IN THE HIGH COURT OF MALAYA AT SHAH ALAM

IN THE STATE OF SELANGOR DARUL EHSAN

ORIGINATING SUMMONS NO. BA-24NCC(ARB)-2-01/2020
_____________________________________________________

BETWEEN

ENVAC SCANDINAVIA A.B. …PLAINTIFF

(BUSINESS REGISTRATION NO. : 556338-1776)

AND

MUHIBBAH ENGINEERING (M) BHD …DEFENDANT

(COMPANY NO.: 12737-K)

GROUNDS OF JUDGMENT

INTRODUCTION

1. This Originating Summons (the “OS”) dated 8 January 2020 was filed
by the Plaintiff for an order to recognize and enforce a foreign arbitral
award dated 11 January 2019 (“the Award”) that orders the Defendant
to pay to the Plaintiff an amount of QAR 5,157,612 – QAR2,838,023 =
QAR2,319,589, which included withholding tax of QAR888,665.

2. The Defendant has, before the filing of this Originating Summons

(“OS”), paid the substantial part of the awarded sum to the Plaintiff but
has taken the position that the Plaintiff has to obtain a Letter of No
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 Objection from the Qatar Revenue Authority before the Defendant is
obliged to release to the Plaintiff the balance QAR888,665.00, which
represents the withheld amount on account of Qatar withholding tax.
The Defendant objects to the OS on the ground that the enforcement
of the balance withheld amount (being the Qatar withholding tax) of
the Arbitral Award is illegal, an abuse of court process and would
therefore be against the Malaysian public policy.

3. The parties have filed and exchanged the following cause papers in
connection with this case:-

3.1. the Originating Summons dated 8 January 2020;

3.2. the Affidavit in Support of the OS affirmed by Patrick Haraldsson

on 20 December 2019(“the Plaintiff’s’ Affidavit”);

3.3. the Defendant’s Affidavit in Reply affirmed by Cheong Lai Keong

on 18 May 2020 (“the Defendant’s Affidavit in Reply”);

3.4. the Plaintiff’s Affidavit in Reply affirmed by Patrick Haraldsson on

9June 2020 (“the Plaintiff’s Affidavit in Reply”);

3.5. the Defendant’s Further in Affidavit in Reply affirmed by Cheong

Lai Keong on 26 June 2020 (“the Defendant’s 2nd Affidavit in
Reply”); and

3.6. the Plaintiff’s 2nd Affidavit in Reply affirmed by Patrick

Haraldsson on 2 July 2020 (“the Plaintiff’s 2nd Affidavit in
Reply”).

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 BACKGROUND FACTS

4. The undisputed background facts of this matter are as follows:-

4.1. The Plaintiff is a company incorporated under the laws of

Sweden and carries out the business of automated waste
collection systems.

4.2. The Defendant is a public limited company registered under the

laws of Malaysia and carries on the business of oil and gas,
marine, infrastructure, civil and structural engineering contract
works.

4.3. On 23 June 2008, the Defendant and the Government of the

State of Qatar, represented by the New Doha International
Airport Steering Committee, entered into a Main Contract No.
25045-000-FC1-C000-00021 (“the Main Contract”) with
respect to the Catering Facility for the New Doha International
Airport. [see pages 17 – 266 of Exhibit C of the Plaintiff’s Affidavit
affirmed by Patrick Haraldsson on 20 December 2019].

4.4. By a Subcontract Document No. 25045-000-FC1-AEFS-00040

with an effective date of 5 June 2008 (the “Subcontract”), the
Plaintiff was engaged to carry out works in relation to the
Vacuum Waste System relating to the Catering Facility under the
Main Contract. [see pages 268 – 405 of Exhibit C of the Plaintiff’s
Affidavit affirmed by Patrick Haraldsson on 20 December 2019].

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4.5. Clause GC-33 of the Subcontract contained a dispute resolution
provision between the parties, which provides that the parties
shall proceed with arbitration as per the General Condition
contained in the Main Contract if the Contractor’s final
determination is not accepted by Subcontractor. The
Subcontract is to be read together with the Main Contract and
incorporates the dispute resolution mechanism by reference.
[see page 283 of Exhibit C of the Plaintiff’s Affidavit affirmed by
Patrick Haraldsson on 20 December 2019].

4.6. Dispute arose between the parties and the Plaintiff instituted
arbitration proceedings culminating in the Award dated 11
January 2019 by a sole arbitrator consisting of Ms Nadine
Debbas Achkar. [see Exhibit D of the Plaintiff’s Affidavit affirmed
by Patrick Haraldsson on 20 December 2019].

4.7. In the arbitral award, the arbitral tribunal allowed the

Plaintiff/Claimant’s claims in the amount of QAR 5,157,612.00
and also allowed the Defendant/Respondent’s counterclaims in
the amount of QAR2,838,023.00. After set-off between the
claims allowed and the counterclaims allowed, the net amount
payable by the Defendant/Respondnet to the Plaintiff/Claimant
under the arbitral award was QAR2,319,589.00, which included
withholding tax of QAR888,665.00. Only part of the outstanding
sum has been paid, leaving an outstanding balance of
QAR888,665.00. [see paragraph 628 of Exhibit D of the
Plaintiff’s Affidavit affirmed by Patrick Haraldsson on 20
December 2019]

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 4.8. Up to the filing of the OS, only part of the awarded sum has been
paid by the Defendant leaving an outstanding balance of QAR
888,665.00. By a letter sent by email dated 6.5.2019 from the
solicitors of the Plaintiff to the solicitors of the Defendant, the
Plaintiff demanded for the balance sum of QAR 888,665.00 from
the Defendant.

4.9. In reply the Defendant by its e-mail dated 12 March 2019 stated
that it was still waiting for clearance pertaining to Qatar tax
retention requirement of 3% of total payment and that it would
only release the withheld amount of QAR888,665 upon the
Plaintiff obtaining and producing a Letter of No Objection from
the tax authority of Qatar. [see Exhibit CLK-3 of the Defendant’s
Affidavit-in-Reply]

4.10. To date, the sum of QAR888,665.00 remains unpaid. [see pages

565-569 of Exhibit E of the Plaintiff’s Affidavit affirmed by Patrick
Haraldsson on 20 December 2019].

5. In both the Subcontract dated 6 June 2008 (made between the

Defendant as the main contractor and the Plaintiff as the
subcontractor) and the Main Contract dated 23 June 2008 (made
between the Government of the State of Qatar and the Defendant , the
applicable law is the law of the State of Qatar [see clause SC-20 in the
Special Conditions of the Subcontract and GC-75 in the General
Conditions of Main Contract. The settlement of disputes by arbitration
shall be in accordance with the Rules of Arbitration of the International
Chamber of Commerce and the place of arbitration shall be Dolha,
State of Qatar: see GC-33 in the General Conditions of the
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 Subcontract read together with GC 68 of the Main Contract. Hence, it
is indisputable that the subcontract and the parties’ rights and
obligations thereunder are governed by the laws of Qatar.

6. The Defendant has not challenged or applied to set aside the arbitral
award in the Court of Law in Qatar.

PRELIMINARY POINT

7. In this OS, the Plaintiff has raised a preliminary point that the
Defendant must raise an objection to the recognition and enforcement
of an award by way of an application under Section 39 of the
Arbitration Act 2005 (“AA 2005”) and that the Defendant cannot raise
an objection merely by an affidavit in opposition to the OS which in law
is an ex parte application.

Plaintiff’s Submissions

8. In support of the said preliminary point, the Plaintiff quoted the

following passages of the Federal Court’s judgment in CTI Group INC
v International Bulk Carriers SPA [2017] 9 CLJ 499:

“[1] The provisions on recognition and enforcement of arbitral

awards as contained in arts. 35 and 36 of the UNCITRAL Model
Law on International Commercial Arbitration have been
incorporated into ss. 38 and 39 of the 2005 Act. The procedure for
the purpose of recognition and enforcement of an arbitral award in
Malaysia is contained in O. 69 rr. 8 and 9 of the Rules of Court
2012 ('ROC'). Sections 38 and 39 of the 2005 Act read with O. 69
rr. 8 and 9 of the ROC, provide for a two-stage process: (i) the first
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 stage, an ex parte proceeding - but subject to the power of the
court as stipulated in O. 69 r. 8 requiring service of the arbitration
claim originating summons on a party to the arbitration. An ex
parte order giving permission to enforce an arbitral award is made
at this stage; and (ii) the second stage, an inter partes proceeding
during which the court deals with the application to set aside an ex
parte order giving leave to enforce an arbitral award. The
application must be made within the prescribed time after that order
is served on the party against whom the order is made.
(paragraphs 56, 63, 64 & 66)

[5] The two-stage process for the enforcement of arbitral awards

as contained in ss. 38 and 39 of the 2005 Act (read with O. 69 r. 8
of the ROC) does not permit a party seeking to set aside an order
made under s. 38 to apply to set it aside under that very section on
the ground that there was no arbitration agreement in existence
between the parties. That party must apply to set aside the order
under s. 39. When the matter moves to the second stage under s.
39, the defendant can only apply to set aside the order made
under s. 38, upon any one or more of the grounds set out in s.
39 and no other. (paragraphs 105 & 106)”

9. It is the submission of the Plaintiff that the Defendant’s ground of

objection that the recognition and enforcement of the Award is against
the Malaysian public policy is not within the ambit of Section 38 of the
Arbitration Act 2005 but in fact one that falls within the ambit of Section
39(1)(b)(ii) of the Arbitration Act 2005 and therefore it is argued by the
Plaintiff that such an objection cannot stand without an application
under Section 39(1) of the Arbitration Act 2005.

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10. The Plaintiff further argues that based on the case law an objection
under Section 39 of the Arbitration Act 2005 merely by way of an
opposing affidavit has no merit and is an abuse of process and as
such, the Defendant’s objections cannot stand. In support of this
contention, the Plaintiff quoted the following passages of the following
cases:

(1) Alami Vegetable Oil Products Sdn Bhd v Hafeez Iqbal Oil &
Ghee Industries (PVT) Ltd [2016] 7 CLJ 19 (Hamid Sultan
JCA’s judgment on behalf of the Court of Appeal) has held that:
“[2] For s. 39 to apply, the application must be made by the
respondent to the award. In this case, the respondent to the
award was the appellant and no such application had been
filed. Instead, the appellant had only filed an opposing
affidavit stating why the respondent’s application
should not be allowed. What was before the court was
a s. 38 application which was in respect of the merit of
the award, which was irrelevant consideration at the
stage of s. 38 application. Therefore, the appeal had no
merit and was an abuse of judicial process as the appellant
had not taken the argument before the court by a proper
application under s. 39 of the AA 2005. (paragraphs 2, 9 &
14)

[3] The appellant had not appreciated the distinction

between ss. 38 and 39 of the AA 2005. Section 38
procedure is a ‘recognition procedure’ to convert an
arbitration award to a judgment. This can only be done
8
 by a person holding an arbitration award. If the
respondent to the award wants to object to the
procedure, he can file an affidavit to do so. (See
International Bulk Carriers SPA v. CTI Group Inc [2014] 8
CLJ 854; [2014] 6 MLJ 851). If the respondent to the
award wants to object to its enforcement, then an
application under s. 39 setting out one of the grounds
must be made by the respondent to the award. To put it
in another way, the appellant in the instant case was
attempting to convince the court ‘to put the cart before
the horse’, that too without making an application under
the mandatory provision to challenge the enforcement
of the award.

(1) Siemens Industry Software GMBH & Co KG [Germany] vs

Jacob and Toaralf Consulting Sdn Bhd & Ors [2020 MLJU
363] (judgment of the Federal Court):

“[50] Having regard to all the above, we therefore agreed

with the High Court that only the dispositive portion of the
arbitral award ought to be registered for purposes of
enforcement of the arbitral award. The reasoning or findings
of the arbitral tribunal would be relevant, if at all, to a court
which is considering the merits of the award, for example in
an application to set aside the arbitral award under s. 39 of
the AA 2005. And this will be done by way of an affidavit
evidence, not by way of registration as a judgment of the
High Court. Nevertheless, as stated earlier, there is no
application filed by the appellant under s. 39 of the AA 2005”
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11. Based on the arguments and references in paragraphs 7 to 10 above,
the Plaintiff has submitted that on this ground alone, this Court ought
to disregard the affidavits filed by the Defendant and allow the
Plaintiff’s OS.

Defendant’s Submissions

12. On the other hand, the Defendant argues that the Plaintiff’s preliminary
point is flawed and that it is correct in procedure for the Defendant to
file affidavits to oppose the Plaintiff’s application for registration and
enforcement of arbitral award as a court order or judgment.

13. In a summary, the Defendant’s arguments on the preliminary point are

as follows:

(i) The wording of Section 39 of AA 2005 does not require any

application to be made for a party to raise any grounds of refusal
in relation to enforcement of an Award.

(ii) An application under Section 39 of AA 2005 is usually made

when the successful party has obtained an ex parte order for
enforcement of the Award.

(iii) There are numerous cases which demonstrate that the Courts
have considered grounds for refusal under Section 39 of AA
2005 based on affidavit evidence, similar to the present case.

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14. In respect of the first argument in subparagraph 13(i) above that it is
not necessary for the Defendant to make an application under section
39 in the present case, the Defendant contends that :

(a) Unlike Section 39 of AA 2005, it is clear that the provision under

Section 38 AA 2005 requires an application to be made by any
party seeking for an Award to be registered;

(b) However, contrary to the wording set out in Section 38, Section
39 of AA 2005 does not make any provision for an application to
be made thereunder, unless it falls within Section 39(1)(a)(vii) of
AA 2005, which the Defendant is not relying on;

(c) It is clear from the provision of Section 39 AA 2005, that the Court
will have to consider refusing enforcement of an award, upon
the “request” of the Defendant (as the unsuccessful party)
provided that there is proof of one of the grounds for refusal;

(d) As such, it is clear from the wording of Section 39 of AA 2005

that there is no obligation on the Defendant to make any formal
application to raise the grounds relied on under Section 39 of AA
2005. A “request” cannot be construed as a requirement to make
a formal application;

(e) It is clear that the intention of Section 39 of AA 2005 is that the

Defendant can request for the grounds set out therein to be
considered by this Honourable Court and at the same time, if
there has been an order obtained on an ex parte basis, then it is

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 open for the Defendant to make an application under Section 39
of AA 2005;

(f) It is clear by the decided cases and the above text, that both
avenues are open to a party challenging the enforcement and
recognition of an Award, and it would be largely dependent on
whether an ex parte order has already previously been obtained;

(g) Relyng on the case of Kejuruteraan Bintai Kindenko Sdn Bhd

v Serdang Baru Properties Sdn Bhd and another case
[2018] 12 MLJ 706, it has been held that Section 39 of AA 2005
is intended to be a “passive remedy”. As opposed to Section
42 (now repealed) and 37 of AA 2005 (which are “active
remedies”), where it is clearly spelt out that any application to set
aside or vary an award may be made within the prescribed time,
Sections 38 and 39 of AA 2005, do not prescribe for any limited
time frame. This led the Court to conclude that Section 39 of AA
2005 is available for an opposing party to resist an
enforcement application, just as the Defendant is doing herein;
and

(h) As such, it is clear that the Section 39 of AA 2005 was intended

to be used as grounds to oppose an application made under
Section 38 of AA 2005, and there is no valid basis for the
Plaintiff’s preliminary objection herein.

15. In respect of the argument in subparagraph 13(ii) above regarding the

two-stage procedure, the Defendant contends that:

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 (a) CTI Group Inc v. International Bulk Carriers Spa [2017] 5 MLJ
314 was a case where there was an ex parte application made
to the High Court under Section 38 AA 2005. As such,
subsequent to this, the opposing party would then be required to
make an application to set aside the ex-parte order obtained
using the provisions of Section 39 of AA 2005. This is the two-
stage process envisioned by the Court in that case.

(b) However, contrary to this, in the present case, the Plaintiff had
not gone through with the first stage by issuing the Originating
Summons on an ex parte basis for leave to enforce an arbitral
award.

(c) CTI Group also sets out that the second stage involves an inter
partes proceedings that deals with the application to set aside an
ex parte order giving leave to enforce an arbitration award.

(d) This has no application in the present case when the Plaintiff has
not made an ex parte application nor obtained an order for leave
to enforce the arbitration award against the Defendant.

