Amprojek Construction Sdn. Bhd. v MCC Overseas (M) Sdn. Bhd. (WA-24C(ARB)-48-11/2025)

Before this Court are two related applications arising from a Final Award dated 23 October 2025 ("Final Award") issued by the learned arbitrator, Mr. Lam Wai Loon ("the Arbitrator") in an ad hoc arbitration between Amprojek Construction Sdn Bhd ("Amprojek") as Claimant and MCC Overseas (M) Sdn Bhd ("MCC") as Respondent.

The first application is Amprojek's application in WA-24C(ARB)- 48-11/2025 to set aside the Final Award pursuant to Sections 37(1)(b)(ii), 37(2)(b)(i), 37(2)(b)(ii), 37(6) and 50 of the Arbitration Act 2005 ("AA 2005") ("Setting Aside Application"). The second is MCC's application in WA-24C(ARB)-52-11/2025 to enforce the Final Award ("Enforcement Application"). A Stay Application filed by Amprojek in Enclosure 248 has been dealt with separately by consent.

Having considered the cause papers, all written submissions filed by both parties together the oral submissions, I deliver these grounds on the Setting Aside Application and the Enforcement Application. For reasons set out below, I find that Amprojek has not met the high threshold required under Section 37 AA 2005 to justify curial intervention, and the Setting Aside Application is accordingly dismissed.

The material facts are not substantially in dispute. Amprojek is a property developer and MCC was engaged as Main Contractor pursuant to a Letter of Award dated 27 February 2014, and a formal contract executed on 9 October 2014 based on the PAM Contract 2006 (With Quantities) ("the Contract"), for the construction of Paragon Suites @ CIQ in Johor Bahru a development comprising 461 service apartment units in two 25-storey towers, carparks and facilities ("the Project"). The total contract sum was RM176,000,000.00. Construction was scheduled to commence on 1 April 2014 and to be completed by 30 September 2016. Liquidated damages ("LD") were contractually fixed at RM76,000.00 per day.

Throughout the works, the Architect allowed four of thirteen extension of time ("EOT") applications submitted by MCC, extending the completion date by 69 days to 8 December 2016 ("Extended Completion Date"). Three Certificates of NonCompletion ("CNC") were issued, with the third and final CNC dated 9 December 2016 but physically issued on 6 July 2017 ("3rd CNC"). The Certificate of Completion and Compliance ("CCC") was issued on 31 May 2017, while the Certificate of Practical Completion ("CPC") was eventually issued on 21 October 2017.

Amprojek issued a Notice of Arbitration on 26 July 2018. The dispute encompassed delay, LD, loss and expense ("L&E"), defects rectification costs, payment under various interim certificates, direct payments to Nominated Sub-Contractors ("NSCs"), refund of cash bond, general damages, and interests.

In the Final Award, the Arbitrator made, inter alia, the following material findings:

MCC was entitled to 22 days EOT only (less than the 69 days allowed by the Architect);

The CPC ought to have been issued on 31 May 2017;

Amprojek was not entitled to impose LD on MCC, on the basis that (i) the 3rd CNC was invalid, and (ii) the LD clause amounted to a penalty;

MCC was not entitled to L&E;

Amprojek's claim for defects rectification costs of RM17,356,710.63 was allowed;

Various payments under Interim Certificates Nos.33,33A, 34,the Penultimate Certificate,and a refund of the Cash Bond of RM8,800,000.00 were awarded to MCC,together with pre-award interest totalling approximately RM14,330,217.92;and

Costs of the arbitration proceedings of RM1,776,277.06 were awarded to MCC.

The net result of the Final Award is that Amprojek is liable to pay MCC approximately RM30,269,624.49 a consequence primarily of the Arbitrator's determination that Amprojek was not entitled to impose LD despite the undisputed delay in completion by MCC. C. THE LAW ON SETTING ASIDE i. The Governing Framework

An application to set aside an arbitral award is governed by Section 37 AA 2005. The grounds relied upon by Amprojek are Sections 37(1)(b)(ii), 37(2)(b)(i) and 37(2)(b)(ii), which provide that an award may be set aside if the High Court finds that the award is in conflict with the public policy of Malaysia, and that such conflict arises where a breach of the rules of natural justice occurred either during the arbitral proceedings or in connection with the making of the award.

The governing principles are authoritatively established by the Federal Court in Jan de Nul (M) Sdn Bhd v Vincent Tan Chee Yoiun &Anor [2019] 2 MLJ 413, which I adopt and apply. The following propositions of law are clear and settled:

The concept of "public policy" under Section 37(1)(b)(ii) must be applied narrowly and restrictively in the context of setting aside an arbitral award. The court's intervention should be sparingly used;

The concept of public policy must be engaged "in the higher sense where some fundamental principle of law or justice is engaged, some element of illegality, where enforcement of the award involves clear injury to public good or the integrity of the court's process or powers will be abused";

The public policy ground can only be invoked in deserving cases — "instances where it appears a violation of the most basic notions of morality and justice";

Instances such as "patent injustice", "manifestly unlawful and unconscionable", "substantial injustice" and "serious irregularity" may constitute grounds, but what is required is that the injustice "had real effect and had prejudiced the basic right of the applicant"; and

The court must be "compelled that a strong case has been made out".

