PETROFAC (MALAYSIA-PM304) LIMITED v PBJV GROUP SDN BHD

Case Significance

Illustrates the limited grounds on which enforcement of a domestic arbitral award under section 38 of the Arbitration Act 2005 may be resisted, and confirms, applying Master Mulia, the deference owed to a tribunal's evidentiary and interpretive decisions where no serious or material breach of natural justice is shown.

This High Court decision concerns an application to enforce an arbitral award under section 38 of the Arbitration Act 2005, heard together with the losing party's application to set the same award aside. The award had been made under the AIAC Arbitration Rules 2018 in a dispute between a contractor and a sub-contractor in the oil-and-gas sector. In this proceeding the successful party sought recognition and enforcement of the Final Award as a judgment under section 38, while the other side resisted enforcement by seeking to set the award aside under section 37 on grounds of breach of natural justice and conflict with the public policy of Malaysia. Because enforcement under section 38 can be resisted only on the limited grounds in section 39, which mirror the setting-aside grounds, the court considered the substance of the natural-justice complaints, namely that the tribunal had relied on hearsay evidence and had treated the pleadings as containing admissions. Applying the three-stage test in Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd, it found no serious or material breach of natural justice. It reasoned that, under section 19 of the Arbitration Act 2005, the tribunal was not bound by the Evidence Act 1950 and had a discretion over the admissibility and weight of evidence, and that the complaints in truth challenged the tribunal's assessment of the evidence and its interpretation, which lay outside the court's supervisory role and could not be used to re-open the merits. The court underlined that the public-policy ground is narrow and is not engaged merely because a party disagrees with the tribunal's factual conclusions, and that permitting such challenges would undermine the finality that the Arbitration Act 2005 is designed to secure. Concluding that there was no impediment to enforcement, the court allowed the enforcement application with costs and dismissed the companion setting-aside application. The judgment is a useful illustration of the limited grounds on which enforcement of a domestic award may be resisted and of the deference owed to a tribunal's evidentiary findings.