(e) The same scenario in CTI Group involving an ex parte order

obtained had also occurred in the case of Tune Talk Sdn Bhd
v. Padda Gurtaj Singh [2020] 3 MLJ 184, which similarly does
not apply to the present case.

16. In respect of the arguments in subparagraph 13(iii) above regarding

court decisions where the Court has considered refusal of the plaintiff’s
application based on grounds for refusal raised by way of affidavits,

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without a formal application, the Defendant referred to the following
cases as examples:

(a) Open Type Joint Stock Co Efirnoye ('EFKO') v. Alfa Trading

Ltd [2012] 1 MLJ 685 where the learned Judge also considered
grounds raised under Section 39 of AA 2005 in response to an
application filed under Section 38 of AA 2005.

(b) Food Ingredients Llc v. Pacific Inter-Link Sdn Bhd And

Another Application [2012] 8 MLJ 585 where there was an
application made under Section 38 of AA 2005, and the learned
Judge then considered grounds raised in opposition under
Section 39 AA 2005 based solely on affidavit evidence.

(c) Agrovenus Llp v. Pacific Inter-Link Sdn Bhd And Another

Appeal [2014] 3 MLJ 648. In this case, it was held that there was
a two stage process, but it was held that the second stage is s
39, which deals with the request and grounds relied upon for
refusal of the recognition or enforcement sought, is where
“questions relating to jurisdiction of the arbitral tribunal as well as
whether, inter alia, the arbitral tribunal exceeded its jurisdiction
or dealt with any dispute not contemplated or not falling within
the terms of the submission to arbitration may properly be
addressed”. This was also a case where the Court considered
grounds raised under Section 39 of AA 2005 without a formal
application.

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 (d) Kelana Erat Sdn Bhd v. Niche Properties Sdn Bhd and
another application [2012] 5 MLJ 809 which was also a case
where the Court considered matters raised in the affidavit by the
Defendant to determine if there were any grounds submitted
pursuant to Section 39 of AA 2005 to justify the refusal of an
application for enforcement made under Section 38 of AA 2005
(however, the Defendant had filed a separate setting aside
application under Section 37 of AA 2005 that was heard together
with the section 38 application).

(e) Hiap-Taih Welding & Construction SdnBhd v. Boustead

Pelita Tinjar Sdn Bhd (formerly known as Loagan Bunut
Plantations Sdn Bhd) [2008] 8 MLJ 471 which was also a case
where the Court considered grounds for refusal based on
affidavit evidence.

ANALYSIS OF THE STATUTORY PROVISIONS AND LEGAL

PRINCIPLES

17. As this Court’s decision of the preliminary point will involve

interpretation of statutes and reading of judgments of the courts in the
various decided cases, it is pertinent to remind ourselves of the
principles of interpretation of statutes and the guidelines on reading of
common law judgments.

General Guidelines and Principles

18. It is apt to be mindful of the guidance of the English Law Lords that all
judgments in the common law systems are to be read in the factual
context of the cases in question and not in the abstract. “Every
15
 judgment of the Court must be read as governed by the facts of the
case”: Quinn v. Leatham [1901] A.C. at page 506. Every case is
decided on its own facts and must be read accordingly: per Viscount
Simon in Harris v. D.P.P [1952] 1 All ER at page 1050D. “ All judgment
under the common law system must be understood secundum
subjectectum materiam: judges, in pronouncing principles, have in
mind the characteristics present in the case, which characteristics may
be absent in other cases” : per Lord Diplock in Mutual Life & Citizens’
Assurance Company Ltd & Another v. Clive Raleigh Evatt [1971]
AC 793, at page 802D-F. These are the guidelines which this Court
will follow when reading and interpreting the judgments of the courts
which the parties have cited or quoted.

19. It is also important to bear in mind that one has to extract the ratio
decidendi of the courts in the judgments and distinguish them from
obiter dictum, as under the doctrine of stare decisis, this Court is bound
by the ratio decidendi of the appellate courts in the previous cases,
while the obiter dictum, though they are of persuasive force, are not
binding on this Court: Kerajaan Malaysia $ 2 Ors v. Tay Chai Huat
[2012] MLJU 60 (Federal Court] in paragraphs to [46] to [50] thereof,
as reproduced below:

“[46] A precedent can be defined as a judicial decision which

serves as a rule for future determinations in similar or analogous
cases. A precedent or authority is a legal case establishing a
principle or rule that a court or other judicial body adopts when
deciding in subsequent cases with similar issues or facts. A
precedent that must be applied or followed is known as a binding
precedent. I would think that this Court must follow its own
proclamations of law made earlier on other cases and honour these
rulings. After all, this Court is the highest court in the country. The
16
doctrine of precedent, a fundamental principle of English Law, is a
form of reasoning and decision-making formed by case law.
Precedents not only have persuasive authority but also must be
followed when similar circumstances arise. Any principle
announced by a higher court must be followed in later cases. In
short the courts are bound within prescribed limits by prior
decisions of superior courts. Judges are also obliged to obey the
set-up precedents established by prior decisions. This legal
principle is called stare decisis. Adherence to precedent helps to
maintain a system of stable laws. Judicial precedent means the
process whereby judges follow previously decided cases where the
facts are of sufficient similarity. The doctrine of judicial precedent
involves an application of the principle of stare decisis, i.e., to stand
by the decided. In practice, this means that inferior courts are
bound to apply the legal principles set down by superior courts in
earlier cases. This provides consistency and predictability in the
law.

[47] It has been said in certain textbooks that the decision or

judgement of a judge may fall into two parts, i.e., the ratio decidendi
(reason for the decision) and obiter dictum (something said by the
way). The ratio decidendi of a case is the principle of law on which
a decision is based. When a judge delivers judgement in a case he
outlines the facts which he finds have been proved on the
evidence. Then he applies the law to those facts and arrives at a
decision, for which he gives the reason (ratio decidendi). The
judge may also go on to speculate about what his decision would
or might have been if the facts of the case had been different. This
is an obiter dictum. The binding part of a judicial decision is the
ratio decidendi. An obiter dictum is not binding in later cases

17
because it was not strictly relevant to the matter in issue in the
original case. However, an obiter dictum may be of persuasive
(as opposed to binding) authority in later cases.

[48] It has also been said that distinguishing a case on its facts, or
on the point of law involved, is a device used by judges usually in
order to avoid the consequences of an earlier inconvenient
decision which is, in strict practice, binding on them. What is
reasonably distinguishable depends on the particular cases and
the particular court - some judges being more inclined to
'distinguish' disliked authorities than others. In Jones v Secretary
of State for Social Services [1972] All ER 145, Lord Reid said (at
page 149):

"It is notorious that where an existing decision is disapproved

but cannot be overruled courts tend to distinguish it on
inadequate grounds. I do not think that they act wrongly in so
doing; they are adopting the less bad of the only alternatives
open to them. But this is bound to lead to uncertainty for no one
can say in advance whether in a particular case the court will or
will not feel bound to follow the old unsatisfactory decision. On
balance it seems to me that overruling such a decision will
promote and not impair the certainty of the law.

But that certainty will be impaired unless this practice is used

sparingly.... and that it should only be in rare cases that we
should reconsider questions of construction of statutes or other
documents." [Emphasis added]

[49] The common law tradition is built on the doctrine of stare

decisis which directs a court to look to past decisions for guidance

18
 on how to decide a case before it. This means that the legal rules
applied to a prior case with facts similar to those of the case now
before a court should be applied to resolve the legal dispute. The
use of precedent has been justified as providing predictability,
stability, fairness and efficiency in the law. Reliance upon
precedent contributes predictability to the law because it provides
notice of what a person's rights and obligations are in particular
circumstances. It also means that lawyers can give legal advice to
clients based on settled rules of law. There is certainty in the law.
There is also uniformity in the law. Similar cases will be treated in
the same way. The use of precedent also stabilises the law.

[50] This Court create precedents. The use of precedent is an

indispensable foundation on which to decide what is the law and
how it should be applied in individual cases. Utra
Badi and Vickeswary are decisions that settled the law in cases
of this genre with finality. I would think that this Court would have
need to hesitate long before distinguishing Utra
Badi and Vickneswary on inadequate grounds or on a
hypothetical issue raised by appellants in appeals before this Court
such as whether there are exceptions to the ratio decidendi
formulated in both authorities. Such hypothetical issues raised in
cases of this genre can have disruptive and seemingly unfair
consequences and extremely capricious results. It creates
uncertainty in the law and would seriously hinder administration of
the General Orders by government departments resulting in
administrative confusion. For the aforesaid reasons adumbrated, I
am unable to follow the majority decision in Yusof bin Sudin”.

Rules Governing Interpretation of Statutes

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20. In the recent decision of our Federal Court, the apex court has
reviewed various previous decisions and summarised the general
rules of interpretation of statute in the judgment of the Federal Court
delivered by Vernon Ong FCJ in Federal Court Civil Appeal 02(f)-23-
04/2018 (Q) between Tebin bin Postapa [as administrator of the
estate of Haji Mostapa bin Asan, deceased] v. Hulba-Danyal bin
Balai & Sophee Sulong bin Balia [as joint administrators of the
estate of Balia bin Munir, deceased [2020] 4 MLJ 721 as follows:

“[30] In our opinion, the rules governing statutory interpretation may

be summarized as follows. First, in construing a statute effect must
be given to the object and intent of the Legislature in enacting the
statute. Accordingly, the duty of the Court is limited to interpreting
the words used by the Legislature and to give effect to the words
used by it. The Court will not read words into a statute unless clear
reason for it is to be found in the statute itself. Therefore, in
construing any statute, the Court will look at the words in the statute
and apply the plain and ordinary meaning of the words in the
statute. Second, if, however the words employed are not clear, then
the Court may adopt the purposive approach in construing the
meaning of the words used. Section 17A of the Interpretation Acts
1948 and 1967 provides for a purposive approach in the
interpretation of statutes. Therefore, where the words of a statute
are unambiguous, plain and clear, they must be given their natural
and ordinary meaning. The statute should be construed as a whole
and the words used in a section must be given their plain
grammatical meaning. It is not the province of the Court to add or
subtract any word; the duty of the Court is limited to interpreting the
words used by the legislature and it has no power to fill in the gaps
disclosed. Even if the words in a statute may be ambiguous, the
20
 power and duty of the Court “to travel outside them on a voyage of
discovery are strictly limited.” Third, the relevant provisions of an
enactment must be read in accordance with the legislative purpose
and applies especially where the literal meaning is clear and
reflects the purposes of the enactment. This is done by reference
to the words used in the provision; where it becomes necessary to
consider every word in each section and give its widest
significance. An interpretation which would advance the object and
purpose of the enactment must be the prime consideration of the
Court, so as to give full meaning and effect to it in the achievement
to the declared objective. As such, in taking a purposive approach,
the Court is prepared to look at much extraneous materials that
bears on the background against which the legislation was
enacted. It follows that a statute has to be read in the correct
context and that as such the Court is permitted to read additional
words into a statutory provision where clear reasons for doing so
are to be found in the statute itself.”

21. Further aids to the interpretation of statutes can be derived from other
decisions of the appellate courts on specific principles of statutory
interpretation including those summarised below:

(a) The Legislature does not legislate in vain, and the interpretation
of words in a section of the statute should not to the extent of
rendering redundant or superfluous other words used in another
section in the same statute: Eusoffe Abdoolcader SCJ in Foo
Loke Ying v. Television Broadcasts Limited [1985] MLJ 35,
following House of Lords in Southwest Water Authority v.
Rumbles [1985] 2 WLR 405 at 411. In Foo Loke Ying, the
Supreme Court held that all words in a statute are to be
21
considered; on presumption that the Parliament does nothing in
vain, the court must endeavour to give significance to every
words of an enactment and it is presumed that if a word or phrase
appears in a statute it was put there for a purpose. See also Privy
Council decision in Enmore Estates v. Darsan [1970] AC 497
at p. 506. The relevant part of the Supreme Court’s judgment
in Foo Loke Yong is as follows:

“Section 5(2) prescribes the periods for the subsistence of

copyright conferred by that section and section 6(2) adopts the
same duration as is provided for in section 5 in respect of
copyright conferred by section 6 in relation to the same type of
work. Now if sections 5 and 6 are indeed intended to be read
conjunctively, quite apart from the fact that there would be no
reason why they could not have been enacted together as a
composite section, section 6(2) would be wholly unnecessary
and redundant. The court however is not at liberty to treat words
in a statute as mere tautology or surplusage unless they are
wholly meaningless. On the presumption that Parliament does
nothing in vain, the court must endeavour to give significance
to every word of an enactment, and it is presumed that if a word
or phrase appears in a statute, it was put there for a purpose
and must not be disregarded. In Quebec Railway, Light, Heat
and Power Co Ltd v Vandry [1920] AC 662, Lord Sumner in
delivering the judgment of the Judicial Committee said (at page
676)”
"Secondly, there is no reason why the usual rule should not
apply to this as to other statutes — namely, that effect must
be given, if possible, to all the words used for the legislature is
deemed not to waste its words or to say anything in vain."
22
 The Judicial Committee applied and followed this case
in Enmore Estates Ltd v Darson [1970] AC 497 506 (at page
506

(b) A statute ought to be so construed that, if it can be prevented, no

clause or sentence or words shall be superfluous, void or
insignificant: per Cockburn C.J in Rex v. Bishop of Oxford
(1879) 4 QBD 245, 5 App Cas 214;

(c) Where different words are used in a statute, they refer to different
things; this is particularly so when the different words are used
repeatedly: per Thomas CJ in Lee Lee Cheng v. Seow Peng
Kwang [1960] MLJ 1 at pg 3 (Court of Appeal);

(d) In the event of any inconsistency between a parent Act and a

subsidiary legislation, the provision of the parent Act prevails to
the extent of any inconsistency: section 23 of the Interpretation
Acts 1948 and 1967 (Act 388); and

(e) To some extent, heading or marginal note to the sections can be

used as aid to interpretation. In Foo Loke Yong (supra) Eusoffe
Abddolcader SCJ said as follows: “To consider the inter-
relationship if any between sections 5 and 6 in the context of the
appellants' argument, it might perhaps be useful to refer to the
marginal notes to these two sections. A side note or marginal
note to a section is part of the statute. It may be considered in
construing the section or any other provision of the statute,
provided due account is taken of the fact that its function is
merely to serve as a brief guide to the content of the section.
Collins, M.R., in Bushell v Hammond [1904] 2 KB 563 took the
23
 approach that the marginal note, while forming no part of the
section, was of some assistance as it showed the drift of the
section. In Reg v Schildkamp [1971] AC 1, Lord Reid and Lord
Upjohn took the view that the marginal or side note will rarely be
of any use in interpreting a statute but that they should not be
rejected completely as aids, the former putting this (at page 10)
on the basis that it is the whole statute that is the product of the
legislature and that therefore the whole statute can be looked at
if any doubt should arise as to its meaning.”

(f) A domestic statute designed to give effect to an international

convention should in general be given a broad and liberal
meaning: per Lord Brandon in The Antonis P Lemons [1985] 1
AC 711 at p. 725 – 726.

Relevant Statutory Provisions

22. The statutory provisions on the recognitions and registration of arbitral

awards and challenge of arbitral awards which are relevant to the
preliminary point here are reproduced below:

“Chapter 7
Recourse Against Award

37. Application for Setting Aside

1) An award may be set aside by the High Court only if—

a) the party making the application provides proof that—

i) a party to the arbitration agreement was under any incapacity;
24
 ii) the arbitration agreement is not valid under the law to which
the parties have subjected it, or, failing any indication thereon,
under the laws of Malaysia;

iii) the party making the application was not given proper notice
of the appointment of an arbitrator or of the arbitral
proceedings or was otherwise unable to present that party’s
case;

iv) the award deals with a dispute not contemplated by or not

falling within the terms of the submission to arbitration;

v) subject to subsection (3), the award contains decisions on

matters beyond the scope of the submission to arbitration; or
Asian International Arbitration Centre (AIAC) 38 vi) the
composition of the arbitral tribunal or the arbitral procedure
was not in accordance with the agreement of the parties,
unless such agreement was in conflict with a provision of this
Act from which the parties cannot derogate, or, failing such
agreement, was not in accordance with this Act; or

b) the High Court finds that—

i) the subject-matter of the dispute is not capable of settlement
by arbitration under the laws of Malaysia; or
ii) the award is in conflict with the public policy of Malaysia.