The guiding principles on the exercise of the court's residual discretion where the ground of breach of natural justice is invoked are as set out by the Federal Court in Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198, which I also adopt:

The court must identify which rule of natural justice was breached, how it was breached, and the connection to the making of the award;

The court must assess the seriousness of the breach in terms of whether it was material to the outcome;

If the breach is relatively immaterial or was unlikely to have affected the outcome, the discretion to set aside will be refused;

Even where a serious breach exists, if it would not have had any real impact on the result, the court may refuse to set aside;

Where the breach is significant and might have affected the outcome, the award may be set aside; and

In some instances, the breach may be so significant that setting aside is practically automatic.

Two further propositions must be emphasised at the outset. First, it is trite that an arbitral tribunal is the master of fact. The court sitting in supervisory jurisdiction is not an appellate court reviewing the merits of the award. An error of fact or law, however egregious in the applicant's eyes, is not per se a ground for setting aside. The threshold of intervention is high and deliberate it is calibrated to preserve the finality and efficacy of arbitration as a dispute resolution mechanism.

Second, as held in Jan de Nul(supra), what the applicant must demonstrate is not merely that the arbitrator reached a wrong conclusion, but that there was a breach of fundamental principles of procedural fairness that materially tainted the award.

With these principles in mind, I turn to examine the three grounds advanced by Amprojek. D. GROUND D.1 — ALLEGED DEFECT IN ARBITRATOR'S CHAIN OF REASONING ON THE 3RD CNC i. Amprojek's Case

Amprojek's first and primary ground is that the Arbitrator's finding that the 3rd CNC was invalid and defective reflects a clear and inexplicable departure from the established facts and the contemporaneous documentary evidence, and that the Arbitrator disregarded Amprojek's material submissions on this issue.

Two specific sub-grounds are advanced: first, a defect in the chain of reasoning (D.1.A); and second, the Arbitrator's abdication of duty under Clause 34.8(d) of the Contract (D.1.B).

On the chain of reasoning ground, Amprojek argues that the Arbitrator invalidated the 3rd CNC on the basis that EOT Applications Nos. 4, 5, 7, 8, 9, 10, 11, 12 and 13 had not been determined at the time of its issuance (6 July 2017).

Amprojek contends this finding is factually wrong because: (a) EOT Applications Nos. 4, 5, 7, 8 and 9 had already been assessed and determined before 6 July 2017; and (b) EOT Applications Nos. 10, 11, 12 and 13 were only submitted on 25 April 2018 and had not even come into existence as at 6 July 2017.

Amprojek further argues that the Arbitrator's reasoning is internally contradictory on one hand condemning the 3rd CNC for being issued too late, and on the other hand requiring the Architect to have waited even longer to determine future EOT applications that did not yet exist.

On the abdication of duty ground, Amprojek contends that having found the CNC defective in part because it failed to account for partial possession of 122 units on 29 March 2017, the Arbitrator should have exercised his power under Clause 34.8(d) of the Contract to "open up, review and revise" the 3rd CNC rather than declaring it wholly invalid.

The Nature of the Arbitrator's Findings The Multi-Limbed Invalidity Finding and Its Evidential Foundation

It is necessary to read the Arbitrator's findings on the 3rd CNC in

15.33 of the Final Award, the Arbitrator identified multiple, distinct and cumulative grounds upon which the 3rd CNC was found to be invalid. These were:

Lateness: The 3rd CNC was issued only some seven months after the last Extended Completion Date of 9 December 2016, and the Arbitrator found no cogent reason was provided to justify its issuance in the form it was in, back-dated to 9 December 2016;

Non-compliance with Clauses 16 and 22.1 of the PAM Conditions of Contract;

Failure to account for partial possession: Given the Arbitrator's finding that partial possession of 122 units had taken place on 29 March 2017, the 3rd CNC (issued on 6 July 2017) ought to have reflected the fact that only the balance of Works remained outstanding and that the LD rate should have been reduced from 29 March 2017 onwards; and

Outstanding EOT applications: As at the date of issuance of the 3rd CNC, certain EOT applications had yet to be determined, including, critically, EOT Application No. 3 which had not been assessed as at 6 July 2017. The critical observation is this: the Arbitrator's finding of invalidity does not rest solely or even primarily on the EOT applications ground that Amprojek challenges so vigorously. The finding is multi-limbed. The grounds of lateness, non-compliance with contractual provisions, and the failure to account for partial possession are independent and self-standing reasons for the Arbitrator's conclusion. Even if Amprojek were to successfully demonstrate an error in the Arbitrator's reasoning concerning the outstanding EOT applications, that would not, without more, dislodge the other bases for the finding of invalidity. The evidential foundation for each limb of the invalidity finding is addressed below.

