Clauses and submission agreements
Minimum essential content
Form requirements
Incorporation by reference
Law of agreement

This article is part of a series on arbitration agreements in Malaysia.

Clauses and submission agreements

An "arbitration agreement" is defined in section 2 of the Arbitration Act 1952 (the 1952 Act)(1) as a written agreement to submit present or future differences to arbitration, regardless of whether an arbitrator is named therein.(2)

Section 9(1) of the Arbitration Act 2005 (the 2005 Act) defines an "arbitration agreement" as "an agreement by the parties to submit all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not". Section 9(2) of the 2005 Act provides that an arbitration agreement may be in the form of an arbitration clause or a separate agreement. The requirements of sections 9(1) and 9(2) of the 2005 Act are considered fulfilled if the contract between the parties contains an arbitration clause.(3) A party cannot refer a dispute to arbitration without a valid arbitration agreement.(4)

Where parties do not have any prior agreement to arbitrate but agree to resort to arbitration after a dispute arises, such parties arbitrate based on a submission agreement. Oral agreements to arbitrate per se (ie, those that are not recorded in any form) are not formally valid.(5)(6)

Minimum essential content

An arbitration agreement should be drafted in simple and clear terms to avoid uncertainty and the risk of undue time and costs when challenges are raised. Further, defects in the drafting of an arbitration agreement may result in inconsistency, uncertainty and the inoperability of the agreement. The adoption of standard arbitration clauses provided by arbitral institutes is encouraged.

Datuk Professor Sundra Rajoo has established an exhaustive and comprehensive list of the minimum essential content of an arbitration agreement. He states that an arbitration agreement should include:(7)

  • a clear reference to arbitration;
  • the seat of the arbitration;
  • the choice of the proper law;
  • the applicable procedural law and rules;
  • details of how and by whom the arbitral tribunal is to be constituted;
  • details of the qualifications that the members of the arbitral tribunal are required to have and the number of members of the arbitral tribunal;
  • the mode and manner of filing vacancies;
  • the language of the arbitral tribunal; and
  • privacy and confidentiality clauses.

In the case of Innotec Asia Pacific Sdn Bhd v Innotec GmBH,(8) an issue arose as to whether the arbitration clauses as stipulated in the agreements between the parties were void for uncertainty. The agreements referred to "SIHK"; it was argued that this could mean many different institutions and hence there was a serious question as to the venue of the arbitration. The High Court found on the facts of the case that "SIHK" referred to Sudwestfalische Industrie – und Handelskammer or the Chamber of Industry and Commerce of Southern Westhphalia, taking into account that the law of the agreements was German law. It must be stressed that parties must draft arbitration clauses with clarity and certainty.

Form requirements

The 1952 Act and the 2005 Act apply only when there is a written agreement. There are, however, important differences in the definition of the phrase "written agreement" in the two acts.

Section 2 of the 1952 Act stipulates that a written agreement is required to submit present and future disputes to arbitration, regardless of whether an arbitrator is named. Parties normally insert an arbitration clause in their contractual arrangements. The 1952 Act does not specify a specific form for the arbitration clause. However, standard form contracts incorporating an arbitration clause are the norm in commercial contracts.

Section 9 of the 2005 Act defines an "arbitration agreement" as an agreement in writing to submit to arbitration all or certain disputes that have arisen or that may arise between parties in respect of a defined legal relationship, regardless of whether such relationship is contractual. This section is based on article 7 of the United Nations Commission of International Trade Law Model Law (the Model Law).

Incorporation by reference

Under the 1952 Act, the writing requirement is satisfied where the document recognises, incorporates or confirms the existence of an agreement to arbitrate.(9) It may be gathered from a series of documents as well.(10)

Sections 9(2) to 9(5) of the 2005 Act illustrate what constitutes an agreement to arbitrate. In Standard Chartered Bank Malaysia Bhd v City Properties Sdn Bhd & Anor,(11) Vincent Ng J explained section 9 of the 2005 Act as follows:

Under s 9 of the 2005 Act, the term 'arbitration agreement' has assumed a much wider meaning to include an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship whether contractual or not. And, though 'an arbitration agreement shall be in writing', there need not be a separate arbitration agreement per se, as it may be in the form of an arbitration clause in any written agreement or even in the form of an exchange of letters, telex, facsimile or any other means of communication or written record which evinces the fact that such an agreement existed between the parties.