2) Without limiting the generality of subparagraph (1) (b)(ii), an award

is in conflict with the public policy of Malaysia where—

25
 a) the making of the award was induced or affected by fraud or
corruption; or
b) a breach of the rules of natural justice occurred—
i) during the arbitral proceedings; or
ii) in connection with the making of the award.

3) Where the decision on matters submitted to arbitration can be

separated from those not so submitted, only that part of the award
which contains decisions on matters not submitted to arbitration may
be set aside.

4) An application for setting aside may not be made after the

expiry of ninety days from the date on which the party making
the application had received the award or, if a request has been
made under section 35, from the date on which that request had
been disposed of by the arbitral tribunal.

Chapter 8
Recognition and Enforcement of Awards

38. Recognition and Enforcement

(1) On an application in writing to the High Court, an
award made in respect of an arbitration where the seat of
arbitration is in Malaysia or an award from a foreign State shall,
subject to this section and section 39 be recognised as
binding and be enforced by entry as a judgment in terms of
the award or by action.
(2) In an application under subsection (1) the applicant
shall produce-

26
 (a) the duly authenticated original award or a duly certified
copy of the award; and
(b) the original arbitration agreement or a duly certified copy
of the agreement.
…………….
4) For the purposes of this Act, “foreign State” means a State
which is a party to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards adopted by the United
Nations Conference on International Commercial Arbitration in
1958.

39. Grounds for Refusing Recognition or Enforcement

(1) Recognition or enforcement of an award, irrespective

of the State in which it was made, may be refused only
at the request of the party against whom it is invoked-

(a) where that party provides to the High Court proof

that-
(i) a party to the arbitration agreement was under
any incapacity;
(ii) the arbitration agreement is not valid under the
law to which the parties have subjected it, or,
failing any indication thereon, under the laws of
the State where the award was made;
(iii) the party making the application was not given
proper notice of the appointment of an arbitrator
or of the arbitral proceedings or was otherwise
unable to present that party's case;

27
 (iv) the award deals with a dispute not contemplated
by or not falling within the terms of the submission
to arbitration;(v) subject to subsection (3), the
award contains decisions on matters beyond the
scope of the submission to arbitration;
(vi) the composition of the arbitral tribunal or the
arbitral procedure was not in accordance with the
agreement of the parties, unless such agreement
was in conflict with a provision of this Act from
which the parties cannot derogate, or, failing such
agreement, was not in accordance with this Act;
or
(vii) the award has not yet become binding on the
parties or has been set aside or suspended by
a court of the country in which, or under the
law of which, that award was made; or

(b) if the High Court finds that-

(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the laws of
Malaysia; or
(ii) the award is in conflict with the public policy
of Malaysia

2) If an application for setting aside or suspension of an

award has been made to the High Court on the grounds
referred to in subparagraph (1) (a)(vii), the High Court
may, if it considers it proper, adjourn its decision and may
also, on the application of the party claiming
recognition or enforcement of the award, order the
28
 other party to provide appropriate security.

(3) Where the decision on matters submitted to arbitration can

be separated from those not so submitted, only that part of
the award which contains decisions on matters submitted to
arbitration may be recognized and enforced.

PART IV
MISCELLANEOUS

50. Mode of Application

Any application to the High Court under this Act shall be by an

originating summons as provided in the Rules of the High Court 1980.

Relevant provisions of the Rules of Court 2012:

Claims under the 2005 Act (O. 69, r. 2)

2. (1) In this Order, “arbitration claim” means any application to the

Court under the 2005 Act, including a claim to—

(a) appoint an arbitrator under subsection 13(7) of the 2005 Act;

(b) decide on the challenge of an arbitrator under subsection
15(3) of the 2005 Act;
(c) decide on the termination of the mandate of an arbitrator
under subsection 16(2) of the 2005 Act;
(d) appeal against the ruling of the arbitral tribunal on jurisdiction
under subsection 18(8) of the 2005 Act;
29
 (e) enforce interlocutory orders or directions of an arbitral tribunal
made under section 19 of the 2005 Act; P.U. (A) 351
(f) seek interlocutory orders or directions under section 11 of the
2005 Act;
(g) determine under section 41 of the 2005 Act, any question of
law arising in the course of the arbitration proceedings;
(h) determine under section 42 of the 2005 Act, any question of
law arising out of an award;
(i) set aside an award under section 37 of the 2005 Act;
(j) direct any matter in connection with bankruptcy proceedings
under section 49 of the 2005 Act;
(k) enforce an award under section 38 of the 2005 Act;
(l) extend time under section 45 or 46 of the 2005 Act; and
(m) seek an order under subsection 44(4) of the 2005 Act where
the arbitral tribunal withholds its award for non-payment of fees
and expenses.

Starting the claim (O. 69, r. 4)

4. (1) An arbitration claim under rule 2 or rule 3 may be made

using the originating summons procedure, and Form 5 shall be
filed in the High Court. An arbitration claim originating summons
shall—
(a) include a concise statement of—
(i) the remedy claimed; and
(ii) any question on which the applicant seeks the decision of
the Court;
(b) state the grounds in support of the originating summons;
(c) show that any statutory requirements have been met;

30
 (d) specify the section of the 1952 Act or the 2005 Act under
which the claim is made;
(e) specify the respondents on whom the arbitration claim
originating summons is to be served, stating their role in the
arbitration; and
(f) identify against which, if any, respondents an order of costs is
sought.

(2) The applicant shall file by affidavit, written evidence on which he

intends to rely when he files his originating summons, including a
copy of the arbitration agreement and the award, where relevant.

(3) Unless the Court orders otherwise, an arbitration claim

originating summons and the affidavit shall be served on the
respondents specified in subparagraph (1)(e), within thirty days
from the date of issue.
(4) Where relevant, rules 5 to 8 shall additionally apply.

Application to set aside an award (O. 69, r. 5)

5. (1) Subject to subparagraph (2), an application to the Court to set

aside an award under section 37 of the 2005 Act may be made—
(a) at any time within ninety days from the date on which the
applicant received the award; or
(b) if a request has been made to the arbitral tribunal for a
correction or interpretation of the award or for an additional
award under section 35 of the Act, at any time within ninety days
after the request has been disposed off by the arbitral tribunal.

31
 (2) An application to the Court to set aside an award on the ground
that the award was induced or affected by fraud or corruption may be
made within ninety days after the alleged fraud or corruption became
known to the party making the application.

(3) In every application to set aside an award, the originating

summons shall, in addition to matters stated in rule 4(1)—
(a) give details of the award challenged;
(b) identify which part or parts of the award are challenged; and
(c) specify the grounds for the challenge.

(4) The applicant shall file by affidavit, written evidence on which he

intends to rely when he files his writ, including a copy of the arbitration
agreement and the award.

(5) The originating summons and affidavit shall be served on

each arbitrator and the respondents.”

Fundamental Features of Arbitration Law and Practice

23. Before this Court embarks on further discussion and analysis of the
parties’ submissions on the preliminary point, it is important to bear in
mind some basic and fundamental features of arbitration law and
practice.

24. A fundamental feature of law and practice of arbitration is that it is only

the court which has territorial jurisdiction at the seat of the arbitration
that is competent to hear and decide on an application to set aside an
arbitral award. An arbitral award in an arbitration with its seat of
arbitration in a foreign country cannot be the subject-matter of an
32
 application in Malaysia to set aside the foreign arbitral award, and vice
versa. This fundamental feature of arbitration law and practice is well
recognised in our statute as well as in international treaty signed by
our country, as explained in paragraphs 25 to 30 below.

25. The relevant provisions include section 3 of our Arbitration Act 20025
which read as follows:

“3. Application to arbitrations and awards in Malaysia

1) This Act shall apply throughout Malaysia.

2) In respect of a domestic arbitration, where the seat of

arbitration is in Malaysia— a) Parts I, II and IV of this Act shall
apply; and b) Part III of this Act shall apply unless the parties
agree otherwise in writing.

3) In respect of an international arbitration, where the seat of

arbitration is in Malaysia— a) Parts I, II and IV of this Act shall
apply; and b) Part III of this Act shall not apply unless the
parties agree otherwise in writing.

4) For the purposes of paragraphs (2)(b) and (3)(b), the parties to

a domestic arbitration may agree to exclude the application of
Part III of this Act and the parties to an international arbitration
may agree to apply Part III of this Act, in whole or in part.”

There are a total of 4 Parts in the Arbitration Act 2005. Part III
(Additional Provisions Relating to Arbitration) of the 2005 Act is
comprised of sections 40 to 46 dealing with consolidation of
proceedings and concurrent hearings (s. 40), determination of
33
 preliminary point of law by court (s. 41), reference on questions of
law (s. 42 which has now been deleted), appeal (s. 43), costs and
expenses of arbitration (s. 44), extension of time for commencing
arbitration proceedings) and extension of time for making award (s.
46). This section 3 provides for a general rule of applicability of Part
III to domestic arbitration where the seat of arbitration is in Malaysia
and non-applicability of Part III to international arbitration where the
seat of arbitration is in Malaysia, while subsection 3(4) gives the
parties the rights to “opt out” and “opt in” regarding the applicability
of Part III. For ease of reference in this judgment, the term “local
awards” shall be used to describe both domestic and international
arbitration awards where the seat of arbitration are in Malaysia.

26. Implicit in section 3 of the 2005 Act is that any arbitration where the
seat of arbitration is outside Malaysia is not governed by the 2005
Act except where the express provision of the 2005 Act stipulates
otherwise. Section 37 (setting aside of arbitral award) is included in
Part II of the 2005 Act. Section 38 (recognition and enforcement of
award) and section 39 (refusal to recognize the award) are also
included in Part II of the 2005 Act. As explained below, sections 38
and 39 are expressly stipulated as applicable to arbitral award where
the seat of arbitration is outside Malaysia provided the seat is within a
State which is a party to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards adopted by the United Nations
Conference on International Commercial Arbitration in 1958: see
subsections 38(10 and 38(4). For ease of reference in this judgment,
the term “foreign award” is used to describe arbitral award in an
arbitration where the seat of arbitration is in a Foreign State, i.e.
State (other than Malaysia) which is a party to the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards adopted by
34
 the United Nations Conference on International Commercial
Arbitration in 1958.

27. The underlying rationale for excluding the applicability of section 37

(setting aside award) from foreign arbitral awards where the seat of
arbitration is outside Malaysia is that only the court which has territorial
jurisdiction at the seat of the foreign arbitration that is competent to
hear and decide on an application to set aside the foreign arbitral
award. This is our statutory recognition of a fundamental feature of
arbitration law which is well-recognised internationally and also part of
comity of nations. This fundamental feature is also judicially
recognised by our Federal Court which held: “This, couple with the
filing of the application to set aside the partial award in the Kuala
Lumpur High Court by the appellant, go to show that the appellant had
accepted Kuala Lumpur as the seat of arbitration. It is trite law that
such a challenge can only be made in the jurisdiction which is the seat
of arbitration. (See Lombard Commodities Ltd v. Alami Vegetable Oil
Products Sdn Bhd [2010] 1 CLJ 137 (FC); A v. B [2007] 1 Lloyd's LR
237; C v. D [2007] EWHC 1541).”: per Ariffin Zakaria CJ in
Government of India v. Petrocon India Limited [2020] 6 CLJ 321 at
paragraph [37].

28. When it comes to section 38 (recognition of arbitral awards), section

38 of our Arbitration Act 2005 has expressly provided for the
applicability of section 38 recognition of awards to both the local
awards (i.e. awards where the seat of arbitration is within Malaysia)
and foreign awards (i.e. awards where the seat of arbitration is in a
foreign country which is a Convention Country). The express words of
“an award made in respect of an arbitration where the seat of
arbitration is in Malaysia or an award from a foreign State” in section
35
 38(1) constitutes the specific inclusion of foreign arbitral awards for the
purposes of recognition of awards which would otherwise have been
brought under the general exclusionary provision of section 3 of the
same Act. As the foreign arbitral awards have been specifically
included in section 38 and section 38 is expressly subject to the
provisions of section 39, the foreign arbitral awards are also brought
under the provisions of section 39 of our Arbitration Act 2005.

29. However, in the considered view of this Court, inclusion of the foreign
arbitral awards into sections 38 and 39 does not deviate or depart from
the fundamental feature of arbitration law and practice that the
Malaysian courts do not have any jurisdiction to hear or decide an
application to set aside a foreign arbitral award in which the seat of
arbitration is outside Malaysia – a feature so well entrenched in
international arbitration law and practice and implicitly embodied in the
exclusionary provisions in sections 3(2) and (3) of our Arbitration Act
2005.

30. Another fundamental feature of arbitration law and practice is that after
an arbitral award is published in a Convention Country, the award can
be enforced in any of the other Convention Countries. Accordingly, a
party who wants to put a complete stop to the enforcement of an
arbitral award where the seat of arbitration is in a Convention country,
must apply for setting aside the foreign award at the Convention
Country whose court has territorial jurisdiction at the seat of the foreign
arbitration (i.e. the seat court). On the other hand, if a dissatisfied party
successfully opposes the recognition and enforcement of the arbitral
award at a country outside the seat of arbitration, the winning party in
the arbitration can still apply for recognition and enforcement of the
award in other Convention Countries. If I may use a simply analogy to
36
illustrate this point, setting aside an arbitral award at the seat court is
like cutting off the tree at its trunk and completely uprooting it, whereas
a successful opposition to an application for recognition and
enforcement of the arbitral award at a particular country is like cutting
off only one of the many branches of the tree. A winning party in a
Convention award can choose whatever Convention country where
the assets of the losing party can be found to apply for recognition and
enforcement of the arbitral award until he has recovered fully the
awarded sum. Rejection or refusal of recognition of the arbitral award
in one Convention country does not operate as a bar to any of the
applications for recognition of the same arbitral award in other
Convention countries. The co-existence of “active remedy’ (i.e.
applying at the seat court to set aside the arbitral award) and the
‘passive remedy’ (i.e. resisting recognition or enforcement at the court
of another country) is well-recognised internationally including
Malaysia, though the courts in different countries seem to adopt
different extent of such co-existence. In Singapore and Hong Kong the
courts’ recognition of the co-existence of ‘active remedy’ and ‘passive
remedy’ is to the fullest extent whereby a party whose arbitrability
challenge or jurisdictional challenge which was rejected by the arbitral
tribunal but which was brought on appeal to the court could at the
enforcement proceeding be re-opened and decided by the court at the
‘passive remedy’ stage: see PT First Media TBK v Astro Nusantara
Internationalo BV & Ors [2014] 1 SLR 372, Rakna Arakshaka Lanka
Ltd v Avant Garde Maritime Services (Private) Limited [2019]
SGCA 33, and Astro Nusantara International BV v. PT First Media
TBR HCCT 45/2010 [2014] 1 SLR 372. Although the appellate courts
in Malaysia have not specifically decided on the exact extent of the co-
existence of the ‘active remedy’ and ‘passive remedy’ in Malaysia,
Justice Hamid Sultan in his book Jainab’s Key to International
37
Arbitration: Malaysian Arbitration Act 2005 has criticised the
decisions of the Singapore Court of Appeal and the Hong Kong Court
of Final Appeal in Astro v. Lippo cases which gave full-scale extent
of recognition to the co-existence of ‘passive remedy’ and expressed
his view that the co-existence of ‘passive remedy’ in Malaysia would
be to a very limited extent. An international jurist Nata Ghibradze in an
article “Preclusion of Remedies Under Article 16(3) of the
UNCITRAL Model Law” published in Pace International Law Review
Volume 27 Issue 1, Commercial Edition, Spring 2015 has critically
analysed the Astro v. Lippo decisions in light of the UNCITRAL Model
Law provisions, legislative background and history and the universal
acceptance of the :Choice of Remedies” policy under the UNCITRAL
Model Law before coming to her learned opinion that the express
preclusionary provisions of the UNCITRAL Model Law ought not to be
stultified by the co-existence of the ‘active remedy’ and ‘passive
remedy’. Whatever the schools of thought on this uncertain and fluid
topic of international arbitration law, the co-existence of ‘active remedy’
and ‘passive remedy’ is universally recognised and even the
proponent of the narrowest extent of co-existence on the part of
Justice Hamid Sultan recognises that public policy is a valid ground for
‘passive remedy’ at the enforcement stage to refuse to accord
recognition and to disallow enforcement. In the premises, the present
case before this Court is one where the Defendant opposes
recognition and enforcement of a foreign arbitral award on ground of
contravention of the public policy of Malaysia, and as this public policy
ground is recognised as valid ground of ‘passive remedy’ irrespective
of the schools of thought on this topic, it is not necessary for this Court
to delve further into the question of what should be the extent of co-
existence of ‘active remedy’ and ‘passive remedy’ in Malaysia. For the
purposes of the present suit, suffice it be said that public policy is a
38
 valid ground of ‘passive remedy’ to oppose the recognition and
enforcement of foreign arbitral awards under section 39 of our
Arbitration Act 2005.

