GSIB SDN BHD v MRCB SENTRAL PROPERTIES SDN BHD

Case Significance

Restates the limited grounds for setting aside an arbitral award under section 37(1)(b)(ii) of the Arbitration Act 2005: an arbitrator's findings on delay, extension of time and LAD are merits decisions that cannot be recast as a natural-justice or public-policy breach, so the award was upheld and enforced under section 38.

This High Court decision concerns an application by GSIB Sdn Bhd to set aside a Final Award made in a construction arbitration in favour of MRCB Sentral Properties Sdn Bhd, together with the companion application to enforce that Award. The two originating summonses were brought under the Arbitration Act 2005, and the court's task was the narrow supervisory one that the Act permits: not to re-hear the merits, but to decide whether a limited statutory ground for setting aside was made out.

The governing question was whether the Award should be set aside under section 37(1)(b)(ii) of the Arbitration Act 2005 on the grounds of a breach of natural justice and conflict with public policy. The applicant's complaints were directed at the arbitrator's findings on delay analysis, extension of time and liquidated ascertained damages (LAD) — the classic battleground of construction arbitrations. The court held that these were "decisions on the merits" of the dispute, and that a disagreement with the arbitrator's evaluation of the delay evidence, the entitlement to an extension of time or the award of LAD does not, without more, amount to a breach of natural justice or a conflict with public policy. The supervisory jurisdiction under section 37 is not an appeal on the merits.

Finding that the Award disclosed "no material breach of natural justice", the court dismissed the setting-aside application and, in the companion proceeding, allowed recognition and enforcement of the Award under section 38 of the Act. The two outcomes are the natural counterparts of one another: an award that survives challenge under section 37 is enforceable under section 38.

The judgment is a useful restatement of the limited grounds on which an arbitral award may be set aside in Malaysia. A party dissatisfied with an arbitrator's findings on delay, extension of time and LAD cannot recharacterise a merits disagreement as a natural-justice or public-policy breach; the court will uphold and enforce the award unless a genuine section 37 ground is established.