(i)(a) The Lateness Limb - Evidential Analysis

The undisputed chronology is damning. The Revised Completion Date was 8 December 2016, yet the 3rd CNC was physically issued on 6 July 2017 and deliberately backdated to 9 December 2016. CW3 (the Architect) admitted this backdating in crossexamination. Amprojek offered no cogent reason for the sevenmonth delay a concession that is itself significant.

The evidential record reveals that the lateness was not merely administrative. EOT No. 6 which resulted in the Revised Completion Date itself was submitted on 22 February 2017. The Architect was contractually obliged under Clause 23.4 to respond within 6 weeks of receiving sufficient particulars, i.e. by approximately 3 May 2017. He failed to do so. The extension was only confirmed on 23 June 2017 and served on 6 July 2017 the very day the 3rd CNC was issued. MCC therefore received simultaneously on 6 July 2017, notice that a revised completion date existed and notice that it had allegedly failed to complete by that very date. This procedural sequence was impossible for MCC to comply with.

The well-established principle that a CNC must be issued "as soon as reasonably practicable" serves the functional purpose of affording the contractor timely notice so it can accelerate and reprogramme works: see generally Sundra Rajoo, Standard Form of Building Contracts Compared, Vol 2, p. 1111, MBA 18; Fernbrook Trading Co Ltd v Taggart [1979] 1 NZLR 556; Perini Corporation v Commonwealth of Australia (1969) 12 BLR 82.

A CNC issued after practical completion has been achieved, and backdated to a date seven months prior, serves none of those purposes and causes manifest prejudice to the contractor. The Arbitrator's finding on lateness was correct on both the evidence and the applicable principle.

(i)(b) The Partial Possession Limb — Evidential Analysis

By 29 March 2017, at Amprojek's own request, MCC handed over 122 serviced apartment units including keys. This was confirmed in writing by MCC's letter dated 8 April 2017, countersigned by Amprojek's representatives, in the Architect's own admissions during cross-examination, and in Amprojek's witness statements. The partial possession is, therefore, not in any material respect in dispute.

Clause 16.1(a) of the PAM Conditions of Contract required the Architect to issue a Certificate of Partial Completion within 14 days of partial possession. Clause 16.1(c) required the LD rate to be proportionately reduced. The Architect did neither. CW3 admitted during cross-examination that he had never even considered applying Clause 16, despite acknowledging that he should have.

By 31 May 2017, the Architect had issued both the CCC and the Interim Completion Certificate official certification that the building was complete, safe, and fit for occupation. Amprojek then delivered vacant possession to purchasers on 1 June 2017. When the 3rd CNC was issued on 6 July 2017, the works had already been completed and handed over. The CNC was issued into a factual vacuum there was no ongoing non-completion to certify. This independent limb of invalidity is, of itself, overwhelming.

(i)(c) The Outstanding EOT Applications Limb — Evidential Analysis

In the arbitration, EOT applications were bifurcated into Part 1 (Pre-CNC: EOT Nos. 1-3) and Part 2 (Post-CNC: EOT Nos. 413). Amprojek's chain-of-reasoning argument focuses exclusively on the Part 2 Post-CNC EOT Applications, while ignoring the Part 1 Pre-CNC applications entirely. This selective focus is its fatal weakness.

On the Part 1 applications, CW1 admitted in cross-examination that EOT Application No. 3 a Part 1 Pre-CNC application had not been assessed as at 6 July 2017 (NOP 25.4.2022, p. 29, lines 13-16). Amprojek did not dispute this admission in the arbitration and offers no response to it in the Setting Aside Application. That admission alone disposes of the "no outstanding applications" argument: if even one Pre-CNC EOT remained unresolved at issuance, the outstanding-EOT limb of the invalidity finding stands independently.

CW1 also made a separate and broader admission going to the heart of Amprojek's case: he acknowledged that the CNC ought to have been issued before LD was imposed and ought not to be issued at a late stage (NOP 25.4.2022, p. 30, lines 1-4). This admission not addressed in the Setting Aside Application confirms that even on Amprojek's own witness's account, the timing of the 3rd CNC was problematic.

On the Part 2 Post-CNC applications, the Arbitrator found at paragraph 15.21 of the Final Award that Clause 23.9 of the PAM Conditions governs Post-CNC EOT applications and that the conditions precedent under Clause 23.1 do not apply in that context. The word "shall" in Clause 23.9 mandates the Architect to assess and grant a reasonable EOT upon occurrence of a relevant event. The Architect had rejected EOT Applications Nos. 4, 5, 7, 8 and 9 on the procedurally incorrect basis of noncompliance with Clause 23.1 without assessing their merits. CW3 admitted this during cross-examination.

(ii) Is There a Defect in the Chain of Reasoning Sufficient to Constitute a Breach of Natural Justice?

Amprojek relies heavily on the Singapore Court of Appeal's decision in BZW and another v BZV [2022] 1 SLR 1080 for the proposition that a defect in the chain of reasoning can constitute a breach of the fair hearing rule where the tribunal's reasoning was one which the parties could not have had reasonable notice it might adopt and which lacks a sufficient nexus to the parties' arguments.

