KASYAF BINA SDN BHD v LEMBAGA KEMAJUAN TANAH PERSEKUTUAN (FELDA)

Case Significance

Instructive on the narrow grounds under section 37 of the Arbitration Act 2005 for setting aside an arbitral award, the principle of minimal curial intervention, and that disagreement with an arbitrator's contractual interpretation is not a breach of natural justice.

This High Court decision at Kuala Lumpur concerns an application to set aside a final arbitral award under section 37 of the Arbitration Act 2005. The plaintiff, Kasyaf Bina Sdn Bhd, was the main contractor appointed by the defendant, the Federal Land Development Authority (Lembaga Kemajuan Tanah Persekutuan, FELDA), for a design-and-build project to construct 100 houses using an industrialised building system for the defendant's settlers in Pahang. Following the arbitration, the plaintiff applied to set aside the whole of the final award issued by the arbitrator, or in the alternative specified paragraphs of it, relying on several limbs of section 37, including breach of natural justice and conflict with public policy, and on section 20 of the Act. The court, per Rajes Raghavji JC, dismissed the application. It held that the plaintiff had failed to meet the threshold required to set aside an award within the narrow confines of section 37, emphasising the principle of minimal curial intervention and the finality of arbitral awards. A disagreement with the arbitrator's interpretation of the contractual terms did not amount to a breach of natural justice, and the plaintiff's grounds in truth amounted to dissatisfaction with the merits of the award, which does not justify intervention; to allow the application would improperly invite the court to assume an appellate role contrary to established principles of arbitral finality. On public policy, the court was unable to agree that the arbitrator's findings offended or violated the basic notions of morality and justice that the public-policy ground requires. On the section 20 complaint of unequal treatment, the court found no breach, the plaintiff having been given a full and fair opportunity to present its case through witness statements, amended statements, documents, witnesses and detailed submissions, and the arbitrator having expressly stated that he considered all the evidence and submissions. The court accordingly dismissed the setting-aside application with costs of RM12,000. The judgment is instructive on the narrow grounds under section 37 for setting aside an arbitral award and the principle of minimal curial intervention.