31. Yet another fundamental feature of arbitration law and practice is that
when the sovereign States negotiated the UNCITRAL Model Law on
Arbitration, there were initial resistance by quite a number of countries
to accept recognition of foreign arbitral awards where the seat is
outside their national territories and the applicable substantive law of
the arbitration is different from the local laws. Such unconditional
recognition of foreign arbitral award was perceived by many as
excessive surrender of the national sovereignty over the applicable
laws and enforcement of judgment to foreign arbitral tribunals. After
rounds of negotiations and give-and-take, the final draft approved in
the UNCITRAL Model Law recommended inter alia that the
enforcement of arbitral awards would be reciprocal between the
Convention countries and the recognition and enforcement of foreign
arbitral awards will be subject to the reservation of the local court’s
jurisdiction to refuse recognition in cases where the arbitral award is
contrary to the public policy of the country or its subject-matter is not
arbitrable under the laws of that country . With this right of reservation
to refuse recognition of foreign arbitral awards, the UNCITRAL Model
Law of Arbitration became widely accepted by Convention countries
including Malaysia. In Malaysia, we have paragraph 39(1)(b)
reservation of our national sovereignty over foreign arbitral award by
conferring upon our courts the discretion to refuse recognition of
foreign arbitral awards on grounds including “if the High Court finds
that— (i) the subject-matter of the dispute is not capable of settlement
by arbitration under the laws of Malaysia; or (ii) the award is in conflict
with the public policy of Malaysia”. As explained in the immediately
39
 foregoing paragraph, this public policy ground for opposing recognition
and enforcement by way of ‘passive remedy’ is universally-recognised.

Interpretation of the Relevant Statutory Provisions

32. With abovementioned principles, fundamental features and concepts

in mind, we shall now proceed to discuss and analyse the parties’
respective submissions and to interpret the statutory provisions and
the cited judgments.

33. Section 37 of Arbitration Act 2005 (setting aside of awards) apply only
to arbitral awards where the seat of arbitration is within Malaysia (“local
awards”). Sections 38 and 39 of the Arbitration Act 2005 (recognition
and refusing recognition) apply to both local arbitral awards and
foreign arbitral awards: see the provisions and analysis in paragraphs
25 to 28 above.

34. In section 39(1) of the Arbitration Act 2005, the word “request” is used
to connote a party’s request to refuse recognition or enforcement. The
word “request” is also used in section 35 and 37(4) to connote a party’s
request for interpretation of award or supplemental award or correction
of award. The word “request” is also used in other provisions of the
same Act, including –

(a) subsection 13(6) : a party’s request to the Director of AIAC for

appointment of arbitrator;
(b) subsection 32(1) : request to record the settlement in the form of
an award;
(c) subsection 37(6): a party’s request to adjourn the challenge
proceeding; and

40
 (d) subsection 44(1)(b) : request the arbitrator to tax the costs of
arbitration;

35. In the Arbitration Act 2005, the words “apply” and “application” to the
High Court are used in many sections including –

(a) section 37 : application to set aside local awards;

(b) section 38 : application by the winning party for recognition and

enforcement of arbitral awards, local or foreign;

(c) section 39(2) : “If an application for setting aside or suspension

of an award has been made to the High Court on the grounds
referred to in subparagraph (1)(a)(vii).”

36. The use of the words “request” in subsection 39(1) coupled with
“application” in subsection 39(2) in the Arbitration Act 2005 which Act
combines the local awards and foreign awards in the substantive
sections without clearly segregating them except by general provisions
in section 3(2) and 3(3) at the front part of the Act which is rather
distanced from the substantive sections have proved to be a source of
confusion and much difficulty in interpretation unless one constantly
bears in mind the fundamental features of arbitration law and practice
as summarized in paragraphs 25 to 31 above.

37. Section 39 provides for two (2) broad categories of situations when an
arbitral awards, be they local awards or foreign awards, are to be
refused recognition or enforcement by the Malaysian courts. These
tow (2) broad categories are both to be at the request of the party
against whom the recognition or enforcement is sought, and the
41
modes the Court will handle such request appear to be different, as
shown from the relevant words of section 39(1) reproduced below:

“39(1) Recognition or enforcement of an award, irrespective of

the State in which it was made, may be refused only at the request of
the party against whom it is invoked –
(a) where that party provides to the High Court proof that –
(i) ……
(ii) ……
(iii) ……
(iv) …….

(b) if the High Court finds that –

(i) the award of the dispute is not capable of settlement by
arbitration under the laws of Malaysia, or
(ii) the award is in conflict with the public policy of Malaysia.

Sub-paragraphs (b)(i) and (b)(ii) of section 39 relate to matters of

Malaysian law, and the requesting party’s proof is not necessary,
although in practice the requesting party will almost invariably put
forward his proof and arguments to persuade the Court for a case
for refusal of recognition or enforcement. Nevertheless, if the
requesting party neglects to provide proof or arguments on the law
or public policy of Malaysia, the Court on its own volition may still
refuse recognition or enforcement if the Court finds that the subject
matter of the award is not arbitrable under Malaysia laws or the
award is in conflict with the public policy of Malaysia. This is also
consistent with the principle decided by the Courts that where a
matter concerns public policy (such as res judicata), the Court can
decide on it although it is not pleaded: see the judgment of the
42
 Supreme Court in Asia Commercial Finance Bhd v. Kawal Teliti
Sdn Bhd [1995] 3 CLJ 783 where the Supreme Court approved the
principle that res judicata may be relied upon even if it is not pleaded
because it is a matter of public policy that no re-litigation should be
entertained. In the words of the Supreme Court at page 795:
“Another source of small confusion is the rule that generally an
estoppel, of which an estoppel per rem judicatum is a kind, as the
name implies, has to be pleaded. But in Superintendent Pudu Prison
v. Sim Kie Chong [1986 CLJ 256[1986] 1 MLJ 494, 498,
Abdoolcader, SCJ, held to the effect that the Court has the inherent
jurisdiction to dismiss an action by applying the doctrine of res
judicata against a party even if it has not been pleaded. We venture
to think the reason for the ratio is that an estoppel or exclusion of
evidence is based on a question of public policy ie. in this case, the
question of public policy that there should be finality in litigation, is
more vigorous in excluding evidence and need not be pleaded,
unlike an ordinary estoppel which should be pleaded.”

As the Legislature is presumed to know the law as at the date of

passing the statute, it is reasonably safe to interpret the Legislature
choice of using the words “if the Court finds that” in paragraph (b)(ii)
in the context of public policy and non-arbitrability in the same sense
as that propounded by the apex courts then in Superintendent of
Pudu Prison v. Sim Kie Chon (No. 2) and in Asia Commercial
Finance Bhd v. Kawal Teliti Sdn Bhd, namely, on a matter of
public policy, the Court can take judicial notice and make finding on
it even if the parties do not prove them to the Court.

38. On the mode of application, section 50 of the Arbitration Act 2005

specifically provides that “Any application to the High Court under this
43
 Act shall be by an originating summons as provided in the Rules of
High Court 1980,” now Rules of Court 2012. In contrast, wherever the
2005 Act uses the word “request” there is no statutory provision to
require that such request be made by way of an originating summons.
Even where a statute uses the word “application” to the High Court
without specifying any particular mode of application, such application
can be made by a notice of application in a pending suit or action: O.32
r.1 of Rules of Court 2012. It is also settled practice that some types
of applications can be made orally or informally in a pending suit or
action, and examples include (1) oral application for minor
amendment; (2) oral application for extension of time to serve
pleadings or submissions; (3) oral applications for directions or orders
at case management sessions; (4) oral application for withdrawal of
actions; (5) oral application for variation of interlocutory orders; etc.
Such being the position, it is difficult to conceive the use of word
“request” in subsection 39(1) of the 2005 Act as imposing a mandatory
obligation upon the requesting party to make a formal written
application by way of an originating summons to oppose the
opposite party’s application for recognition or enforcement of an
arbitral award in a pending suit or action.

39. Sub-section 39(2) with the expression “if an application for setting
aside or suspension of an award has been made to the High Court on
the grounds referred to in subparagraph 1(a)(vii)” –

(1) does not apply to a foreign arbitral award because the High Court
(i.e. the High Court of Malaya and the High Court of Sabah and
Sarawak, as defined in section 3 of the Act) has no jurisdiction
to hear or decide on any application to set aside a foreign arbitral
award : see paragraphs 25 to 31 above);
44
 (2) cross-refers to sub-paragraph 1(a)(vii) wherein the relevant part
stipulates as “the award .. has been set aside or suspended by
a court of the country in which, or under the law of which, that
award was made” – as the Malaysian courts have no jurisdiction
to set aside or suspend a foreign arbitral award, this
subparagraph 1(a)(vii) is only operative as applicable to local
awards (i.e. awards where the seat of arbitration is within
Malaysia);

(3) the specific provision on the High Court’s power, on setting aside
of local awards is in section 37. If subsection 39(2) were to make
a simple cross-reference to section 37 instead of the otiose
cross-reference to subparagraph 1(a)(vii) of section 39, there
would probably be no confusion or misinterpretation of the same.
This is perhaps the result of combining section 39’s applicability
to both local awards and foreign awards while also trying to
segregate part of them as applicable to only local awards.
Brevity of words in the drafting process has led to this difficult
and confusing state of affairs in interpretation of section 39.
Fortunately for our present case involving a foreign arbitral
award, both subsection 39(2) and subparagraph 39(1)(a)(vii) do
not apply to the foreign arbitral award here. This non-
applicability of both subsection 39(2) and subparagraph
39(1)(a)(vii) has made the task of interpretation and application
to the facts of the present case slightly easier, as compared with
applicability of the said provisions to local arbitral awards.

40. As both subsection 39(2) and subparagraph 39(1)(a)(vii) have been

ruled out due to their non-applicability to the foreign arbitral award
45
 here, the said provisions should not be allowed to govern or control
the meaning of “request” in subsection 39(1) in the context of a foreign
arbitral award. As such, the relevant and applicable operative words of
subsection 39(1) are as follows :

“39(1) Recognition or enforcement of an award, irrespective of

the State in which it was made, may be refused only at the request of
the party against whom it is invoked –
(a) where that party provides to the High Court proof that –
(i) ……
(ii) ……
(iii) ……
(iv) …….

(b) if the High Court finds that –

(i) the award of the dispute is not capable of settlement by
arbitration under the laws of Malaysia, or
(ii) the award is in conflict with the public policy of Malaysia.”

41. Applying the principle of interpretation decided by our Federal Court in

Tebin bin Postapa [as administrator of the estate of Haji Mostapa
bin Asan, deceased] v. Hulba-Danyal bin Balai & Sophee Sulong
bin Balia [as joint administrators of the estate of Balia bin Munir,
deceased [as stated in paragraph 20 above] and our Supreme Court
in Foo Loke Ying [as stated in subparagraphs 21(a) to 21(c) above],
this Court finds and concludes that a party who requests for refusal of
recognition or enforcement of a foreign arbitral award in the High Court
may put forward his request by way of affidavit proof and submissions
[if he relies on one or more limbs of paragraph 39(1)(a)] or by way of
submissions [if he relies only on either of the limbs of paragraph
46
 39(1)(b)]. Accordingly, a party who requests for refusal of recognition
or enforcement of a foreign arbitrator award in Malaysia does not have
to file a separate originating process by way of originating summons
to oppose an existing application for recognition or enforcement of the
foreign arbitral award in a pending suit or action.

42. The above mentioned interpretation of the relevant sections of the

Arbitration Act 2005 is also consistent with, and is further reinforced
by, the provisions of O.69 r.2, 4 and 5 of the Rules of Court 2012
quoted in paragraph 22 above. In O.69 r.2(1) of Rules of Court 2012,
“arbitration claim” is defined to mean “application to the Court” under
the 2005 Act”, and the specific items enumerated thereunder
expressly mention a claim to – (i) set aside an award under section 37
of the 2005 Act; ….. (k) enforce an award under section 38 of the Act”,
with the mode of application stipulated in r. 4(1) as an originating
summons – similar to section 50 of the 2005 Act. A request for refusal
of recognition or enforcement of award under section 39(1) of the 2005
Act is excluded from the definition of “arbitration claim” in O.69 r. 2(1)
of the Rules of Courts 2012.

43. The abovementioned interpretation of the statute is also consistent

with the purpose of the relevant statutory provisions. The actual words
used in subsection 39(4) of the Arbitration Act 2005 are as follows:

“39(2) If an application for setting aside or suspension of an

award has been made to the High Court on the grounds referred
to in subparagraph (1) (a)(vii), the High Court may, if it considers it
proper, adjourn its decision and may also, on the application of
the party claiming recognition or enforcement of the award, order
the other party to provide appropriate security.”
47
 Following the principles of statutory interpretation laid down in section
17A of the Interpretation Act to give effect to the purpose of the
statutory provision, it can be seen from the express words that the
purpose of subsection 39(2) is to confer upon the High Court a
discretionary power to adjourn its decision or to order the respondent
to provide appropriate security pending the High Court’s hearing and
disposal of an application for setting aside or suspension of an award.
The specific grounds stipulated in subparagraph (1)(a)(vii) are “the
award has not yet become binding on the parties or has been set
aside or suspended by a court of the country in which, or under
the law of which, that award was made”. Reading subparagraph
39(1)(a)(vii) together with the opening part of subsection 39(2) which
stipulates “If an application for setting aside or suspension of an
award has been made to the High Court on the grounds referred
to in subparagraph (1) (a)(vii)”, this means that in an application to
the High Court for setting aside or suspension of a local award on the
specific grounds stated in subparagraph (1)(a)(vii). This is because
the High Court has no jurisdiction to entertain any application to set
aside or suspend a foreign award. This interpretation will give effect to
the purpose of subsection 39(2). It is not consistent with the principles
of statutory interpretation to stretch the words in subsection 39(2) to
the extent of holding that the said subsection has laid down an
additional ground and basis for making an application for setting aside
or suspending a local award under subparagraph 39(1)(a)(vii) over
and above the grounds specified in section 37 of the 2005 Act.

44. In the considered view of this Court, an interpretation of the statutory

provisions which sustains the Plaintiff/Envac’s objection on the
preliminary point would involve an interpretation of some words in the
48
 statute in isolation and out of the legislative context of the Arbitration
Act 2005 and also contradictory to the fundamental features of the
arbitration law and practice as summarized in paragraphs 25 to 31
above. Moreover, that would also be tantamount to an erroneous
statutory interpretation which contravenes the well-recognised
principles of statutory interpretation as summarized in paragraps 20
and 21 above.

45. In line with the fundamental features of the arbitration law and practice,
Lee Swee Seng J. (now JCA) in Kejuruteraan Bintai Kindenko Sdn
Bhd v. Serdang Baru Properties Sdn Bhd & Anor Case [2018] 2
MLJ 706, [2018] 1 CLJ 369 has explained the section 38 application
to set aside as “active remedy” and the section 39 request for refusal
of recognition or enforcement as “passive remedy” in the following
parts of the judgment:

“[18] There is no good reason why a party that has not applied to set
aside an award under s. 37 or refer a question of law under s. 42 may
not at the stage of enforcement of the award raise the grounds listed
under s. 39(1) to oppose enforcement of the award.

[19] As the award was against the defendant as claimant in the

arbitration, the claimant was well entitled to apply to set aside the
award under s. 37 or refer a question of law under s. 42 at least with
respect to pre-award interest but it did not do so.

