Dato' Dr Muhammad Ridzuan Bin Mohd Salleh v Syarikat Air Terengganu Sdn Bhd(1) involved a disputed shareholders' agreement. The parties agreed to resolve their disputes via arbitration. The sole arbitrator signed a statement of independence, as required by the Kuala Lumpur Regional Centre for Arbitration. On the advice of the arbitrator, the parties entered into negotiations and a consent award in favour of the defendant was entered.

At a later date, it was discovered that the arbitrator had become a director of a bank that had financed the joint venture agreement between the disputing parties. This fact had not been disclosed to either party. By the time the matter came to light, it was 90 days since the award had been issued and the timeframe to set aside the award had elapsed.

The main issue was whether the award could be set aside on the grounds of breach of natural justice. There was also a further issue of whether the 90-day timeframe for setting aside the award could be extended.

The High Court considered the issue of the time extension by reference to Section 37(4) of the Arbitration Act 2005. Section 37(4) provides that "an application for setting aside may not be made after the expiry of days from the date on which the party making the application had received the award".

The court held that Section 37(4) places a discretionary, not obligatory, requirement on the court regarding the timeframe, and that the court retains some degree of discretion to extend the time for a party to file an application to set aside an award beyond the 90-day timeframe.

The court then went on to consider whether an extension should be granted in this case. The circumstances considered included the continuing duty of disclosure, until conclusion of the arbitration, to disclose any factor likely to give rise to justifiable doubts as to the arbitrator's impartiality or independence. The court considered that the arbitrator ought to have disclosed his appointment as a director of the bank to the parties. It further held the fact that the appointment was made to Bursa Malaysia and was therefore in the public domain, and that the appointment was as a non-independent, non-executive director and member of the Credit Review Committee, did not make the non-disclosure any less justifiable. The fact that the award was a consent award was also held not to reduce the importance of the requirements of impartiality and independence, and the award was set aside.

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(1) High Court of Malaysia, Kuala Lumpur, [2012] MLJU 184.