I accept that this principle, though originating from Singapore jurisprudence, is consonant with Malaysian law. However, I am unable to find that it is satisfied on the facts of this case for the following reasons.

First, the question of whether the Architect ought to have determined all outstanding EOT applications before issuing the 3rd CNC was squarely in issue at the arbitration it was one of MCC's own submissions. The Arbitrator was therefore deciding a live issue that the parties had addressed in their pleadings and submissions. Amprojek cannot now complain that it had no notice that the Arbitrator might consider this issue.

As stated in BZW(supra), a party has reasonable notice of a chain of reasoning if it arose from the parties' pleadings or arose by reasonable implication therefrom. This plainly was such a case.

Second, and more importantly, whether the Arbitrator was factually correct in his assessment of which EOT applications had been determined as at 6 July 2017 is, at its highest, a question of factual error, not a breach of natural justice. The court must be astute to distinguish between a tribunal that has failed to engage with a party's submissions at all (which may found a breach of natural justice) and a tribunal that has engaged with the submissions but reached a conclusion that the losing party regards as factually wrong (which is merely an error reviewable only on appeal, if at all).

As observed in Asg v Ash [2016] SGHC 130 which Amprojek itself cites "the tribunal may, after applying its mind to an issue, come to a decision which may be characterised as inexplicable because it has failed to comprehend the submissions or has comprehended them erroneously. That is not a breach of the rules of natural justice."

In the present case, the Arbitrator's reasoning demonstrates that he was alive to the EOT applications issue. He expressly identified which applications he considered outstanding and acknowledged that the Part 2 applications were rejected by the Architect on the ground of failure to comply with the condition precedent under Clause 23.1.

Whether or not the Arbitrator correctly assessed the dates on which each application was determined is a factual matter that this Court cannot and should not re-examine under Section 37 AA 2005. As the Federal Court emphasised in Jan de Nul(supra), this Court is not an appellate tribunal over the arbitrator's findings of fact.

Third, even accepting Amprojek's factual narrative, this does not inexorably lead to the conclusion that the 3rd CNC was valid. As set out above, the Arbitrator had independently found that the CNC was issued without cogent justification for the delay, that it was backdated, and that it failed to account for partial possession. These are distinct grounds that Amprojek's chain-of reasoning argument does not address.

I also note that Amprojek's submission presents what is characterised as an "irreconcilable contradiction" namely, that the Arbitrator simultaneously criticised the 3rd CNC for being issued too late while also suggesting it should have been withheld until all EOT applications were determined. I do not find this characterisation compelling.

As the evidence demonstrates, the Arbitrator's position is not contradictory: the 3rd CNC was issued both too late in time and without proper determination of outstanding EOT applications. These are concurrent defects, not alternative or inconsistent ones. The lateness argument captures the temporal failure (seven-month delay after the revised completion date). The EOT argument captures the substantive failure to assess claims on their merits. Identifying both defects simultaneously does not require the Arbitrator to hold mutually exclusive positions.

Fourth, applying the test in BZW(supra) that to set aside on the basis of a chain of reasoning defect, the party must establish that the tribunal "conducted itself either irrationally or capriciously such that a reasonable litigant in his shoes could not have foreseen the possibility of reasoning of the type revealed in the award" I am unable to reach that conclusion here. The Arbitrator's reasoning on the 3rd CNC, whilst Amprojek disagrees with it vigorously, is not of a character that no reasonable litigant could have anticipated. The validity of the 3rd CNC, including its timing, its form, its compliance with the PAM Contract, and its treatment of partial possession, were all matters in dispute in the arbitration. The Arbitrator's finding that these factors rendered the CNC invalid is a legitimate arbitral conclusion.

(iii) The Abdication of Duty Argument

Amprojek's second sub-ground under D.1 is that the Arbitrator, having found the 3rd CNC defective, was obliged by Clause 34.8(d) of the Contract to revise the CNC rather than simply invalidating it. Reliance is placed on Northern Regional Health Authority v Derek Crouch Construction Co Ltd [1984] QB 644 for the proposition that the power to "open up, review and revise" certificates carries with it a duty to exercise that power in appropriate circumstances.

I reject this argument for three independent reasons. First, Clause 34.8(d) empowers an Arbitrator to open up and revise certificates that reflect the Architect's professional judgment such as valuations and assessments. The invalidity of the 3rd CNC arises not from any disputed professional assessment but from anterior procedural and temporal failures lateness, noncompliance with Clause 16, and outstanding EOTs.

These failures are not exercises of professional judgment amenable to revision under Clause 34.8(d); they are contractual breaches that are incapable of being ratified. To exercise Clause 34.8(d) in the manner Amprojek proposes would be to allow Amprojek to benefit from its own default a position wholly contrary to the fundamental principle that a party cannot profit from its own breach.