[20] The plaintiff as respondent in the arbitration did apply to vary the
award under s. 42 but that was not on the point of the power of the
arbitrator to award pre-award interest but rather on the award of LAD
without the need to prove loss but by applying the agreed formula for
49
the LAD. Indeed it is not for the plaintiff to raise the issue of pre-award
interest as it is a point in favour of the plaintiff whether on the smaller
sum as awarded by the learned arbitrator or the much bigger sum as
varied by this court.

[21] The question then is whether the defendant as claimant in the

arbitration may raise this now in opposing the recognition and
enforcement of the award.

[22] The fact that Parliament had allowed the same grounds under a
setting aside of an award under s. 37(1) to be repeated in an
application to oppose recognition and enforcement under s.
39(1) would mean that Parliament does not consider the same
grounds to be redundant.

[23] Granted, in a domestic arbitration, both an application for setting

aside under s. 37 and also a corresponding application under s. 38 of
the AA 2005 to recognise and enforce the award, generally the court
would hear both applications together as one would be a flip side of
the other in that if the award is set aside then correspondingly it will
not be enforced and conversely if not set aside it would generally be
enforced.

[24] However, in the case of an international arbitration, the setting

aside is at the court where the seat of arbitration is. In the case of an
international arbitration the seat of arbitration may well be different
from the jurisdiction where a party may want to enforce an award in its
favour. An award for instance may be against the public policy of the
State where the award is sought to be enforced though the same
award is not successfully set aside by the court where the seat of
arbitration is.

50
[25] Likewise whilst an application for setting aside may not be made
after the expiry of 90 days from the date on which the party making the
application had received the award as provided under s. 37(4) of the
AA 2005 there is no such time frame for the enforcement of an award
by way of registering it as a judgment of the court under s. 38 of the
AA 2005. This is understandable and the enforcement would normally
be applied for in the State where the award debtor has assets to be
attached.

[26] As both ss. 37 and 38 of the AA 2005 are applicable to domestic

as well as international arbitration it is difficult to say that a ground that
could be raised in a setting aside of an award if not raised, cannot be
so raised for the first time in opposing an application for recognition
and enforcement of the award.

[27] Our Supreme Court in State Government of Sarawak v. Chin Hwa

Engineering Development Co [1995] 4 CLJ 1; [1995] 3 MLJ 237 had
recognised passive remedy even under the old Arbitration Act 1952.
His Lordship Edgar Joseph Jr FCJ observed at p. 8 (CLJ); p. 245 (MLJ)
as follows:

We agree, that in certain circumstances, a party may avail himself

of a passive remedy by which is meant he does not take the
initiative to attack an award, but simply waits until his opponent
seeks to enforce the award by action or summary process, when
he resists enforcement. Mustill and Boyd on Commercial
Arbitration (2nd Ed) at p 546 have instanced two situations when
the passive remedy would be available; namely: (1) where the
award is so defective in form or substance that it is incapable of
enforcement; (2) where the whole or part of the award is ineffective,

51
 on the ground that the relief granted lies outside the jurisdiction of
the arbitrator.

[28] The Singapore Court of Appeal wrestled with this issue of

"passive remedy" in PT First Media TBK v. Astro Nusantara
International BV and Ors [2013] SGCA 57; [2014] 1 SLR 372. "Active
remedy" is understood to mean an award debtor applying to set aside
an award and "passive remedy" as in an award debtor resisting or
opposing an application by an award creditor to recognise and enforce
the award. It was explained thus in the award by Sundaresh Menon
CJ as follows:

38. Thus, under the 1950 EAA, an award debtor had two options
to avoid the consequences of an award: (a) the active remedy of
setting aside under s. 23; or (b) the passive remedy of resisting
enforcement under s. 26. This is buttressed by Sir Michael Mustill
and Stewart Boyd, The Law and Practice of Commercial Arbitration
in England (Butterworths, 1982) ("Mustill & Boyd"), where the
authors recognised that there are two categories of remedies
available after an award has been released. They termed these two
categories as "passive remedies" and "active remedies" and
described their operation in the following terms (at p 489):

A party avails himself of a passive remedy when he does not

himself take any initiative to attack the award, but simply
waits until his opponent seeks to enforce the award by
action or summary process, and then relies upon his matter of
complaint as a ground why the Court should refuse
enforcement. (emphasis added)

52
 39. The authors' commentary (at p. 488) on the options available
to parties with jurisdictional objections is remarkably on point:

Jurisdictional problems

If concerned with the existence or continued validity of the

arbitration agreement, the validity of the notice to arbitrate or
the qualifications of the arbitrator, (a party may) issue an
originating summons or a declaration. Alternatively, (that party
may) wait until after the award (has been published) and then
set aside the award or raise the objection as a ground for
resisting enforcement. (emphasis added)

40. If the system of "choice of remedies" is to be interpreted as one

which permits parties to defend against an award passively by
seeking to resist its recognition and enforcement in the enforcing
court even though no active attack had been taken against the
award, which is exactly how both Mr Landau and Mr Joseph
understood it and how we saw it, it is evident that the features of
this system were already part of English arbitration law by the
1970s at the latest.

[29] In Singapore, international arbitration is governed by the

International Arbitration Act (Cap 143A, 2002 Rev Ed) ("IAA") wherein
s. 3 provides as follows:

3 - (1) Subject to this Act, the Model Law, with the exception of
Chapter VIII thereof, shall have the force of law in Singapore.

[30] The "Model Law" referred to is the Model Law on International

Commercial Arbitration adopted by the United Nations Commission on
International Trade Law ("the Model Law"). Chapter VIII of the Model

53
Law is where the various grounds for refusing recognition or
enforcement of the arbitral award are set out in art. 36 thereof which is
reproduced in our s. 39 of the AA 2005.

[31] Their s. 19 on the enforcement of awards merely states that leave

of the High Court is required for its enforcement as a judgment of the
court. It is the same as our s. 27 of our old Arbitration Act 1952 and s.
26 of the English Arbitration Act 1950. It reads:

Enforcement of awards

19. An award on an arbitration agreement may, by leave of the High

Court or a Judge thereof, be enforced in the same manner as a
judgment or an order to the same effect and, where leave is so
given, judgment may be entered in terms of the award.

[32] The Singapore Court of Appeal had to delve and dig deeply into
the legislative history of the IAA and the rationale for excluding the
application of Chapter VIII of the model law in coming to the conclusion
that the courts there would still refer to the grounds for resisting an
enforcement of an award as set out in art. 36 of the Model Law in
deciding whether or not leave to enforce the award as a judgment of
the court ought to be given. The Chief Justice of Singapore Sundaresh
Menon CJ concluded as follows:

84. As we have held, the content of the power to refuse

enforcement under s. 19 must be construed in accordance with the
purpose of the IAA which, as we have stated, is to embrace the
Model Law. Given that de-emphasising the seat of arbitration by
maintaining the award debtor's "choice of remedies" and alignment
with the grounds under the New York Convention are the pervading
themes under the enforcement regime of the Model Law, the most
54
 efficacious method of giving full effect to the Model Law philosophy
would, in our view, be to recognise that the same grounds for
resisting enforcement under Art. 36(1) are equally available to a
party resisting enforcement under s. 19 of the IAA.

[33] Quite obviously we do not have this problem as the whole of art.
36 of the Model Law is reproduced in our s. 39 of the AA 2005. The
reproduction in s. 39 following the same grounds in a setting aside of
an award under s. 37 cannot be for decorative purposes but for the
deliberate design of permitting the same grounds not raised because
there was no previous application to set aside under s. 37 to be raised
in resisting or opposing an application under s. 39 of the AA 2005. The
repetition of the same grounds has nothing to do with it being
redundant but everything to do with reiteration as in making those
same grounds available in resisting an enforcement application
under s. 39 of the AA 2005.

[34] One can appreciate that if a ground has been argued in a setting
aside application under s. 37 and the same ground is sought to be
argued under a subsequent s. 38 application in opposing an
enforcement of an award, then res judicata might well apply to prevent
the same ground from being ventilated again.”

46. The use of the terms “active remedy” in the context of application to
set aside awards and “passive remedy” in the context of opposing
recognition or enforcement by arbitration awards have been in widely-
accepted use and well-settled by various decided authorities and
textbook authors in Malaysia as well as outside Malaysia. Examples
include –

55
 (1) Sir Michael Mustill and Stewart Boyd, The Law and Practice of
Commercial Arbitration in England (Butterworths, 1982), cited
with approval by Edgar Joseph Jr SCJ in State Government of
Sarawak v. Chin Hwa Engineering Development Co [1995] 4
CLJ 1; [1995] 3 MLJ 237 and by Sundradesh Menon CJ in PT
First Media TBK v. Astro Nusantara International BV and
Ors [2013] SGCA 57; [2014] 1 SLR 372;

(2) Richard Garnet, Henry Gabrial, Jeff Waincymer & Judd Epstein,
A Practical Guide to International Commercial Arbitration, at
8. #1.20;

(3) Janab’s Key to ‘International Arbitration: Malaysian

Arbitration Act 2005;

(4) Nata Ghibradze in an article “Preclusion of Remedies Under

Article 16(3) of the UNCITRAL Model Law” published in Pace
International Law Review Volume 27 Issue 1, Commercial
Edition, Spring 2015.

47. In line with the fundamental features of arbitration law and practice,
the Courts in various cases have considered on merits the
respondents’ requests by way of affidavits and submissions in
opposition to the plaintiffs’ application for recognition and enforcement
of arbitral awards. These decided cases include the cases cited by
the Defendant herein and referred to in paragraphs 16(a) to 16(d)
above.

48. I have read in detail the two Federal Court cases cited by the Plaintiff
but I do not find any ratio decidendi in either of those cases which had
56
clearly and finally decided on the issue in this preliminary point as to
constitute a binding precedent upon this Court. In Siemens Industry
Software GMBH & Co KG [Germany] vs Jacob and Toaralf
Consulting Sdn Bhd & Ors [2020 MLJU 363] the question was
whether the Court should enter judgment on the arbitral award in terms
of the dispositive part of the arbitral award or in the entirety of the
award including the grounds, findings and reasons for the award. The
ratio decidendi of the Federal Court in Siemens Industry Software
case is that in entering a judgment on the arbitral award, the Court
should only record the dispositive part of the arbitral award but not the
other parts of the arbitral award which includes the findings, reasons
and grounds for the arbitrator’s decisions in the award. It is rather
puzzling how a practice of the courts in recording the dispositive part
of the arbitral awards which had been in existence for many decades
had to be questioned all the way to the Federal Court in that case
when, as held by the Federal Court, any attempt to record the entirety
of the arbitral awards would be contrary to the concept of privacy and
confidentiality in arbitrations; moreover, recording the entirety of the
arbitral awards as court judgments would certainly lead to much
confusing when these judgments recording the entirety of arbitral
awards are published in the law reports and erroneously quoted by
other lawyers subsequently as binding precedents as if these were the
courts’ own judgments. In the second Federal Court decision in CTI
Group INC v International Bulk Carriers SPA [2017] 9 CLJ 499
cited by the Plaintiff, the Federal Court was dealing with the ex parte
procedure for recognition of arbitral awards and the inter partes
procedure for setting aside such ex parte court order of recognition
under Order 69 of the Rules of Court 2012. In CTI Group case by the
Federal Court, the ratio decidendi of the Federal Court’s decision was
not on the question posed in the preliminary point herein. In the third
57
 Federal Court case of Lombard Commodities Ltd v. Alami
Vegetable Oil Products [2010] 2 MLJ 23, [2010] 1 CLJ 137 (which
was referred to in Jainab’s Key to International Arbitration: Malaysian
Arbitration Act 2005), the sole question posed before the Federal Court
was “Does the failure of the Yang di-Pertuan Agong to issue a Gazette
Notification pursuant to s. 2(2) of the CREFA declaring the UK to be a
party to the NYC render a Convention Award made in the UK
unenforceable in Malaysia, notwithstanding the fact that all the
conditions ordinarily required for the enforcement of the said Award
under CREFA have been satisfied?”, to which the Federal Court
answered in the negative and thereafter proceeded to grant
recognition of the foreign arbitral award in that case. As such, the ratio
decidendi of the Federal Court’s decision in Lombard Commodities
was not on the question posed in the preliminary point herein.

PROCESS UNDER SECTION 39 OF ARBITRATION ACT 2005

49. From the conclusion of this Court in the preliminary point as discussed
in paragraph 17 to 48 above, it has become unnecessary or irrelevant
for this Court to decide on the question whether the section 39 of
Arbitration Act 2005 involves a two-stage process or one-stage
process or both.

50. Nevertheless, since the parties have submitted at length on the

procedural process of section 39 and have referred to a number of
case authorities and the Plaintiff has taken this matter on appeal, it is
perhaps not otiose for this Court to analyse the parties’ submissions
and discuss the law on the procedural process under section 39 of the
Arbitration Act 2005.
58
51. For completeness and wholesome understanding of the procedural
processes relevant to this topic, reference has to be made to section
37 (application to set aside an award), section 38 (recognition and
enforcement of award) and section 39 (grounds of refusing recognition
or enforcement) of award in the Arbitration Act 2005 as well as O.69
rr.2, 4 and 5, of the Rules of Court 2012 on arbitration proceedings.

52. Section 37 (application to set aside an award) is only applicable to

award where the seat of arbitration is in Malaysia (i.e. local award),
and the Malaysian courts have no jurisdiction to hear or decide to set
aside an award where the seat of arbitration is outside Malaysia (i.e.
foreign award). An application to set aside a local award under section
37 is to be by way of an originating summons: section 50 of Arbitration
Act 2005. An application to set aside a local award is defined as an
“arbitration claim” in O.69 r. 2(1)(i) of Rules of Courts 2012. O.69 r.
4(1) of Rules of Courts 2012 provides generally that “An arbitration
claim under rule 2 or rule 3 may be made using the originating
summons procedure and Form 5 shall be filed in the High Court. An
arbitration claim originating summons shall - … (e) specify the
respondents on whom the arbitration claim originating summons is to
be served, stating their role in the arbitration.” O.69 r.4(3) provides
that “unless the Court orders otherwise, an arbitration claim originating
summons and the affidavit shall be served on the respondents
specified in subparagraph (1)(e) within thirty days from the date of
issue.” O.69 r. 4(4) provides: “Where relevant, rules 5 and 8 shall
additional apply.” Form 5 is an inter partes Originating Summons.
Form 6 is Ex Parte Originating Summons, but none of O.69 r.4, r.5 or
r.6 cross-refers to Form 6.

59
53. O.69 r.5 provides for the specific procedure of application to set aside
and award. O. 69 r. 5(5) provides that “The originating summons and
affidavit shall be served on each arbitrator and the respondents.”

54. O.69 r.8 provides for the specific procedure of application for
permission to enforce an award. O.69 r. 8(1) provides that “An
application for permission to enforce an award in the same manner as
a judgment or an order may be made without notice in an arbitration
claim originating summons”. O.69 r.8(4) provides that “The Court
may specify parties to the arbitration on whom the arbitration claim
originating summons shall be served.”

O.69 r. 8(7) and r.8(8) provide as follows:

“(7)Within fourteen days after service of the order giving permission
to enforce the award or, if the order is to be served out of the
jurisdiction, within such other period as the Court may set-
(a) the respondent may apply to set aside such order; and
(b) the award shall not be enforced until-
(i) after the expiration of that period; or
(ii) if the respondent applies within that period to set aside, until
after the application made by the respondent has been finally
disposed of.

(8) The order giving permission for enforcement shall contain a

statement of the right to make an application to set aside the order.”

55. O.69 r.9 provides as follows:

“Registration in High Court of foreign awards (O. 69, r. 9)
9. Where an award has, under the law in force in the place where
it was made become enforceable in the same manner as a judgment
60
 given by a Court in that place, an applicant may enforce the award in
the manner provided for under rule 8.”

56 It is settled law that the specific provisions of the statute supersede or

prevail over the general provisions in the statute.

