The non-compliance of a party with interim orders in arbitration can justify the dismissal of claims, despite procedural oversights by the Arbitral Tribunal.

I. Introduction

[1] There are two actions before this court involving the same parties in different capacities. In R3-24-88-2009, Infineon Technologies (Malaysia) Sdn Bhd ("Infineon") is a Plaintiff with Orisoft Technology Sdn Bhd ("Orisoft") as the Defendant. In the other action, namely R3-24-70-2009 Orisoft is Plaintiff with Infineon as Defendant. I had earlier granted an interim injunction directed against Infineon in the second case, and the matter is now before this court technically on an inter-partes hearing to set aside this interim injunction but since a disposal of the interlocutory application will in effect dispose of the substance of the dispute, parties are agreed that I hear and decide on the substantive action as well. The subject matter of the injunction is a "Notice of Challenge" issued by Infineon against Orisoft and members of the Arbitral Tribunal in this case, under Article 10 of the UNCITRAL Arbitration Rules.

[2] The main action is R3-24-88-2009, where Infineon is Plaintiff, is an application to set aside an award given by the Arbitral Tribunal on 10 September 2009. This award dismissed the Claimant's (Orisoft's) claim with costs, but also held that Infineon be at liberty to file a counter claim against Orisoft. The application to set aside is made under s 37(1)(a)(iii) and (vi) of Arbitration Act 2005 ("the Act").

[3] The award dismissing the claim was made under section 27(6) of the Act which stipulates "if without showing sufficient cause ... the Claimant fails to proceed with the claim, the arbitral tribunal may make an award dismissing the claim." By way of introduction, it needs to be stated there were three other Defendants in the second case, namely the solicitors for Infineon, Messrs. Zaid Ibrahim & Co ("Zaid Ibrahim"), the Director of the Kuala Lumpur Regional Centre for Arbitration (Dato' Noorashikin binti Tan Sri Abdul Rahim, and the Kuala Lumpur Regional Centre for Arbitration itself ("KLCRA"). There was an ancillary application flowing from the injunction application by KLCRA and the Director to strike out the claim against them on the ground of immunity. I allowed this claim. As far as the claim against Zaid Ibrahim is concerned, Orisoft has withdrawn this claim against the firm. Thus, for the moment the only two parties in dispute are Infineon and Orisoft.

[4] Despite the successful claim for immunity, the Director of KLRCA, and the KLRCA had earlier indicated to this court through their counsel that they would respect any decision of this court affecting the two immediate parties in this dispute.

[5] As earlier indicated, the substance of this dispute concerns an arbitral award handed down by a three-man Tribunal, where the Claimant is Infineon and the Respondent is Orisoft, which has counterclaimed against Infineon.

[6] The background facts to this present dispute before this court are not straightforward and therefore have to be carefully analysed in the context of the relevant provisions in the Arbitration Act of 2005, and the applicable rules of procedure initially agreed by the parties to govern the arbitral proceedings.

[7] At the heart of this dispute is extent of applicability of the UNCITRAL Rules in relation to arbitral proceedings conducted under the auspices of the KLRCA, in light of an express provision in the Arbitration Agreement (Clause 26) which refers to the arbitration being intended to be "resolved by applicable rules at the Regional Centre for Arbitration in Kuala Lumpur for the time being in force, which rules are deemed to be incorporated by reference in this Clause."

[8] I now proceed to analyse the background facts in some detail, given the importance of these facts to a proper resolution of this dispute.

II. Background Facts

[9] Disputes having arisen between Orisoft and Infineon, Infineon commenced arbitration proceedings against Orisoft under Clause 26 of the applicable Statement of Work executed between the parties for a project called "Malays