Second, even if Clause 34.8(d) were engaged, no evidence was produced by Amprojek before the Arbitrator of the reduced LD rate applicable after partial possession. The Architect himself admitted he never computed it. The net effect of revision under Clause 34.8(d) would therefore be no different from outright invalidity: Amprojek would still fail to prove its LD entitlement for want of evidence.

Third, Northern Regional Health Authority(supra) addressed revision of a Quantity Surveyor's professional valuations not procedurally defective certificates of non-completion. It is irrelevant on the present facts. There is no authority establishing a mandatory obligation on an arbitrator to exercise the Clause 34.8(d) power in every case where a certificate is found defective. The power is permissive, not mandatory in all circumstances.

A failure to exercise a contractual power is not, without more, a breach of the rules of natural justice. It may be characterised as an error of law or procedure, but it does not elevate to the level required to engage the public policy exception under Section 37 AA 2005. The threshold for setting aside under public policy is confined to fundamental violations of justice, not mere procedural or analytical errors in the arbitrator's approach to contractual powers.

For all these reasons, Ground D.1 is dismissed. Amprojek has not established a defect in the chain of reasoning of the character required under BZW(supra) and Master Mulia(supra), nor has it demonstrated any abdication of contractual duty amounting to a breach of natural justice.

Amprojek's second ground is that the Arbitrator erred in dismissing the LD claim by effectively requiring Amprojek to prove actual loss as a precondition to enforcement of the LD clause, contrary to the binding Federal Court decision in Cubic Electronics Sdn Bhd v Mars Telecommunications Sdn Bhd [2018] MLJU 1935. It is submitted that this departure from binding legal precedent constitutes a denial of natural justice contrary to public policy, following the reasoning in Datuk Bandar Kuala Lumpur v Sri Tinggi Sdn Bhd [2025] 10 MLJ 410.

Amprojek argues that the Arbitrator relied on post-contractual circumstances specifically that Amprojek had been released from LD liability to purchasers and that there was no evidence of financing losses when the correct legal test under Cubic Electronics(supra) is to assess the reasonableness of the LD clause at the time of contracting, and that the burden of proving unreasonableness falls on the defaulting party (MCC).

The Threshold Issue — No Valid CNC, No LD Claim

Before looking at the Cubic Electronics(supra) analysis, there is a more basic legal issue that must be dealt with first: the LD claim fails at the outset because no valid CNC was ever issued. Under Clause 22.1 of the PAM Conditions of Contract, the issuance of a valid CNC is a condition precedent to the imposition of LD. This is settled law: Lion Engineering Sdn Bhd v Pauchuan Development Sdn Bhd [1997] 4 AMR 3315; Token Construction Co Ltd v Charlton Estates Ltd (1973) 1 BLR 48.

The consequence is significant and dispositive. Even if Amprojek were correct on every submission under Ground D.2 even if the Arbitrator had wholly misapplied Cubic Electronics the LD claim cannot be revived because the CNC on which it depends has been held invalid. Under Master Mulia(supra) at paragraphs 53(c)一(d), a purported breach that cannot affect the outcome of the award is not a basis for setting aside. Ground D.2 independently fails the materiality test on this basis alone.

(ii) The Proper Characterisation of the Complaint

The threshold question is whether Amprojek's complaint falls within the jurisdiction of this Court under Section 37 AA 2005, or whether it is in truth an appeal on a point of law masquerading as a public policy challenge.

In my judgment, this is substantially a complaint about an alleged error of law — specifically, that the Arbitrator misapplied the principles in Cubic Electronics(supra). The distinction between an error of law (which is not reviewable under Section 37) and a breach of natural justice (which may be) is fundamental. An arbitrator who applies the wrong legal test commits an error of law.

An arbitrator who refuses to engage with a party's submissions at all, or who acts in a procedurally unfair manner, may commit a breach of natural justice. The former does not become the latter merely because the legal error is characterised as a departure from binding precedent.

I accept that in Datuk Bandar Kuala Lumpur(supra) the High Court held that an arbitrator who expressly refused to be bound by the doctrine of stare decisis not merely applying precedent erroneously but rejecting the doctrine altogether committed a breach of natural justice.

That is a different and more extreme case. Here, Amprojek does not allege that the Arbitrator refused to apply Cubic Electronics(supra) as a matter of principle. Indeed, Amprojek's own Written Submissions acknowledge that the Arbitrator "appeared to have applied Cubic Electronics at paragraph [15.34] of the Final Award."

This concession is significant and, indeed, fatal to the stare decisis argument. It means that on Amprojek's own case, the Arbitrator engaged with Cubic Electronics(supra) and purported to apply it. Amprojek's true complaint is that the application was "illusory" and that the approach adopted was "not in line" with the Federal Court decision.

But this is precisely the characterisation of a legal error an incorrect application of a legal principle rather than a refusal to engage with it or a fundamental breach of procedural fairness. A party cannot simultaneously concede that the relevant legal framework was applied and maintain that its non-application constitutes a breach of natural justice. That concession is dispositive of the stare decisis ground.

