In Murray & Roberts Australia Pty Ltd v Earth Support Company Sdn Bhd(1) the Malaya High Court considered the recognition and enforcement of four Australian awards by a sole Australian arbitrator.

Facts

Plaintiff Murray & Roberts entered into a joint venture agreement with an Australian proprietary company to form Murray & Roberts-Marine & Civil JV ('the JV entity').

On November 16 2010 the JV entity entered into a supply agreement with defendant Earth Support Company Sdn Bhd. On February 8 2011, by way of a deed release and discharge, the JV entity was dissolved and the plaintiff assumed control of its businesses.

The plaintiff alleged that the defendant had breached the supply agreement, which resulted in it having to undertake rectification work at its own expense. The dispute was referred to arbitration. The seat of the arbitration was Australia and the matter was heard by a sole arbitrator.

The defendant contended that the plaintiff was not privy to the arbitration clause contained in the supply agreement between the defendant and the JV entity. By a letter dated January 29 2014, the defendant informed the arbitrator that it would take no further part in the Australian proceedings, and that the Australian arbitrator had no jurisdiction to determine the dispute and thus it was not bound by the determinations of the Australian arbitrator.

The Australian arbitrator rendered four awards against the defendant dated February 28 2014, April 17 2014, April 22 2014 and June 5 2014, respectively.

By way of an ex parte originating summons, the plaintiff applied to the Malaya High Court for recognition and enforcement of the awards. The defendant opposed the summons and filed an application to strike out the same.

Various technical issues were put forward by the defendant to support its application. The court did not accept these issues, as they were found to be wholly without basis.

Decision

With regard to the defendant's contention that the plaintiff was not party to the arbitration agreement, the court took the opportunity to consider the high courts' role as enforcement courts, not supervisory courts, in respect of foreign arbitral awards.

The court examined Lombard Commodities Ltd v Alami Vegetable Oil Products Sdn Bhd(2) and Open Type Joint Stock Company Efirnoye v Alfa Trading Ltd,(3) both of which reinforce the court's determination on the supervisory nature of the high courts with regard to foreign arbitral awards.

The court also referred to the decision in Agrovenus LLP v Pacific Inter-Link Sdn Bhd,(4) in which a two-stage approach was endorsed in relation to the recognition and enforcement of foreign awards:

"In our view, s 38 reflects the obvious. An applicant for recognition or enforcement of an award must first satisfy the court that there is an award and an arbitration agreement that authorised it. That would show of the tribunal that made the award sought to be recognised and enforced is the tribunal referred to in the arbitration agreement. Although an objection as to jurisdiction of the arbitral tribunal could be argued on the basis of the terms of the arbitration agreement, we accept that a formalistic approach to compliance with s 38, by production of the copy of the award and the sale contract of April 3, 2009 relating to the transaction in dispute and containing an arbitration agreement suffices under s 38 as prima facie proof.

We held the view that the second stage is s 39, which deals with the request and grounds relied upon for refusal of the recognition or enforcement sought, and that this second stage 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.

We make the observation that the division under ss 38 and 39 into two stages is to simplify the application for recognition or enforcement of an award and the process of dealing with exercise of discretion to refuse that application. This is consistent with recognition of such arbitrations as a specialised tribunal for resolution of commercial disputes or disagreements by those in commerce."

In essence, the first stage requires the plaintiff to satisfy the court from a jurisdictional standpoint that recognition and enforcement of the awards in question stems from a valid arbitration agreement. The second stage requires the defendant to prove that there are grounds to refuse recognition and enforcement of the awards.

The court held that the plaintiff had satisfied the first stage, while the defendant had not fulfilled the requirements under the second stage. The court also held that it had no supervisory jurisdiction or power under the Arbitration Act 2005 to inquire into the validity and correctness of awards. In any event, the defendant should have applied to the Australian courts to challenge and review the validity and correctness of the awards.

In view of the above, the plaintiff's originating summons was allowed in terms of the recognition and enforcement of the awards.

For further information on this topic please contact K Shanti Mogan at Shearn Delamore & Co by telephone (+60 3 2070 0644) or email (shanti@shearndelamore.com). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.

Endnotes

(1) [2015] 3 AMR 152.

(2) [2010] 2 MLJ 23.

(3) [2012] 1 CLJ 323.

(4) [2014] 4 CLJ 525.

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