MRCB BUILDERS SDN BHD v A.F.S. Engineering Sdn. Bhd.

Case Significance

Reinforces the narrow, non-merits grounds for setting aside an arbitral award under section 37 of the Arbitration Act 2005: a public-policy challenge based on alleged breaches of natural justice will fail unless a genuine denial of a fair hearing is established.

This decision of the Construction Court within the High Court in Kuala Lumpur concerns an application to set aside a final arbitration award under section 37 of the Arbitration Act 2005. The award, dated 14 December 2024, had been made in an ad hoc arbitration between a builder and an engineering company. The party challenging the award contended that it should be set aside because it conflicted with the public policy of Malaysia, having been made in breach of the rules of natural justice. The complaints included alleged ex parte communications between the successful party and the arbitrator shortly before the award was issued, conduct by the arbitrator's appointed secretary said to go beyond the agreed administrative role, a distasteful remark attributed to the arbitrator, and the award of interest on several claims without sufficient explanation of its nature or basis. The court set out the narrow grounds on which an award may be set aside under section 37 — including that the subject matter is not arbitrable or that the award conflicts with public policy, which is expressly engaged where the award was induced by fraud or corruption or where a breach of natural justice occurred during the proceedings or in connection with the making of the award. Examining each complaint, the court found that none of the circumstances in section 37 was established and that there had been no breach of the fair-hearing rule or of natural justice in the tribunal's conduct. It held that the award was not contrary to the public policy of Malaysia and, noting that the parties had agreed the award would be final and binding, dismissed the application with costs. The court emphasised that a public-policy challenge is not an invitation to reopen the merits of the dispute, and that dissatisfaction with the arbitrator's findings or conduct falls well short of the high threshold the section imposes. The judgment reinforces the limited, non-merits basis on which the court will interfere with an arbitral award.