The authorities in Datuk Bandar Kuala Lumpur(supra),Ipoh Tower Sdn Bhd v Taki Engineering Sdn Bhd [2016] MLJU 1509, and Kementerian Pertahanan Malaysia & Anor v SME Ordnance Sdn Bhd [2025] MLJU 3561 all involved arbitrators who disregarded the applicable law entirely or awarded zero compensation based solely on a single witness's personal opinion without any legal framework.

These are materially different situations from the present case, where the Arbitrator cited, engaged with, and applied the Cubic Electronics(supra) framework, albeit in a manner Amprojek disagrees with. These cases are distinguishable.

(iii) The Cubic Electronics Analysis on the Evidence

Even if I were to characterise the complaint as one potentially going to natural justice, I am satisfied that the Arbitrator did not simply ignore the Cubic Electronics(supra) framework. The Arbitrator's multi-layered analysis found: (i) that the 3rd CNC was invalid, which was in itself a sufficient basis to deny the LD claim; and (ii) that on the evidence before him, the LD clause operated as a penalty rather than a genuine pre-estimate of loss in the circumstances.

The evidential basis for the second finding was substantial. The Arbitrator found that: (i) the foundational basis for the LD rate at contracting was exposure to purchasers and financing costs; (ii) Amprojek deliberately chose not to produce documents within its possession evidencing these costs; (iii) Amprojek in fact paid no LD to purchasers because it obtained a government extension under Regulation 11 of the Housing Development Regulation 1989; and (iv) Amprojek did not seriously pursue its case on reputational loss. CW1 confirmed in cross-examination that no amounts were paid to purchasers. This was not disputed.

Clause 22.2 of the PAM Conditions is material in this context. It provides that the LD sum is payable "without the need for the Employer to prove his loss and/or damage unless the contrary is proven by the Contractor".

This contractual allocation of the burden of proof is precisely what the Arbitrator applied. MCC did prove the contrary: Amprojek paid no amounts to purchasers, financing costs were not substantiated, and reputational loss was not pursued.

The Federal Court in Cubic Electronics(supra) at paragraph [70] expressly preserved the right of the defaulting party to prove the unreasonableness of the damages clause. MCC did exactly that, on the evidence admitted by Amprojek's own witnesses.

Whether the Arbitrator was correct in finding that the LD operated as a penalty, and whether that analysis is consistent with Cubic Electronics(supra), may be the subject of legitimate academic debate and potentially of an appeal on a question of law.

But that is a fundamentally different inquiry from whether there was a breach of natural justice. Amprojek was given full opportunity to present its case on the LD issue. The fact that the Arbitrator reached a conclusion adverse to Amprojek after considering those submissions does not establish a breach of natural justice.

Ground D.2 is accordingly dismissed. G. GROUND D.3 — ALLEGED IRRATIONALITY IN PRE-AWARD INTEREST

Amprojek's third ground is that the Arbitrator's approach to preaward interest was irrational and contrary to public policy. Having determined that Amprojek's defects rectification costs only "crystallised" upon the date of the Final Award, the Arbitrator ought, it is submitted, to have applied the same logic to Amprojek's LD entitlement that LD should be treated as not crystallising as a debt until the Final Award.

Since the Arbitrator did not do so, and instead awarded preaward interest running from 2017 on sums due to MCC, the total pre-award interest of RM14,330,217.92 is said to be excessive, manifestly unjust and contrary to public policy.

The Contractual and Statutory Basis for the Interest Award

At the outset, it must be noted that Amprojek is estopped from challenging the Arbitrator's jurisdiction to award pre-award interest. In its Points of Claim dated 5 August 2019, Amprojek itself pleaded for interest on all sums "from such dates at such rates as deemed fit by the arbitrator". Having expressly invited the Arbitrator to exercise that jurisdiction, Amprojek cannot now challenge the manner in which it was exercised as a violation of Section 20 AA 2005. This is self-contradictory and wholly unfounded.

The pre-award interest award rests on 3 distinct and cumulative legal bases: (i) Clause 30.17 of the PAM Conditions, which entitles MCC to interest at 1% above Maybank's BLR on certified sums unpaid; (ii) Clauses 34.8(f) and (g) of the PAM Conditions, which expressly empower the Arbitrator to award interest whether pre-or post-award; and (iii) Section 33(6) AA 2005, which confers wide discretion on the Arbitrator to award interest from such date, at such rate, as he considers appropriate.

The Arbitrator exercised this discretion after a careful analysis spanning paragraphs 16.1-16.13 of the Final Award, going through each head of claim, determining which attracted interest and which did not, and setting the date from which interest ran by reference to the evidence. This is exactly the deliberative process that courts expect and should not disturb: Lian Hup Manufacturing Co Sdn Bhd v Unitata Bhd [1994] 2 MLJ 51; UDA Land Sdn Bhd v Puncak Sepakat Sdn Bhd [2020] MLJU 892.

(ii) The "Logical Consistency" Argument Contains a Fundamental Analytical Error

Amprojek's logical consistency argument rests on a false equivalence between two legally distinct categories of obligation. Defects rectification costs are unliquidated damages that crystallise upon quantification and award — no sum is due until the Arbitrator determines it.

