1. ) PT WIJAYA KARYA (PERSERO) TBK (A COMPANY INCORPORATED UNDER THE LAWS OF REPUBLIC OF INDONESIA) 2. ) WIJAYA KARYA PERSERO SDN. BHD. v 1. ) ZECON BERHAD 2. ) ZECON CONSTRUCTION (SARAWAK) SDN. BHD.

Case Significance

A clear reaffirmation of the pro-enforcement, minimal-intervention philosophy of the Arbitration Act 2005: a tribunal is entitled under kompetenz-kompetenz to rule on its own jurisdiction, and a court should not set aside an award absent a compelling ground within the Act's narrow limits.

This decision of the Court of Appeal concerns an appeal against a High Court decision that had set aside an international arbitral award under section 37 of the Arbitration Act 2005. The dispute arose out of construction-related dealings in Sarawak between two Wijaya Karya companies — an Indonesian company and its Malaysian subsidiary, the appellants — and the Zecon group of respondents. The respondents had succeeded in the High Court in setting aside the award, and the central questions on appeal were whether a valid arbitration agreement existed between the parties and whether the arbitral tribunal had properly exercised its power, under the doctrine of kompetenz-kompetenz preserved by section 18(7) of the Arbitration Act 2005, to investigate and rule on its own jurisdiction in answer to the respondents' jurisdictional challenge.

The Court of Appeal emphasised the settled policy of the Arbitration Act 2005 favouring arbitral finality and minimal curial intervention: a court should be slow to set aside an award and may do so only within the narrow grounds the Act permits. Reviewing the tribunal's treatment of the jurisdictional challenge, the court held that the tribunal had been entitled, under the principle of kompetenz-kompetenz, to determine its own jurisdiction, and that the respondents had failed to demonstrate how the outcome would have differed had they been afforded a further opportunity to argue their agency-based arguments more extensively. Against that background it concluded that the High Court's decision to set aside the award was plainly wrong and warranted appellate intervention, there being no compelling ground to disturb the award. The court unanimously allowed the appellants' appeal with costs of RM40,000 subject to allocatur, upheld the award, and set aside the High Court's decision. The judgment is a clear reaffirmation of the pro-enforcement, minimal-intervention philosophy of the Arbitration Act 2005 and of a tribunal's competence to rule on its own jurisdiction.