PERDANA SPECIALIST HOSPITAL SDN. BHD. v AKIRAN SERVICES SDN. BHD.

Case Significance

A clear restatement that the grounds for setting aside an award under section 37 of the Arbitration Act 2005 are exhaustive and non-merits based: absent a genuine breach of natural justice or a jurisdictional or procedural defect, the court will not disturb the tribunal's decision.

This decision of the High Court's Commercial Division in Kuala Lumpur concerns an application to set aside an arbitration award under section 37 of the Arbitration Act 2005. The applicant, a hospital company, sought to set aside an award dated 21 August 2024 made in favour of a services company, or in the alternative to have it remitted to the arbitrator to be reconsidered in light of questions of law under section 42; the application was heard together with the services company's summons to register the same award. The applicant's essential complaint was that the award had been made in breach of the rules of natural justice. The court began from the settled position that the grounds for setting aside an award under section 37 are exhaustive, that the court does not sit as an appellate court over the arbitrator, and that the merits of the dispute decided by the tribunal are not open to scrutiny. Examining the complaints, the court found no breach of natural justice and no procedural error: the arbitrator's decision had been made in accordance with the arbitration agreement and within the scope of the arbitration, and he had properly applied his mind to the parties' pleaded cases, the evidence and the submissions, including on questions of waiver and estoppel that had been raised through the conduct of the parties rather than specifically pleaded. The court noted that an arbitrator is entitled to have regard to a defence such as waiver or estoppel that emerges from the way the parties have conducted themselves, and that doing so is a matter within the tribunal's province rather than a denial of a fair hearing. Concluding that this was not a suitable case in which to exercise the power to set aside, the court declined to do so and dismissed the application, ordering the applicant to pay costs fixed at RM20,000 in total across both summonses. The judgment is a clear restatement of the narrow, non-merits basis on which a court will interfere with an arbitral award under section 37.