By contrast, the certified sums on which pre-award interest was awarded were payable on fixed contractual dates under the Interim Payment Certificates, with Clause 30.17 mandating interest at 1% above Maybank's BLR on any certified sums unpaid by the due date.

This contractual interest obligation accrues automatically upon non-payment; it requires no exercise of discretion and cannot be suspended by an asserted set-off. The "logical consistency" argument therefore rests on comparing an unliquidated claim requiring judicial quantification with a liquidated contractual entitlement. These are not comparable. The premise of the argument is flawed, and the argument fails.

(iii) The Set-Off Notice Requirement Was Not Complied With

A further point arising from the record reinforces the correctness of the interest award. Clause 30.4 of the PAM Conditions requires any amount to be set off against certified sums to be effected by written notice from the Employer or the Architect.

This procedural requirement was not complied with. Amprojek's LD deductions against MCC's certified payments were accordingly irregular from the outset, regardless of the subsequent finding on the validity of the 3rd CNC. The pre-award interest award reflects, in part, the financial consequences of those procedurally defective deductions.

(iv) The Quantum Is Not Disproportionate in Context

The award of pre-award interest on sums certified and due under the Contract but unpaid is a conventional arbitral remedy. The fact that Amprojek had chosen to withhold those sums, in the honest but ultimately mistaken belief that it was entitled to set off LD against them, does not make the Arbitrator's award of interest on those sums irrational or unjust.

A party who withholds a sum that is contractually due bears the commercial risk of being liable for interest if the withholding is ultimately held to be unjustified. A bona fide belief that one is entitled to set off does not suspend the running of contractual interest on certified amounts. If it did, any party could withhold certified payments indefinitely merely by asserting a set-off, without bearing any financial consequence. That cannot be the law.

Amprojek has withheld sums owed to MCC since 2017 approximately eight years. MCC had to fund the works from its own resources throughout this period and pursued three separate CIPAA adjudications before obtaining final vindication in the arbitration. RM14,330,217.92 of interest on principal sums outstanding for eight years, at 1% above BLR, is not only commercially expected it is contractually stipulated. It does not "shock the conscience" in any legally meaningful sense.

The threshold for invoking public policy is high it must be a case where the upholding of the award would be "wholly offensive to the ordinary reasonable and fully informed member of the public." An award of contractual interest computed on outstanding sums over a multi-year arbitration period does not approach that threshold.

Ground D.3 is accordingly dismissed.

In the alternative, Amprojek seeks an adjournment under Section 37(6) AA 2005 to allow the Arbitrator an opportunity to resume the arbitral proceedings or take such other action as will eliminate the grounds for setting aside.

Section 37(6) is a discretionary power. Since I have found that no ground for setting aside has been established under Section 37(1), there are no "grounds for setting aside" to be eliminated. It would be contrary to principle to invoke Section 37(6) in circumstances where the court has found the award to be sound: Garden Bay Sdn Bhd v Sime Darby Property Bhd [2018] 2 MLJ 636 (COA), paragraphs 12-13 and 15.

Even if remission were theoretically available, it would be inappropriate here. The Arbitrator made detailed findings of fact and law after 16 days of hearing and review of 147 bundles of documentary evidence. A remission would effectively give Amprojek a second opportunity to re-argue its case before the Arbitrator a purpose directly contrary to the finality principle that arbitration is designed to serve.

The application under Section 37(6) is accordingly also dismissed.

Given my consideration of OS 48 and my grounds above, I hold that the Award is to be recognised and binding and to be enforced as a judgment.

The Defendant has complied with the formal requirements of Section 38 of the Act by producing the duly certified Final Award and the underlying arbitration agreement in the Contract.

Amprojek's Reply at paragraphs 61 to 68 argues that this Court retains an independent and unfettered discretion to refuse enforcement even if the Setting Aside Application is dismissed, relying on A v B & Ors [2024] 4 HKC 36. That case is distinguishable on its facts: the Hong Kong court refused enforcement because the arbitrator had merely set out contractual provisions and stated conclusions without providing any reasoning whatsoever.

The present case is fundamentally different: the Arbitrator delivered a detailed reasoned award after 16 days of hearing, examining 147 bundles of documentary evidence and addressing each issue with full analysis. The absence-of-reasoning deficiency that engaged the court in A v B & Ors(supra) simply does not arise here.

As held by the Federal Court in Siemens Industry Software GmbH & Co Kg (Germany) v Jacob and Toralf Consulting Sdn Bhd [2020] 3 MLJ 1, once the formal requirements of Section 38 of the Act are met, the registration and enforcement of an award should be granted as of right.

The Plaintiff has not invoked any of the limited grounds for refusal of enforcement under Section 39 of the Act. Their attempt to resist enforcement is intrinsically linked to their failed application to set aside the Award in OS 48. Since the setting aside application has been dismissed, there is no valid legal barrier to enforcement.

