Enhancing Party Autonomy in Arbitration : Parliament passed the Arbitration (Amendment) (No.2) Bill 2018

Parliament passed the Arbitration (Amendment) (No.2) Bill 2018 (“the Bill”) last week to amend the Arbitration Act 2005 (“AA 2005”).

The amendments proposed under the Bill include:-

(a)  Extension of the arbitral tribunal’s powers to order interim measure under s.19 AA 2005, including power to grant preliminary order to one party without notice to the other party;

(b)  Increasing finality of arbitral awards by deletion of s.42 AA 2005;

(c)  Empowering the arbitral tribunal to award pre-award interest under s. 33 AA 2005;

(d)  Allowing parties to be represented by any representative of choice under the new s.3A AA 2005;

(e)  Recognising arbitration agreement recorded by way of “any electronic communication” under the new s.9(4a) AA 2005.

The objective of the amendments is to “enhance Malaysia’s profile on international and regional arena as a safe-seat and arbitration friendly jurisdiction” (as per the Bill’s Explanatory Statement). The proposed amendments enhances party’s autonomy in resolving disputes by arbitration, as the pre-agreed mode of dispute resolution.

Once the amendments take effect, parties to domestic arbitration should take note that they can no longer challenge an arbitral award under s.42 AA 2005, i.e. by reference to the High Court on questions of law that substantially affects their rights.

At the time of writing, the proposed amendments have yet to take effect as it is pending Royal Assent and publication in the Gazette.