Kerajaan Negeri Melaka v Ariffin & Associates [2005]

Kerajaan Negeri Melaka v Ariffin & Associates [2005]

In this case the High Court considered the setting aside of an arbitral award relating to the construction of a hockey stadium in Malaysia. The application to set aside was filed pursuant to the Arbitration Act 1952.

The High Court set aside the award in part pursuant to Section 24(2) of the act, which affords as a ground to set aside an arbitral award the misconduct of arbitral proceedings or the improper procurement of the arbitral award.

The High Court held that it was entitled to exercise its power to set aside the award as an error of construction was apparent on the face of the record. The error of construction was identified as the arbitrator’s implication of a term into the contract stating that the state government (a party to the contract) would not unreasonably withhold its consent to the cost estimates if no impropriety were demonstrated on the part of the parties responsible for preparing the cost estimates. The High Court felt that the clear wording of the contract left no room or necessity for the implication of such a term in the contract. The High Court also found that the arbitrator erred in allowing reimbursements for expenses which had not been clearly itemized or supported by documents. Finally, the High Court set aside the arbitrator’s taxed costs on the basis of improper exercise of discretion.

In the event that this case had been brought under the 2005 Arbitration Act it is very unlikely that the court would have decided the matter in the same way as in the grounds for setting aside an arbitral award are narrowly circumscribed and the grounds permitting a referral of the arbitral award to the domestic courts are now limited to questions of law. Under the 2005 Act the parties would have been permitted to opt out of the provisions allowing for a referral of the award to the High Court on a point of law.