57. In the premises, the procedure for recognition and enforcement of

award is primarily a two-stage process, subject to the Court’s
discretion to direct service upon the respondent which has the effect
of converting it into a one-stage process – as decided and explained
by the Federal Court in CTI Group Inc v. International Bulk Carriers
SPA [2017] 9 CLJ 499. The relevant part of the Federal Court’s
judgment in CTI Group Inc case are reproduced below:

“[1] The provisions on recognition and enforcement of arbitral

awards as contained in arts. 35 and 36 of the UNCITRAL Model
Law on International Commercial Arbitration have been
incorporated into ss. 38 and 39 of the 2005 Act. The procedure for
the purpose of recognition and enforcement of an arbitral award in
Malaysia is contained in O. 69 rr. 8 and 9 of the Rules of Court
2012 ('ROC'). Sections 38 and 39 of the 2005 Act read with O. 69
rr. 8 and 9 of the ROC, provide for a two-stage process: (i) the first
stage, an ex parte proceeding - but subject to the power of the
court as stipulated in O. 69 r. 8 requiring service of the arbitration
claim originating summons on a party to the arbitration. An ex
parte order giving permission to enforce an arbitral award is made
at this stage; and (ii) the second stage, an inter partes proceeding
during which the court deals with the application to set aside an ex
parte order giving leave to enforce an arbitral award. The
application must be made within the prescribed time after that order
61
 is served on the party against whom the order is made.
(paragraphs 56, 63, 64 & 66)
[5] The two-stage process for the enforcement of arbitral awards
as contained in ss. 38 and 39 of the 2005 Act (read with O. 69 r. 8
of the ROC) does not permit a party seeking to set aside an order
made under 38 to apply to set it aside under that very section on
the ground that there was no arbitration agreement in existence
between the parties. That party must apply to set aside the order
under s. 39. When the matter moves to the second stage under s.
39, the defendant can only apply to set aside the order made
under s. 38, upon any one or more of the grounds set out in s.
39 and no other. (paragraphs 105 & 106)”

58. In this context, it is important to note that –

(a) the statutory provisions in section 38 and 39 of the Arbitration

Act 2005 do not stipulate the procedure as a two-stage process
or one-stage process;

(b) it is the provisions in O.69 r.8 of the Rules of Courts 2012 which
stipulate that the procedure can be either a two-stage process or
one-stage process depending on the applicant’s choice and
subject to the High Court’s order, and it is provided to the
following effects :

(i) “An application for permission to enforce an award ….. may

be made without notice in an arbitration claim originating
summons” O.69r. 8(1);

62
(ii) O.69 r.8(1) by the use of word “may” gives the applicant the
choice of commencing his application by either ex parte
originating summons in Form 6 or inter partes originating
summons in Form 5;

(iii) If the applicant chooses to commence by ex parte

originating summons under O.69 r.8(1) in Form 6, the
enforcement application becomes a two-stage process –
this was what happened in CTI Group Inc. case;

(iv) However, the enforcement application can become a one-

stage process if –

(1) the Court orders the ex parte originating summons to

be served on the respondent (as is provided in O. 69 r.
8(4) and was noted in CTI Group Inc case); or

(2) the applicant chooses to a commence the enforcement

application by inter partes originating summons in Form
5 [see O.69 r. 8(1) “may” and O.69 r.4(3) and O.69
r.4(4)].

(v) As the application to set aside the Ex Parte Order is made

in a pending suit, the application is by Notice of Application:
O. 32 of Rules of Court 2012.

(vi) If the respondent fails or neglects to apply to set aside the

Ex Parte Order, the procedure of enforcement then reverted
to a one-stage process from the originally–intended two-
stage process, as the process would in such event ends with
the Ex Parte Order.
63
(vii) In CTI Group Inc case the Federal Court did not state that
all applications for enforcement of awards must invariably
be commenced by ex parte originating summonses;

(viii) As the specific provision in O.69 r.8(1) gives the applicant

the choice of commencing an enforcement application by ex
parte originating summons, it is till correct to say that the
O.69 r.8 procedure for enforcement of awards is primarily
a two-stage process subject to the power of the High Court
to order it to be served, thereby converting it into a one-
stage process, as described in CTI Group Inc;

(ix) In a two-stage process under O.69 r.8, the two stages

envisaged are –
(1) ex parte stage where the applicant may obtain an ex
parte order for enforcement [o.69 r.8(1) to (6)] and

(2) inter partes stage where the respondent, after being

served with ex parte enforcement order, applies to set aside
the ex parte enforcement order [o.69 r.8(7)].

(x) The application to set aside under O.69 r.8(7) is directed

against the ex parte Court Order which granted the ex
parte permission to enforce award, and it is not directed
against or for the purpose of setting aside the arbitral
award, An application to set aside an arbitral award must
be made to the Court having jurisdiction over the seat of
arbitration. Even after the ex parte Court Order (for
enforcement) has been set aside by the High Court here,

64
 the arbitral award remains intact and can be the subject of
enforcement applications in other Convention Countries.

59. In light of the above, it is improper and incorrect to say that by reason
of the two-stage process for enforcement application, the respondent
who opposes an application for enforcement must do so by making a
separate application by way of an originating summons, or that any
failure of the respondent to proceed by a separate originating
summons would be fatal to his rights under section 39(1) to oppose
the application for recognition and enforcement.

60. It can be clearly seen that no such procedural requirement or fatal

effect is expressly stipulated in either the Arbitration Act 2005 or O.69
of the ROC 2012.

61. Sustaining the Plaintiff’s procedural contention in the present case

would also lead to a very strange result whereby an express
requirement by court rules to make an application need only be
commenced by a less formal Notice of Application than an implied
requirement said to be imposed by the word “request”.

62. In any event, if perchance the Court is compelled or obliged to interpret

O.69 of Rules of Court 2012 as impliedly requiring the respondent to
oppose an enforcement application by making a separate application
by way of an originating summons any failure or neglect to adopt such
procedure by the respondent is not necessarily fatal to the
respondent’s right to oppose the application for enforcement of award
: see O.1A and O.2 r.1 and r.3 of the Rules of Court 2012. In the
present case, the Defendant’s affidavit and exhibits have clearly stated
its ground for opposing recognition and enforcement and the facts and
65
 evidence in support of such ground, and the Plaintiff has been given
plenty of opportunity to know and reply to the same. In the
circumstances, there is no miscarriage of justice which can be argued
as having allegedly been occasioned by the Defendant’s filing of
affidavit and exhibits in opposing recognition instead of filing a
separate originating summons.

63. We now turn to consider and analyse the judgment of Hamid Sultan
JCA in Alami Vegetable Oil Products Sdn Bhd v. Hafeez Iqbal Oil
& Ghee Industries (PVT) Ltd [2016] 7 CLJ 19, cited by the Plaintiff
in support of their arguments in our present case.

64. At the outset, it must be emphasized that Alami Vegetable Oil

Products case was in respect of recognition and enforcement of a
specie of local award, namely a domestic international award where
the seat of arbitration is in Malaysia. This is specifically stated in
paragraph [10] of the learned Judge’s judgment which reads as
follows:

“[1] The appellant/defendant appealed against the judgment of the

learned High Court Judge in respect of an application by the
respondent/plaintiff/claimant for two arbitration awards issued in
Malaysia, to be recognised and enforced as judgments, pursuant
to s. 38 of the Arbitration Act 2005 (AA 2005)”.

65. In contrast, the character of the arbitral award in our present case is
different, because what we have in the present case is a foreign
arbitral award where the seat of arbitration is Qatar, a foreign country.
The factual distinction is relevant and important here because the
Courts in Malaysia have no jurisdiction to hear and decide in an
66
 application to set aside a foreign arbitral award: see the analysis and
explanation in the paragraphs above, and subsection 39(2) of the
Arbitration 2005 Act which cross-refers to paragraph 39(1)(a )(vii) of
the same Act cannot operate vis-à-vis a foreign award. Therefore,
subsection 39(2) of the Arbitration Act 2005 is applicable to the local
award in Alami Vegetable Oil Products case but does not apply to
the foreign award in our present case. In the circumstances the case
of Alami Vegetable Oil Products can be distinguished from our
present case on the facts, and the dicta in the judgment in Alami
Vegetable Oil Products case are, according to the doctrine of stare
decisis, not binding on this Court in our present case with materially
different facts.

66. In Hafeez Iqbal Oil & Ghee Industries (PVT) Ltd v. Alami Vegetable
Oil Products Sdn Bhd [2018] 3 CLJ 635, Azimah Omar J. referred to
the Court of Appeal’s decision in Alami Vegetable Oil Products Sdn
Bhd v. Hafeez Iqbal Oil & Ghee Industries (PVT) Ltd [2016] 7 CLJ
19 and held as follows:

[50] Coming back to the issue of contravention of public policy, the

law requires the defendant to adduce proof that the award is in
conflict with the public policy of Malaysia. The defendant here has
clearly failed to prove the same. It is trite law that the contravention
of public policy argument ought not to be utilised as a I to reopen
settled matters in the arbitration. (See: i. Colliers International
Property Consultants (USA) v. Colliers Jordan Lee and Jaafar
(Malaysia) [2010] 1 LNS 636; [2010] MLJU 650; ii. Open Tyre Joint
Stock Company Efirnoye (“EFKO”) v. Alfa Trading Ltd [2012] 1 CLJ
323; [2012] 1 MLJ 685)

67
 [51] The defendant here did not make any application under s.
37(1)(a)(i) to (vi) or under (b)(ii) of the Act.
[52] This court agrees with the plaintiff’s submission that if the
defendant was indeed serious about their contention (that the final
appeal board had acted outside the terms of arbitration stipulated
in the plaintiff’s request for arbitration and/or contains decisions on
matters beyond the scope of the submission to arbitration and that
both the final award and final appeal award are in conflict with the
public policy of Malaysia) the defendant should have moved the
court under s. 37 of the Act to set aside the award which they failed
to do.
[53] The failure in applying to set aside the award under s. 37 the
Act on the same grounds now attempted to be raised under s. 39
the Act, leads to the inescapable conclusion that the issues raised
by the defendant in this application lacks bona fide intent and
obviously an afterthought.
[54] It is this court’s judgment that the defendant in the present
case has ultimately failed to discharge the burden of proof to prove
that the defendant’s challenges against the recognition under s. 38
of the Act falls within any of the circumstances under s. 39 of the
same Act”.

67. It is important to note that the case of Hafeez Iqbal Oil & Ghee
Industries (PVT) Ltd v. Alami Vegetable Oil Products Sdn Bhd
[2018] 3 CLJ 635 also relates to PORAM awards, which are domestic
international awards where the seat of arbitration is in Malaysia, and
are a specie of local awards. As such, that case can be distinguished
from the facts of our present case which involves a foreign award
where the seat of arbitration is in Qatar, a foreign country.

68
68. In In Hafeez Iqbal Oil & Ghee Industries (PVT) Ltd v. Alami
Vegetable Oil Products Sdn Bhd [2018] 3 CLJ 635, Azimah Omar J.
referred to the Federal Court’s decision in State Government of
Sarawak v. Chin Hwa Engineering Development Co. [1995] 3 MLJ
237 but did not discuss or analyse whether or not the law decided
therein still applies now. The relevant parts of Edgar Joseph Jr. FCJ’s
judgment in State Government of Sarawak v. Chin Hwa
Engineering Development Co. are reproduced below:
“By way of amplification, it was argued that the judge had
misdirected himself in holding, as he did in fact hold, that the
employer was precluded from challenging the validity of the award
for the first time, at the very late stage of enforcement proceedings
under s 27 of the Act, when it was open for it to have done so at a
much earlier stage, under s 24(2) of the Act or under O 69 r 2(3) of
the Rules of the High Court 1980. In support, our attention was
directed to the following passage in Commercial Arbitration by
Mustill and Boyd (2nd Ed) at p 546:
A party avails himself of a passive remedy does not himself
take the initiative to attack the award, but simply waits until
his opponent seeks to enforce the award by action or
summary process, and then relies upon his matter of
complaint as a ground why the court should refuse
enforcement.
It was implicit in the submissions of the Attorney General that what
he was contending for was a ruling by this court that the arbitration
clause – cl 43 – was not wide enough to confer jurisdiction upon
the arbitrator to determine the questions:
(1) whether the suspension of the contractor from future tendering,
until further notice, was unlawful; and

69
 (2) if so, what was the appropriate sum to award by way of
damages for wrongful suspension?
We agree, that in certain circumstances, a party may avail
himself of a passive remedy by which is meant he does not
take the initiative to attack an award, but simply waits until his
opponent seeks to enforce the award by action or summary
process, when he resists enforcement. Mustill and Boyd
on Commercial Arbitration (2nd Ed) at p 546 have instanced two
situations when the passive remedy would be available; namely:
(1) where the award is so defective in form or substance that it is
incapable of enforcement;
(2) where the whole or part of the award is ineffective, on the
ground that the relief granted lies outside the jurisdiction of the
arbitrator.
In the circumstances, we agree with the submission of the Attorney
General that it was open to the employer to have had recourse to
the passive remedy of resisting the enforcement proceedings
under s 27 of the Act by relying on its complaint that the arbitrator
had no jurisdiction to determine the validity of the suspension order
and, consequently, no jurisdiction to award damages for alleged
wrongful suspension, these being matters in dispute which were
outside the scope of cl 43 of the contract. Whether or not the
employer is entitled to succeed in this contention is, of course, a
separate matter, and it is to this question that we must now direct
our attention”

69. In State Government of Sarawak v. Chin Hwa Engineering

Development case, the Federal Court was referring to Mustill &
Boyd’s summary of the fundamental feature of arbitration law and
practice as at 1995. The fundamental feature of arbitration law and
70
 practice, which allowed a respondent to either resort to an active
remedy of applying to set aside and arbitral award or adopt a passive
remedy of waiting until the enforcement stage to oppose the
enforcement, was already in existence for many decades before 1995
both internationally and in Malaysia. Under the old Arbitration Act
1952, there was no express statutory provision for opposing the
enforcement application and there was no specific ground expressly
recognised by the statute for opposing the enforcement application.
Yet the Courts have recognized the respondent’s right to adopt the
passive remedy of opposing the enforcement application on certain
exceptional grounds. Under the old Arbitration Act 1952 the available
statutory grounds for challenging the arbitral award and for applying to
set aside the arbitral award were more extensive as they permitted the
case stated procedure which related to the substantive merits of the
arbitral award. The common law principles which permitted the setting
aside of awards on procedural grounds under the Old Arbitration Act
1952 were rather similar to the express statutory grounds for setting
aside awards under section 37 of our Arbitration Act 2005. Yet the
Federal Court in State Government of Sarawak v. Chin Hwa
Engineering Development accepted the principle that failure or
neglect on the part of the respondent to take the active remedy of
setting aside did not deny him the right to take the passive remedy of
opposing recognition and enforcement of award.

70. When our Legislature decided to adopt the UNCITRAL Model Law on
Arbitration as the model for drafting our new Arbitration Act 2005, our
Legislature intended to bring our arbitration law to be more in line with
the international arbitration law and practice : see The Government
of India v. Cairns Energy India [2014] 9 MLJ 149. As the co-
existence of active remedy (application to set aside awards) and
71
 passive remedy (waiting until enforcement application to oppose the
enforcement of awards) has been recognised internationally as well as
in Malaysia at the time of the enactment of the Arbitration Act 2005 as
a fundamental feature in the arbitration law and practice, it is highly
improbable that our Legislature in adopting UNCITRAL Model
Arbitration Law as the model for our Arbitration Act 2005 could have
intended to make a substantial departure from such fundamental
feature of international arbitration law and practice in the absence of
clear or express words to that effect.

71. A fortiori, in respect of a foreign award where the Malaysian courts

have no jurisdiction to entertain any application to set aside, any
omission or neglect on the part of the respondent to apply to set aside
the foreign award cannot be a ground to deny him of the right to
oppose the enforcement of foreign award under section 39 – the only
statutory right of recourse which the respondent has against a foreign
award in the Malaysian courts. In jurisprudence and common sense,
it is rather inconceivable how a respondent’s omission to do
something, which the statute disallows him from doing, can be held to
deny him the only right which the same statute expressly confers upon
him.

