DancomTelecommunication (M) Sdn Bhd v Uniasia General Insurance Berhad MLJU 0387 [2008]

DancomTelecommunication (M) Sdn Bhd v Uniasia General Insurance Berhad  MLJU 0387 [2008]

The Court of Appeal had to consider the validity of an arbitration clause which limited the time frame for referring a dispute to arbitration. The specific clause read as follows:

All differences arising out of this policy shall be referred to arbitration…If the company shall disclaim liability to the insured for any claim…and such claim shall not within 12 calendar months from the date of such disclaimer have been referred to arbitration…the claim shall…be seemed to have been deemed… abandoned.

The arbitration agreement was governed by the Arbitration Act 1952. Dancom Telecommunications (M) Sdn Bhd contended that a clause imposing a timeframe on referring claims to arbitration was void and based their contentions on the content of section 29 of the Contract Act. Clause 29 provided that any agreement by which a party to it is restricted absolutely from enforcing its rights under or in respect of any agreement by the usual legal proceedings in the ordinary tribunal is void.

The Court of Appeal held that a contract which incorporates a valid arbitration clause for referring a dispute to arbitration within a specified timeframe as agreed by the parties is valid and enforceable.

The Court of Appeal held that Section 29 uses the term ‘ordinary tribunal’, which means the ordinary courts of law. Section 29 does not render illegal any contract by which parties have agreed to refer their disputes to arbitration.

The court of appeal held that express provisions as contained within Section 28 of the Arbitration Act 1952 and Section 45 of the Arbitration Act 2005, clearly contemplate the extension of timeframes for the commencement of arbitration proceedings, which suggest that clauses that limit such timeframes must in fact be valid.

Dancom Telecommunications (M) Sdn Bhd v Uniasia General Insurance Bhd [2008]