The Arbitration (Amendment) Act 2018 (No. 2) (the 2018 Amendment Act) widely broadened the types of agreement that could be considered to have been made "in writing". Following the coming into force of the 2018 Amendment Act, the sections provide for an agreement to be in writing where its content has been recorded in any form. This is the case regardless of whether the agreement was made orally, by conduct or by any other means, and is no longer confined to documents signed by the parties or an exchange of letters, telex, fax or other means of communication that provide a record of the agreement. The requirement for such an agreement to be made in writing can now also be satisfied if it is made electronically under the new section 9(4A) of the 2005 Act. An exchange of pleadings in which the existence of an arbitration agreement is acknowledged can also constitute an arbitration clause. Section 9(5) also provides for an arbitration clause to be incorporated by reference in another document. For instance, a bill of lading may, by specific reference, incorporate an arbitration clause in a charter party.

In 2013, the Federal Court – in the case of Ajwa for Food Industries Co (MIGOP), Egypt v Pacific Inter-Link Sdn Bhd(12) observed that there was no requirement under sections 9(3) and 9(4) of the 2005 Act that an agreement which refers to a separate document containing an arbitration clause need be signed, and it is usually sufficient for the reference to be a general reference to the document containing the arbitration clause. Subsequently, the High Court, in two cases, ruled that a particular reference must be sufficiently clear so as to leave minimal ambiguity as to what the parties intend to incorporate by reference.(13) In determining whether a particular document has been incorporated by reference, the Court of Appeal has clarified that is the agreement containing the reference to the document that is to be construed and not the document containing the arbitration clause.(14)

However, it has been held that where a party's name does not appear in the arbitration agreement, an award rendered pursuant to arbitration proceedings without the presence of such party may be liable to be set aside as of right.(15)

Law of agreement

There are no specific provisions in the 1952 Act to determine the law applicable in arbitration agreements and the proper law is determined in accordance with the general principles regarding conflict of laws – namely, the law chosen by the parties, or, in the absence of such choice, the law of the country with which the contract is most closely connected.

This is reflected in the 2005 Act. Section 30 of the 2005 Act provides for determining the "substantive law" of the arbitration proceedings (distinct from the "curial law" of the arbitration).(16) For domestic arbitrations, parties previously had to resolve disputes or differences in accordance with the substantive law of Malaysia.(17) This was amended by the 2018 Amendment Act, which recognises the right of the parties, in both domestic and international arbitrations, to choose the applicable substantive law. In the absence of such choice, the 2018 Amendment Act provides that the arbitral tribunal shall apply the law which it considers applicable, as determined by the conflict of laws rules.(18) Section 30(5) further requires the arbitral tribunal to take into account the terms of the agreement and trade usages when deciding on the dispute.

The applicability of the substantive law of arbitration proceedings in the context of a setting-aside application was considered by the Federal Court in The Government of India v Cairn Energy Pty Ltd & Ors. Among the issues considered by the Court was whether the substantive law of the arbitration proceedings would apply to a setting-aside application. The Court held that in dealing with challenges under section 37 of the 2005 Act, the challenge cannot be determined by reference to the substantive law of the contract, which in this case was Indian law (the arbitration agreement concerned was governed by English law). However, as the seat of the arbitration was Kuala Lumpur, Malaysia, the curial law of the seat would apply.

The Federal Court's recent decision in Thai-Lao Lignite Co Ltd & Anor v The Government of the Lao People's Democratic Republic serves as a reminder that parties should ensure that the law governing the arbitration agreement be expressly specified. If not, the law with the closest and most real connection to the arbitration agreement applies, which, in Malaysia, is deemed to be the seat of the arbitration.(19) Therefore, in the absence of a stipulated governing law in the arbitration agreement and where the resulting arbitration is conducted and seated in Malaysia, the 2005 Act shall be applicable to the relationship between the arbitral tribunal and the Malaysian courts (ie, lex arbitrii) and to the arbitration proceedings between the parties to the dispute (ie, the curial law).(20) Additionally, a choice of law clause that seeks to cover non-contractual disputes submitted to arbitration which arose in connection with the agreement subject to arbitration should be drafted widely to be identical to the contractual dispute resolution mechanism.(21)

For further information on this topic please contact Tan Sri Dato' Cecil Abraham, Dato' Sunil Abraham, Aniz Ahmad Amirudin or Syukran Syafiq at Cecil Abraham & Partners by telephone (+60 3 2726 3700) or email ([email protected], [email protected], [email protected] or [email protected]) . The Cecil Abraham & Partners website can be accessed at


(1) For details of the current arbitration legislation in Malaysia, see "Introduction to arbitration in Malaysia: history and current legislation".