72. In the premises, it is the considered view of this Court that the co-
existence of active remedy (application to set aside an award) and
passive remedy (resisting the enforcement of an award) stated by
Edgar Joseph Jr SCJ in State Government of Sarawak v. Chin Hwa
Engineering Development and elucidated by Lee Swee Seng J. (now
JCA) in Kejuruteraan Bintai Kindenko Sdn Bhd v. Serdang Baru
Properties Sdn Bhd & Anor Case is still valid and relevant under our
Arbitration Act 2005 today, and that public policy as a ground for
72
 passive remedy can be raised by the Defendant in the present suit to
oppose the Plaintiff’s application for recognition and enforcement of a
foreign award. As explained, the facts of our present suit do not
necessitate any decision on the exact extent of the co-existence of
active remedy and passive remedy to be recognised in Malaysia in
respect of the other grounds of opposing recognition or enforcement
under subsection 39(1) of our 2005 Act.

73. In the premises, this Court has dismissed the Plaintiff/Envac’s objection
on the preliminary point

PUBLIC POLICY

74. Section 39 of the Arbitration Act 2005 provides that “recognition or

enforcement of an award … may be refused only at the request of the
party against whom it is invoked …. (b) if the High Court finds that …..
(ii) the award is in conflict with the public policy of Malaysia.”

75. In our present case, the Defendant by its affidavit and submissions has
requested this Court to refuse the recognition and enforcement of the
foreign Arbitral Award. In procedure, the Defendant has fulfilled the
procedural requirement of request under section 39(1) of our
Arbitration Act 2005.

76. The statutory expression “public policy of Malaysia” involves the

legislative recognition that the public policy of Malaysia on some
matters or issues may differ from the public policy of another foreign
country on such matters or issues.

73
77. This Court accepts and applies the concept of minimal court
intervention as stipulated in section 8 of our Arbitration Act 2005 in the
following words:
“No court shall intervene in matters governed by this Act except where
so provided in this Act.”

78. Subsection 39(1)(b)(ii) provides that recognition or enforcement may

be refused “if the Court finds that the award is in conflict with the public
policy of Malaysia.”

79. This Court also accepts and will apply the general principles regarding
public policy which have been laid down in the following case
authorities:

(1) Jan D Nul (M) Sdn Bhd & Anor v. Vincent Tan Chee Yioun &
Anor [2019] 2 MLJ 413 (Federal Court) in paragraphs [51], [53]
and [58] of the judgment :

“[51] A Guide to the UNCITRAL Model Law on International

Commercial Arbitration: Legislative History and
Commentary by Howard M Holtzmann and Joseph E Neuhaus
(Kluwer, 1989) had highlighted the term ‘public policy’ as
follows: ‘In discussing the term ‘public policy, it was understood
that it was not equivalent to the political stance or international
policies of a state but comprised the fundamental notions
and principles of justice. It was understood that the term
‘public policy’, which was used in the 1958 New York
Convention and many other treaties, covered fundamental
principles of law and justice in substantive as well as
procedural respects’.
74
…………
[53] The decision of the Singapore Court of Appeal in PT
Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1
SLR 597, provides a good guidance on the interpretation of the
term ‘public policy’ in an application to set aside an arbitral
award made by a tribunal, on the ground of a breach of the rule
of natural justice for being in conflict with the public policy. In
that case Chan SekKeong CJ (delivering the judgment of the
court) ruled:
Although the concept of public policy of the State is not
defined in the Act or the Model Law, the general consensus
of judicial and expert opinion is that public policy under the
Act encompasses a narrow scope. In our view, it should
only operate in instances where the upholding of an
arbitral award would ‘shock the conscience’ (see
Downer Connect (58) at (136), or is ‘clearly injurious to
the public good or … wholly offensive to the ordinary
reasonable and fully informed member of the public’
(see Deutsche Schachbau v Shell International
Petroleum Co Ltd [1987] 2 Lloyds Rep 246 at 254, per
Sir John Donaldson MR), or where it violates the
forum’s most basic notion of morality and justice:
see Parsons & Whittemore Overseas Co Inc
v. SocieteGeneraledeL’Industrie du Papier (RAKTA) 508 F
2d 969 (second Cir, 1974) at 974.
……………
[58] The scope of public policy ground for setting aside an
arbitral award could only be invoked in deserving case ie
in instances where it appears a violation of the most basic
notions of morality and justice. It covers fundamental
75
 principles of law and justice in substantive as well as
procedural respect. Instances where the upholding of an
arbitral award would shock the conscience, or clearly
injurious to the public good, or wholly offensive to the
ordinary reasonable and fully informed member of the
public, had been held by courts in various jurisdiction to
fall within the category of public policy ground for setting
aside an arbitral award. The court must adopt the principle as
laid down by Howard M Holtzmann and Joseph E Neuhans as
found in their commentary in A guide to the UNCITRAL Model
on International Commercial Arbitration: Legislative History and
Commentary ‘that the term ‘public policy’ which was used in the
1958 New York Convention and many other treaties, covered
fundamental principles of law and justice in substantive as well
as procedural respects’. The terms ‘patent injustice’ or
‘substantial injustice’ or ‘manifestly unlawful and
unconscionable’ as often used by the court in setting aside
arbitral awards, do not mean injustice which is more than de
minimis; what is required is that the injustice had real effect
and had prejudiced the basic right of the applicant
(see: Soh Beng Tee & Co Pte Ltd v Fairmount Development
Pte Ltd [2007] 3 SLR 86].

(2) Sui Southern Gas Co. Ltd v. Habibullah Coastal Power Co.
Pte Ltd [2010] 3 SLR 1, para [59] :
“[59] Although the concept of public policy of the State is not
defined in the Act or the Model Law, the general consensus of
judicial and expert opinion is that public policy under the Act
encompasses a narrow scope. In our view, it should only operate
in instances where the upholding of an arbitral award would
76
‘shock the conscience’ (see Downer Connect ([58] supra)
at [136]), or is ‘clearly injurious to the public good or … wholly
offensive to the ordinary reasonable and fully informed member
of the public’ (see Deutsche Schachbau v Shell International
Petroleum Co Ltd [1987] 2 Lloyds’ Rep 246 at 254, per Sir John
Donaldson MR), or where it violates the forum’s most basic
notion of morality and justice: see Parsons & Whittemore
Overseas Co Inc v SocieteGenerale de L’Industrie du Papier
(RAKTA) 508 F 2d, 969 (2nd Cir, 1974) at 974. This would be
consistent with the concept of public policy that can be
ascertained from the preparatory materials to the Model Law. As
was highlighted in the Commission Report (A/40/17), at para 297
(referred to in A Guide to the UNCITRAL Model Law on
International Commercial Arbitration: Legislative History and
Commentary by Howard M Holtzmann and Joseph E Neuhaus
(Kluwer, 1989) at 914):

In discussing the term ‘public policy’, it was understood that

it was not equivalent to the political stance or international
policies of a State but comprised the fundamental
notions and principles of justice … It was understood that
the term ‘public policy’, which was used in the 1958 New
York Convention and many other treaties, covered
fundamental principles of law and justice in substantive as
well as procedural respects. Thus, instances such as
corruption, bribery or fraud and similar serious cases would
constitute a ground for setting aside. [Court of Appeal’s
emphasis in PT Asuransi]

77
 [48] It is clear, therefore, that in order for SSGC to have
succeeded on the public policy argument, it had to cross a
very high threshold and demonstrate egregious
circumstances such as corruption, bribery or fraud,
which would violate the most basic notions of morality
and justice. Nothing of the sort had been pleaded or proved
by SSGC, and its ambiguous contention that the Award was
“perverse” or “irrational” could not, of itself, amount to a
breach of public policy.”

(3) Sigur Ros Sdn Bhd v. Master Mulia Sdn Bhd [2018] 3 MLJ
608 paragraph [32] & [33] :

“[32] This then makes the threshold to be met

somewhat high in that by its very nature, ‘it should be
immediately obvious or at least fairly rapidly apparent that
there has been such a breach or conflict with the public
policy of Malaysia … The Court must be compelled to agree
or that a strong case has been made out that the award
conflicts with the public policy of Malaysia. Otherwise, the
contractual arrangements of the parties must be
maintained’.
[33] Further, ‘it must be understood that the notion or
concept of public policy in arbitration is not one grounded in
public law, generally understood as
the Wednesbury principles. In other words, the award will
not be set aside simply because it is irrational or
unreasonable or one that is so irrational or unreasonable
that no reasonable person could have made such an award.
The concept of public policy must be one taken in the
78
 ‘higher sense, where some fundamental principle of law
and justice is engaged, some element of illegality,
where enforcement of the award involves clear injury to
public good or the ‘integrity of the Court’s process and
powers will thereby be abused’.” “[32] This then
makes the threshold to be met somewhat high in that by
its very nature, ‘it should be immediately obvious or at least
fairly rapidly apparent that there has been such a breach or
conflict with the public policy of Malaysia … The Court must
be compelled to agree or that a strong case has been made
out that the award conflicts with the public policy of
Malaysia. Otherwise, the contractual arrangements of the
parties must be maintained’.
[33] Further, ‘it must be understood that the notion or
concept of public policy in arbitration is not one grounded in
public law, generally understood as
the Wednesbury principles. In other words, the award will
not be set aside simply because it is irrational or
unreasonable or one that is so irrational or unreasonable
that no reasonable person could have made such an award.
The concept of public policy must be one taken in the
‘higher sense, where some fundamental principle of law
and justice is engaged, some element of illegality,
where enforcement of the award involves clear injury to
public good or the ‘integrity of the Court’s process and
powers will thereby be abused’.”

(4) The Government of India v. Cairns [2014] 9 MLJ 149

paragraph [154], [156] and [157] :

79
“[154] …..as one which is in the 'higher sense', where some
fundamental principle of law and justice is engaged, some
element of illegality, where enforcement of the award involves
clear injury to public good or the 'integrity of the court's process
and powers will thereby be abused'..

[156] I appreciate the Court of Appeal did not finally define the
scope of public policy, nor did it have to in that case.
Nevertheless, it made those points including remarking that 'the
considerations of public policy could never be exhaustively
defined'; and that it favoured a narrower as opposed to wide
view of the compass of the words 'public policy'. In the context
of Malaysian law, it must be treated with caution and
construed narrowly with the court finding compelling or
strong reasons for intervention.

“[157] Lest it be misconstrued that the courts are adopting a

hands-off attitude when dealing with arbitration awards, it is in
fact the contrary. These minimalistic interventions go
towards supporting arbitration, giving healthy respect for
autonomy, confidentially, commerciality and a host of
multifarious reasons why many corporate entities opt for
arbitration in the first place. “[154] …..as one which is in the
'higher sense', where some fundamental principle of law and
justice is engaged, some element of illegality, where
enforcement of the award involves clear injury to public good or
the 'integrity of the court's process and powers will thereby be
abused'..

80
 [156] I appreciate the Court of Appeal did not finally define the
scope of public policy, nor did it have to in that case.
Nevertheless, it made those points including remarking that 'the
considerations of public policy could never be exhaustively
defined'; and that it favoured a narrower as opposed to wide
view of the compass of the words 'public policy'. In the context
of Malaysian law, it must be treated with caution and
construed narrowly with the court finding compelling or
strong reasons for intervention.

“[157] Lest it be misconstrued that the courts are adopting a

hands-off attitude when dealing with arbitration awards, it is in
fact the contrary. These minimalistic interventions go
towards supporting arbitration, giving healthy respect for
autonomy, confidentially, commerciality and a host of
multifarious reasons why many corporate entities opt for
arbitration in the first place.

DEFENDANT’S OBJECTION TO RECOGNITION AND

ENFORCEMENT

80. In our present case, the Defendant (Malaysian company) opposes the
application of the Plaintiff (Scandinavian company) for recognition and
enforcement of the foreign arbitral award because –

(1) the Defendant has paid the bulk of the total net awarded amount
to the Plaintiff;

81
 (2) the balance unpaid amount of QAR888,654.91 is being held
back on account of Qatari withholding tax pursuant to laws of
Qatar;

(3) despite repeated request, the Plaintiff has failed to obtain tax
clearance from the Qatari Tax Authority on release of the
balance unpaid amount; and

(4) under the laws of Qatar, it would be contravention of the tax laws
for the Defendant to pay the balance amount to the Plaintiff
(Scandinavian company resident outside Qatar) without the
written clearance certificate or official letter from the Qatari Tax
Authority, and doing so would also render the Defendant
(Malaysian company) liable to pay the balance amount as
withholding tax.

81. On the part of the Plaintiff, the Plaintiff insists that the balance unpaid
amount must be released to the Plaintiff irrespective of the
Defendant’s objection regarding Qatari withholding tax.

FACTS

82. In the present case, it is undisputed fact that –

(1) the Plaintiff is a Scandinavian company ordinarily resident in

Scandinavia;

(2) of the total net arbitral award sum, the bulk thereof has already
been paid by the Defendant to the Plaintiff;

82
 (3) only the balance amount of QAR888,654.91 has not been paid
by the Defendant to the Plaintiff.

83. According to the Defendant-

(1) Under the Qatar laws, the Defendant is required to retain
QAR888,654.91 as the Tax Retention Sum until the production
of a No Objection Letter for the Qatar Tax Authority for the
Plaintiff to receive the same : paragraph 9 and Exhibit “CLK-2”
to Defendant’s Affidavit in Reply;

(2) The Defendant had in compliance with Qatar Laws, specifically

asked the Plaintiff to produce a No Objection Letter from the
Qatar Tax Authority to enable the release of the Tax Retention
Sum to the Plaintiff. However, the Plaintiff has not made any
attempt to obtain the No Objection Letter and paragraph 10 of
Defendant’s Affidavit-In-Reply and Exhibit “CLK-3” thereto (e-
mails dated 30.01.2019 and 12.3.2019).

84. By letter dated 7.5.2019, the Plaintiff’s stated that there was no
obligation for the Plaintiff to provide any certification or letter in relation
to the so-called Withholding Tax and demanded for the payment of the
same : paragraph 12 of Defendant’s Affidavit-In-Reply and Exhibit “E”
to Plaintiff’s Affidavit-in-Support.

85. The Defendant’s solicitors by letter dated 13.5.2019 stated that the
Defendant was unable to make the payment of the Tax Retention Sum
as the released of the sum would place the Defendant in breach of the
Qatar Laws : paragraph 13 of Defendant’s Affidavit-In-Reply and
Exhibit “CLK-5” thereof.

83
 PARITIES’ CONTENTIONS ON TAX LAWS.

86. In Exhibit “CLK-2” to the Defendant’s Affidavit-In-Reply, the Defendant

produced a copy of the Circular No. 2/2011 issued under Qatar Laws.
The relevant parts of the Circular No. 2/2011 in paragraph 1(6) read
as follows:

“ CIRCULAR NO. 2/2011

Your Excellencies/the Ministers

Messrs / Heads of Government bodies and public authorities and
corporations
Messrs / Taxpayers and external auditors
Doha

Greetings,
In reference to the provisions of the Income Tax Law issued by way of
Law 21 of 2009, and particularly Articles 2, 3, 4, 11, 20 and 21 thereof,
kindly follow the following instructions when making payments under
contract wholly or partly carried out in the State:

First : Where payments are made to taxpayers who are residents

in the State

1. In the case of companies

A company shall be resident if it is incorporated in the State or has its
place of effective management therein. This can be confirmed through
the data in the extract of the Commercial Register (which must be
valid). The company will, then, have the Qatari nationality and will take
one of the forms provided for in the Commercial Company Law issued

84
by way of Law 5 of 2002 (joint company, limited liability company,
shareholding company, etc.).

Where the payments are made in execution of a contract concluded

with a resident company as described above, the last payment shall
be made upon the presentation of a valid tax card by the company.
The issuance of a tax assessment or a non-objection letter by the
Public Revenues and Taxes Department is not required.

2. In the case of natural persons

Where the payments are made to a natural person resident in the State
and holding the Qatari nationality (or the nationality of another State of
the Cooperation Council for the Arab States of the Gulf) and carries
on an activity in his name (in a sole proprietorship), the last payment
shall be made upon the presentation of a valid tax card.

Second : Where payments are made to taxpayers who are

residents in the State

1. In the case of taxpayers registered in the Commercial

Register

The extract of the Commercial Register (which must be valid)

provides, in this case, that the taxpayer has a foreign nationality and
takes the form of a branch.

Where the payments are made to a branch of a foreign taxpayer, the

following must be observed:

a) If the branch is permanent in the State

85
This can be confirmed in the extract of the Commercial Register
through the existence of a fixed address in the State and also through
the absence of a link between the activity of the branch and a specific
period, contract or project.

