Enforcement of Foreign Arbitral Awards

The Arbitration Act 2005 has repealed the Arbitration Act 1952 together with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 1985. However it as demonstrated in the following there were still challenges facing a party seeking to enforce a foreign arbitral award under the Foreign Arbitral Awards Convention Act in Malaysia before the Federal Courts ruling in 2010.

The problem revolves around the fact that The Yang Di Pertuan Agong did not notify or order in the Gazette any of the contracting states to the New York Convention or the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act.

Section 2(2) of the Foreign Arbitral Awards Convention Act states “The Yang Di Pertuan Agong may, by order in the Gazette, declare that any state specified in the order is a party to the New York Convention and that order shall, while in force, be conclusive evidence that a state is a party to the said Convention”

We refer below to the Courts decisions in respect of two cases namely Sri Lanka Cricket v World Sports Nimbus Pte Ltd [2006] and Alami Vegetable Oil and Products Sdn Bhd v Lombard Commodities Limited [2009]

Sri Lanka Cricket v World Sport Nimbus Pte Ltd 2 CLJ316 [2006]

In this case the Court of Appeal heard the application for the registration and enforcement of an arbitral award from Singapore. The Court of Appeal held that the arbitral award could not be recognised due to there being no notice in the Gazette. The Court did propose that enforcement in Malaysia may be possible under the provisions of the Reciprocal Enforcement of Judgments Act 1958 or alternatively sue under the award in a common law action. Neither option were a quick option of enforcement in Malaysia

Alami Vegetable Oil Products Sdn Bhd v Lombard Commodities Limited MLJU 0214 [2009]

In the instance the arbitral award was made in the United Kingdom but on the grounds that the notice was never posted in the gazette as referred above the Appeal Court refused to register the foreign award. The Court also mentioned other irregularities in respect of failure of the appellant to produce an arbitration agreement. It should be noted that the award was attempting to be enforced in Malaysia under Section 27 of the Arbitration Act 1952 together with the Foreign Arbitral Awards Convention Act 1985.

Lombard Commodities Limited v Alami Vegetable Oil Products Sdn Bhd CLJ 137 [2010]

Lombard Commodities Limited appealed the Appeal Court decision and in 2010 the Federal Court where the court held that due to the use of the word ‘may’ in Section 2(2) of the Foreign Arbitral Awards Convention Act 1985 it was not a pre-condition that the countries be notified in the Gazette to enforce a foreign arbitral award and further there was nothing precluding alternative evidence being used to establish if a state was a convention state.

In conclusion it would appear that foreign arbitral awards from convention states will now be recognised by the Malaysian Courts for enforcement as firstly the Arbitration Act 2005 does not make reference to the Gazette notification as did the 1952 Act and that the Federal Court has made a clear statement that the Gazette notification is no longer grounds for Malaysia not recognising a foreign arbitral award from a convention state.

Act 320 convention on Enforcement of Foreign Arbitral Awards Act 1985

MALCONLAW 2010