(2) See, for example, Bina Puri Sdn Bhd v EP Engineering Sdn Bhd & Anor [2008] 3 CLJ 741.

(3) See Tindak Murni Sdn Bhd v Juang Setia Sdn Bhd and another appeal [2020] 3 MLJ 545.

(4) See Jaya Sudhir a/l Jayaram v Nautical Supreme Sdn Bhd & Ors [2019] 5 MLJ 1.

(5) See Food Ingredients LLC v Pacific Inter-Link Sdn Bhd and another application [2012] 8 MLJ 585 at [104]. Reversed by the Court of Appeal on other grounds in Agrovenus LLP v Pacific Inter-Link Sdn Bhd and another appeal [2014] 3 MLJ 638.

(6) See, for example, Vincent Tan Chee Yioun & Anor v Jan De Nul (Malaysia) Sdn Bhd & Anor (and two other appeals) [2017] 5 AMR 733.

(7) Sundra Rajoo, "Law, Practice and Procedure of Arbitration" (Lexis Nexis 2003) at pages 71 to 72.

(8) [2007] 8 CLJ 304.

(9) See Bauer (M) Sdn Bhd v Daewoo Corp [1999] 4 MLJ 545 at 565.

(10) See, for example, the Court of Appeal's decision in Bina Puri Sdn Bhd v EP Engineering Sdn Bhd & Anor [2008] 3 CLJ 741, where it was held that it was settled law that an agreement must be in writing but it is not the law that it has to be signed and it suffices for there to be an agreement.

(11) [2008] 1 MLJ 233 at 243.

(12) [2013] 5 MLJ 625.

(13) See Mersing Construction and Engineering Sdn Bhd v Kejuruteraan Bintai Kindenko Sdn Bhd & Ors [2011] 3 MLJ 264, HC and CLLS Power System Sdn Bhd v Sara-Timur Sdn Bhd [2015] 11 MLJ 485, HC.

(14) See Best Re (L) Ltd v ACE Jerneh Insurance Berhad [2015] 5 MLJ 513 CA.

(15) See International Bulk Carriers Spa v CTI Group Inc [2014] 6 MLJ 851. In this case, the central issues before the Court of Appeal were whether:

  • the registration of an award would be valid when the relevant documents were not produced before the Court for the purposes of registration; and
  • an award can be registered when the defendant's name does not appear in the arbitration agreement pursuant to sections 38 and 9 of the 2005 Act.

It was not in dispute that the defendant was not a party to the relevant agreement, but the tribunal had ruled that the defendant was liable even though they did not participate in the arbitration proceedings. In finding that the defendant was not a signatory to the agreement in any manner and had no form of nexus as provided in section 9, the Court held that the award could be registered. This was because section 38 of the 2005 Act required the production of the arbitration agreement and this requirement was not met, since the defendant was not a signatory to the arbitration agreement.

This case was appealed to the Federal Court in CTI Group Inc v International Bulk Carriers SPA [2017] 5 MLJ 314. The Federal Court, in reversing the decision of the Court of Appeal, found that the applicant had discharged the burden imposed under section 38(2) of the 2005 Act and therefore that the High Court had been correct in registering and enforcing the award. The Federal Court further held that once an order has been made by the High Court pursuant to section 38 of the 2005 Act, an aggrieved party must apply to set aside such order pursuant to section 39 of the 2005 Act (ie, on the grounds set out in section 39 of the 2005 Act) and not apply to set aside the order under section 38 of the 2005 Act. On the facts of this appeal, the setting-aside application was made solely pursuant to section 38 of the 2005 Act and therefore the Federal Court held that the High Court had been correct in dismissing the application.

(16) Derived from article 28 of the Model Law with changes.

(17) Section 30(1) of the 2005 Act.

(18) Section 30(4) of the 2005 Act.

(19) [2017] 6 AMR 219 at [187], [244] (Jeffrey Tan FCJ).

(20) Ibid.

(21) Ibid.