KASUGI PRIMA SDN BHD v COBRAIN HOLDINGS SDN BHD

Case Significance

Confirms, in the companion arbitration appeal, that an arbitrator's exercise of authority under section 21(3)(b) of the Arbitration Act 2005 — including using her own expertise to weigh the evidence — did not breach natural justice; the appeal was dismissed with RM25,000 costs, reinforcing the courts' limited supervisory role over arbitral awards.

This Court of Appeal decision is the companion appeal to the related arbitration matter between Kasugi Prima Sdn Bhd and Cobrain Holdings Sdn Bhd, both appeals having been heard together and disposed of in a single judgment of the court delivered by Azimah binti Omar JCA (sitting with Mariana Yahya and Wan Ahmad Farid Wan Salleh JJCA). The two appeals, numbered 1146 and 1147, arose from High Court decisions on originating summonses concerning an arbitral award in a construction dispute. The issues common to both turned on the arbitrator's exercise of the power conferred by section 21(3)(b) of the Arbitration Act 2005 and on whether her use of her own expertise to analyse the evidence had offended the rules of natural justice.

The court upheld the award. It agreed with the learned High Court judge that the arbitrator had invoked her authority under section 21(3)(b) of the Arbitration Act 2005 without breaching the rules of natural justice, affirming that an arbitrator may deploy specialist expertise in evaluating the evidence while still affording the parties a fair hearing. Having answered the issues against the appellant, the court held both appeals to be devoid of merit and dismissed them. The court was careful to distinguish between an arbitrator forming her own view of technical evidence, which is a proper exercise of the adjudicative function, and an arbitrator deciding a case on a point never put to the parties, which would offend the fair-hearing rule; it found the former, not the latter, on the facts. In this appeal (1147) it ordered the appellant to pay the respondent costs of RM25,000, subject to allocatur, while the related appeal carried a separate lower costs order in the same judgment. The decision reinforces the limited supervisory role of the courts over arbitral awards under the Arbitration Act 2005 and confirms that an arbitrator's reliance on her own expertise, within the authority the Act confers, is not by itself a denial of natural justice, and that a court will not use a natural-justice challenge as a gateway to re-examine the merits.