In this case, the last payment shall be made upon the presentation of
a valid tax card by the branch. The issuance of a tax assessment or
a non-objection letter by the Public Revenues and Taxes Department
is not required.

b) If the branch is not permanent in the State and the

period of its activity is at least one year

Where the extract of the Commercial Register provides that the activity
of the branch is linked to a specific period, contract or project and the
period of activity is at least one year, the last payment of the contract
or 3% of its value after deduction of supply and works carried out
abroad, whichever is higher, must be retained. It will be released
only after the presentation by the taxpayer of a non-objection
letter issued by the Department.

The retention shall apply only to the last payment (or 3% of the contract
value) shall be made upon the presentation of a valid tax card by the
taxpayer. The issuance of a tax assessment of a non-objection letter
by the Public Revenues and Taxes Department is not required.

2. In the case of taxpayers not registered in the

Commercial Register or registered for an activity or a
project which lasts less than one year

86
Where the payments are made to a non-resident taxpayer who is not
registered in the Commercial Register or who is registered therein for
a contract, an activity or a project the period of which is less than one
year, then the payments shall be subject to withholding tax in
accordance with the provisions of Article 11/2 of the above mentioned
law, and a certificate to this effect shall be delivered to the taxpayer in
accordance with Article 20 of the same law.

Taxpayers who have a permanent establishment in the State may

submit to the Department a request for refund of the tax withheld
unduly.

Third : Where the payments are made to taxpayers registered in

the Qatar Financial Center

In this case, the amount due (including the last payment) shall be paid
upon the presentation by the taxpayer of a valid certificate issued by
the competent authorities of the Qatar Financial Center stating that the
taxpayer is registered in the Center.

Finally, the Ministry reminds all parties that make payments to

taxpayers as envisaged above, including Ministries, Government
bodies and public authorities and corporations, that they are required
to provide the Public Revenues and Tax Department in the Ministry of
the details of the contracts they conclude in accordance with the
conditions of Article 38 of the Executive Regulations of the above
mentioned law (copy of which is enclosed).

This circular repeals any contrary provision in previous circulars.

Your faithfully,

87
 Yousef Hussain Kamal
Minister of Economy and Finance ”

87. In paragraph 9 of the Plaintiff’s Affidavit-In-Reply, the Plaintiff’s

deponent replied as follows:

“9. The Plaintiff denies paragraphs 16 to 18 Defendant’s Affidavit

and state that the Plaintiff is advised by its solicitors and which
advice the Plaintiff verily believes to be true that the Arbitrator
had dealt explicitly with the issue of the withholding tax in
paragraphs 442 to 455 (at pages 109 to 112) of the Arbitral
Award found in Exhibit “D” of the Plaintiff’s 1st Affidavit and
decided inter alia that:

i. However, the 1993 Tax Law which requires the

Respondent to withhold the final payment due to the
Claimant was expressly repealed upon enactment of Law
No. 21 of 2009 (“the 2009 Tax Law”) [para 446];

ii. The withholding of tax is applicable for all services

rendered on or after 1 Januari 2010. [para 449]

iii. Given that the amount of QAR844,662.91 was deducted

by the Respondent, the Tribunal is of the view that the
burden of proof to demonstrate that this amount was rightly
withheld rests on the Respondent. The Tribunal finds that
the Respondent has not met this burden. [para 450]

88
 iv. The Tribunal is also mindful of the fact that, under the
terms of the Subcontract, the Works of the Claimant were
completed by 21 October 2009 ie over two months prior to
the entry into force of the 2009 Tax Law. As noted
elsewhere in this Award, the Respondent extended the
Subcontract Milestones, and in particular Milestone 3.4
until 20 October 2011. [para 454]

v. On the basis of the above, the Tribunal determines that the

Claimant is entitled to payment of the amount withheld of
QAR844,662.91. [para 455]

It is to be noted that the learned arbitrator did not decide to the effect
that there was no liability for withholding tax under the Qatar laws in
respect of the last payment to be made to the Plaintiff/Claimant.
Instead, the learned arbitrator avoided the issue on withholding tax
under Qatar laws by merely holding that the Defendant/Respondent
has failed to discharge the burden of proof in the arbitration that
withholding tax had to be retained under the Qatar laws.

88. The Plaintiff in its Affidavit-in-Reply contended as follows:

“13. In reply to paragraph 26 of the Defendant’s affidavit which is

denied, I state that the Arbitral Tribunal has decided that the
Plaintiff is entitled to the payment of the amount withheld and
consequently, the Defendant must pay the same.

14. Paragraph 27 of the Defendant’s Affidavit is denied. The Plaintiff

states that the Defendant has not taken steps to raised the issue
pertaining to the tax requirement of Qatar by way of a challenge
89
 to the Arbitral Award or otherwise and consequently is estopped
from contending that the sum of QAR888,54.91 is not payable.

16. Paragraphs 29 to 33 of the Defendant’s Affidavit are denied. I

state that :

16.1 The Defendant is not ready willing and able to pay the sum
of QAR888,654.91 despite the arbitrator’s decision that
such sum is payable and particularly since the award is
final and binding;

16.2 The Defendant is grabbing at straws in order to evade

compliance with the Arbitral Award by relying on a
purported tax requirement in Qatar that was repealed upon
enactment of Law No. 21 of 2009 and which was found by
the arbitrator to not apply to the contract between the
parties. Payment under a repealed foreign law that no
longer applies is not against public policy in Malaysia;

16.3 The Defendant now seeks to rely on Circular No. 2/2011

in relation to Income Tax 21 of 2009 which is a Ministerial
Decree of the Qatari Ministry of Economy and carries no
force of law or legal basis.

17. I state further that in the event the orders sought herein for the
recognition and enforcement of the Arbitral Award is not allowed,
the Plaintiff will suffer prejudice in that it will be prevented from
recovering the sums awarded to it under an Arbitral Award that
is now final and binding an which sums are held by the
Defendant for its benefit upon the Plaintiff having concluded its
90
 works. On the contrary, the Defendant will be unjustly enriched
in that it will benefit from the retention sums held for the benefit
of the Plaintiff relying on a Ministerial Decree of the Qatari
Ministry of Economy which is not issued by the tax authorities of
Qatar and which carries no force of law or legal basis.”

89. In the Defendant’s Further Affidavit-In-Reply, the Defendant replied as

follows:

(1) release of the Tax Retention Sum without a letter of no objection

from Qatari Tax Authority would place the Defendant in breach
of the Qatari tax laws : paragraph 6;

(2) the Arbitrator does not state anywhere in her decision that the
Plaintiff is precluded from paying tax under the contract, and as
such the issue of payment of tax by the Plaintiff under the terms
of the Subcontract remains very much alive and resolved to-date
: paragraph 7;

(3) ordering the Defendant to release the Tax Retention Amount

would be a breach of Malaysian public policy because it will force
the Defendant, a Malaysian entity, to commit an illegal act under
the Qatari tax laws, thereby exposing the Defendant to further
liabilities while allowing the Plaintiff, a foreign entity, to evade
Qatari tax laws : paragraph 8(i) of Defendant’s Further Affidavit-
In-Reply.

(4) The Defendant does not challenge the Award because it wishes
to comply with the Award, including the Tax Retention Amount
upon the Plaintiff’s production of No Objection Letter from the
91
 Qatari Tax Authorities : paragraph 9(i) of Defendant’s Further
Affidavit-In-Reply.

(5) If the Plaintiff takes the position that no tax is payable under
Qatari tax laws, if fails reason why the Plaintiff cannot get a letter
of no objection from the Qatari Tax Authority confirming the
same so as to facilitate the release of the Tax Retention Sum:
paragraph 9 (iii) of Defendant’s Further Affidavit-In-Reply.

90. In the Plaintiff’s 2nd Affidavit-In-Reply, the Plaintiff further contends

that:
“ 5. With reference to paragraph 6 of the Defendant’s 2nd Affidavit,
which is denied, I state that the dispute as regards tax was
determined by the Arbitral Tribunal and the award is final and
binding. The Defendant is precluded in law from imposing its
own conditions for payment of the sums ordered to be paid in
the award.

6. Paragraph 7 of the Defendant’s 2nd Affidavit is denied. The

Arbitral Tribunal dealt explicitly with the issue of the withholding
tax in paragraphs 442 to 455 (at pages 109 to 112) of the
Arbitral Award found in Exhibit “D” of the Plaintiff’s 1st Affidavit
and decided inter alia that the 1993 Tax Law was expressly
repealed upon enactment of Law No. 21 of 2009 (“the 2009
Tax Law”) [para 446] which applied to services rendered on or
after 1 January 2010. [para 449] and that in this case, the new
law was not applicable since the works herein was completed
by 21 October 2009.

92
 7. Save that the Defendant owes a remaining sum of QAR
888,654.91 to the Plaintiff, the rest of paragraph 8 of the
Defendant’s 2nd Affidavit is denied. I am advised by the
solicitors of the Plaintiff and which advise I verily believe to be
true that the Defendant has not adduced any evidence to show
that a demand has been made against it by the Qatari tax
authorities or that the purported tax is due and payable. Even
if there was such a liability, a breach of Qatari Law is not an
illegality in Malaysia and thus not against public policies in
Malaysia.”

91. The Plaintiff has taken objection to the opinion of Clyde & Co. which
was reproduced in part and with substantial parts thereof blackened
out: Exhibit “CLK-6”.

FINDINGS AND DECISION OF THIS COURT

92. In the entirety of the facts and circumstances of the present case, this
court finds that –

(1) the Defendant has established a strong prima facie case that it
would contravene the tax laws of Qatar if the Defendant releases
the balance QAR888,665.00 to the Plaintiff without a Letter of No
Objection from the Qatar tax authority;

(2) the tax law of Qatar is foreign law which is treated as a fact to be
proved;

93
 (3) although the Defendant has established a strong prima case of
contravention of Qatar tax law, the Plaintiff has not adduced
evidence of Qatar law expert or lawyer to rebut the prima facie
case;

(4) the evidence adduced by the parties, though establishing a

strong prima facie case of contravention of the Qatar tax law, is
not sufficient for this Court to make a specific finding of fact as to
whether the release of the unpaid balance QAR888,665 would
or would not contravene Qatar tax law;

(5) although the learned arbitrator has ruled in the Arbitration Award
that the balance amount should be paid by the Defendant to the
Plaintiff, the learned arbitrator has not made a specific decision
that no withholding tax was leviable or payable under the laws of
Qatar; in any event, neither the learned arbitrator’s ruling nor the
decision of this Court would be binding on the Qatar tax authority;
and

(6) neither the arbitrator’s ruling nor this Court’s decision on the
question regarding Qatar tax law will discharge the Defendant
from any liablility vis-à-vis the Qatar tax authority.

93. From the facts, circumstances and the findings in our present case,
this Court has come to the conclusion that –

(i) on the one hand, if this Court were to make an outright refusal to
recognize the foreign arbitral award for enforcement, this Court
would cross the permissible line of minimal intervention and

94
 contravene the legislative policy of readily accepting arbitral
awards for enforcement;

(ii) on the other hand, if this Court were to make an unconditional

order for recognition and enforcement as per the prayers sought
by the Plaintiff here, it would saddle the Court with the wrong
impression of condoning the evasion of foreign tax thereby
shocking the conscience, injurious to public good, offensive to
the informed members of the public or a clear injury to the
integrity of the court process, and therefore contrary to the public
policy of Malaysia.

94. In the entire circumstances of our present case, this Court has
concluded that there should be permission granted to the Plaintiff to
enforce the balance unpaid amount of QAR888,665 in the Award on
terms that would not be contrary to the public policy of Malaysia. The
public policy in this context is that in making court orders, the
Malaysian courts do not issue a court order which has the effect of
condoning a litigant’s evasion of foreign tax.

95. It is also to be noted that even if this Court were to uphold the Plaintiff’s
preliminary objection on the point of procedure, this Court in exercise
of discretion would still have come to the same decision there should
be permission granted to the Plaintiff to enforce the balance unpaid
amount of QAR888,665 in the Award on terms that would not be
contrary to the public policy of Malaysia. Irrespective of whether or not
there was compliance with procedure on the part of the Defendant,
once this Court has come to notice that granting permission to enforce
an award, be it local award or foreign award, in the terms as prayed
for by the Plaintiff would be contrary to the public policy of Malaysia,
95
 this Court has the discretion to grant the permission to enforce the
award in a manner which does not contradict the public policy of
Malaysia. The public policy in this context is that in making court
orders, the Malaysian courts do not issue a court order which has the
effect of condoning a litigant’s evasion of foreign tax. While a particular
litigant may have his own commercial interest as the sole or primary
consideration for approaching the Court for relief, the Court has to
balance it with consideration for the image and integrity of the system
of administration of justice, a matter of public policy which the 2005
Act expressly stipulates as a relevant consideration by the Court.

96. It is to be clarified that if this Court were to find that the Defendant has
proved to the satisfaction of this Court that the balance unpaid amount
of QAR888,665 was liable to be retained as withholding tax under the
laws of Qatar, this Court would have refused to grant leave to enforce
the Award for the said amount of QAR888,665 instead of granting
leave with terms as is done in the present case.

CONCLUSION

97. In the premises, this Court on 26.8.2020 made an order on the

following terms:

This Court grants prayer 1 of the Plaintiff’s Originating Summons in

Enclosure 1 on these terms & conditions:

(a) the Plaintiff is only entitled to enforce recovery of the unpaid

balance of QAR888,654.91 subject to terms in (b) to (d) below;

96
(b) if the Plaintiff obtains a written Letter of No Objection from the
relevant Qatari tax authority, the Defendant shall pay the amount
of QAR888,654.91 to the Plaintiff within 7 working days of being
served with a true certified copy of such non-objection letter;

(c) in the event that the Plaintiff fails or neglects to obtain a non-
objection letter from the relevant Qatari tax authority within 2
months from the date of this Order, the Defendant is only duty-
bound to pay the said unpaid balance amount to the Plaintiff within
7 days of Plaintiff providing to the Defendant an on-demand bank
guarantee from a licensed bank in Malaysia to indemnity and pay
the Defendant on demand and unconditionally the said amount in
the event the Qatari tax authority demands the Defendant to pay
the amount as withholding tax; and

(d) the terms of the on-demand guarantee under item (c) above shall
be mutually agreed upon by the Plaintiff and Defendant, failing
which the terms thereof shall be resolved and decided by the
Registrar of this Court.

After hearing counsel on costs, this Court ordered that each party shall
bear its own respective costs of this proceeding.

97
98. The primary term imposed on the permission to enforce the unpaid
balance amount of the award sum in the foreign arbitral award is in
item 1 of the Court Order – making it conditional upon the Plaintiff’s
production of the Letter of No Objection from the Qatar tax authority.
If the retained amount of QAR888,665 is truly and really not subject to
withholding tax of Qatar, it would not be difficult or problematic for the
Plaintiff to approach the Qatar tax authority for issuance of such Letter
of No Objection.

99. The alternative term imposed in item 2 of the Court Order is a latitude
granted to the Plaintiff in the event the Plaintiff needs the said money
urgently and it would require a rather long time for the Plaintiff to
procure the Qatar tax authority’s Letter of No Objection.

100. Without such terms imposed, it would be in conflict with the public
policy of Malaysia, and it would be injurious to the integrity of the court
process here as well as injurious or detrimental to the Defendant.

101. Without such conditional term in item 1 of the Court Order, this Court
would bear the real risks of being inflicted with the infamy of Malaysian
court in granting leave to enforce arbitral award in a manner which
condones evasion of a foreign tax law.

102. In the considered view of this Court, it is in the public policy of Malaysia
that the Court of Law in Malaysia should not bear the real risk of being
inflicted with such infamy.

Dated : 12 November, 2020

98
 Signed
................................................................
TEE GEOK HOCK
JUDICIAL COMMISIONER
HIGH COURT OF MALAYA AT SHAH ALAM
(NCVC 10)

To the parties’ solicitors / counsel:

1. For the Plaintiff : Norliza Rasoo Khan & Vanessa Victor,

Messrs Liza Khan & Sankey
(Kuala Lumpur)

2. For the Defendant : Sathya Kumardas & Aarthi Jeyarajah,

Messrs Shearn Delamore & Co

99