In Malaysia, commercial arbitration is a well-established alternative dispute resolution (ADR) method for resolving both local and international economic issues, notably in the construction industry. The large number of construction disputes that are judged at first instance under the Construction Industry Payment and Adjudication Act 2012 is an exception.
Arbitration‘s popularity began to climb in 2011, according to statistics from Malaysia’s largest arbitration institution, the Asia International Arbitration Centre (AIAC). The AIAC received a total of 125 arbitration cases in 2019. The 2019 novel coronavirus illness (COVID-19) had no discernible influence on the number of new cases reported. The AIAC recorded 100 arbitration cases in 2020 (a little reduction from 2019), with 123 cases being domestic arbitrations and 15 being foreign arbitrations.
The following are some notable recent developments:
- The AIAC’s Director, Tan Sri Datuk Suriyadi bin Halim Omar, and Deputy Director, Datuk Dr Prasad Sandosham Abraham, have been appointed for the 2020-2022 term (both former judges of the apex court in Malaysia, the Federal Court)
- The AIAC’s Protocol on Virtual Arbitration Proceedings (VAP Protocols) and Protocol on Virtual Mediation Proceedings (VMP Protocols) have been released (VMP Protocols). The Protocols are intended to provide a user-friendly guideline for the conduct of virtual hearings in both arbitration and mediation at the AIAC, as the number of such hearings continues to rise as a result of the COVID-19 epidemic, as well as the time and cost benefits that come with it.
- On February 10, 2021, the AIAC will launch its Protocol for the Administration of Arbitrations Pursuant to the UNCITRAL Arbitration Rules (AIAC UNCITRAL Protocol). The AIAC UNCITRAL Protocol serves as a framework for arbitrations conducted purely under the UNCITRAL Arbitration Rules.
- On June 20, 2021, the AIAC will release its proposed Arbitration Rules for public discussion. The proposed Arbitration Rules intend to include a fast-track procedure to reduce the need for a separate set of AIAC fast-track arbitration rules, additional provisions on summary determination of issues for early claim rejection, and consolidation of multi-contract disputes, among other things.
- Under the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, arbitral awards issued in Malaysia are enforceable in 168 contracting states (as of October 2021). (New York Convention). Since November 5, 1985, Malaysia has been a contracting state. Furthermore, Malaysian courts have a non-interventionist stance to arbitral rulings.
Are you interested to understand more about Arbitration and the way it works, let’s take a look more about the Arbitration Act of Malaysia 2005 (Act 646)