Section 38 of AA 2005 is a mandatory provision. Once its requirements are satisfied, this Court must recognise and enforce the Final Award by entry as a judgment, unless the grounds under Section 39 are established. No Section 39 grounds have been made out. The argument that the Court's discretion to refuse enforcement under Section 39 may be exercised as a general safety valve for grievances that did not reach the threshold for setting aside has no basis in the statutory scheme and would fundamentally undermine the finality of arbitration. As the Federal Court confirmed in Master Mulia(supra), the Court's role in the arbitral regime is one of support, not interference.

The Final Award is final and binding, and the Defendant is entitled to reap the fruits of its successful arbitration.

I am mindful of the Federal Court's observation in Thai-Lao Lignite Co Ltd & Anor v Government of The Lao People's Democratic Republic [2017] MLJU 1196 that arbitral awards "are not sacrosanct" and that a supervisory court that only rubber-stamps arbitral awards does disservice to the arbitral process.

I also acknowledge that the outcome of the Final Award, requiring Amprojek to pay a net sum of some RM30 million, may seem to produce a commercially surprising result. However, the supervisory role of this Court under Section 37 AA 2005 is not to correct commercial surprises or to ensure that outcomes appear proportionate. It is to ensure that the arbitral process was conducted in accordance with fundamental principles of justice and fairness. I am satisfied that it was.

I wish to add one further observation. The application of the public policy exception to arbitral awards must remain tightly controlled. If this Court were to accept Amprojek's arguments in this case where the Arbitrator produced a detailed, reasoned award, engaged with all major issues, applied relevant legal principles, and reached conclusions that, however unwelcome to Amprojek, are intelligible it would effectively transform Section 37 AA 2005 into a right of appeal on the merits of arbitral decisions. That would be contrary to the policy of the AA 2005, contrary to the UNCITRAL Model Law from which it derives, and contrary to the considered and consistent approach of the Federal Court.

For all the reasons set out above:

Amprojek's Setting Aside Application in WA-24C(ARB)-48- 11/2025 is dismissed with costs of RM50,000.00 payable to MCC;

Amprojek's application under Section 37(6) AA 2005 for remission is dismissed;

MCC's Enforcement Application in WA-24C(ARB)-52- 11/2025 (Enclosure 1) to enforce the Award is allowed with costs of RM10,000.00 payable to MCC. The Award is to be registered as a judgment of the High Court pursuant to Section 38 of the Arbitration Act 2005.

This Court wishes to place on record its appreciation for the exemplary assistance rendered by counsel for both parties. The quality of the advocacy, both written and oral, was of the highest order and was of great assistance to the Court. Dated 14th May 2026 RAJES RAGHAVJI JUDICIAL COMMISSIONER HIGH COURT CONSTRUCTION COURT 1 KUALA LUMPUR COUNSEL: For the Plaintiff(OS48)/ Defendant(OS52): Muhammad Faisal Moideen, Julian Ch'ng Wei Shen and Ainan Hamdani (Messrs Moideen & Max (Kuala Lumpur) For the Defendant(OS48)/ Plaintiff(OS52): Rodney Gomez, Michelle Lim Wan Foong, Tan Ren Tse, Chai Jia Hui and Neo Wing Ling (Messrs CY Ng & Barry (Kuala Lumpur) Case(s) referred to: Jan de Nul (M) Sdn Bhd v Vincent Tan Chee Youn [2019] 2 MLJ 413 Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198 Sundra Rajoo's, Standard Form of Building Contracts Compared, Vol 2, p. 1111, MBA 18 Fernbrook Trading Co Ltd v Taggart [1979] 1 NZLR 556 Perini Corporation v Commonwealth of Australia (1969) 12 BLR 82 BZW and another v BZV [2022] 1 SLR 1080 Asg v Ash [2016] SGHC 130 Northern Regional Health Authority v Derek Crouch Construction Co Ltd [1984] QB 644 Cubic Electronics Sdn Bhd v Mars Telecommunications Sdn Bhd [2018] MLJU 1935 Datuk Bandar Kuala Lumpur v Sri Tinggi Sdn Bhd [2025] 10 MLJ 410 Lion Engineering Sdn Bhd v Pauchuan Development Sdn Bhd [1997] 4 AMR 3315 Token Construction Co Ltd v Charlton Estates Ltd (1973) 1 BLR 48. Ipoh Tower Sdn Bhd v Taki Engineering Sdn Bhd [2016] MLJU 1509 Kementerian Pertahanan Malaysia & Anor v SME Ordnance Sdn Bhd [2025] MLJU 3561 Lian Hup Manufacturing Co Sdn Bhd v Unitata Bhd [1994] 2 MLJ 51 UDA Land Sdn Bhd v Puncak Sepakat Sdn Bhd [2020] MLJU 892 Garden Bay Sdn Bhd v Sime Darby Property Bhd [2018] 2 MLJ 636 A v B & Ors [2024] 4 HKC 36 Siemens Industry Software GmbH & Co Kg (Germany) v Jacob and Toralf Consulting Sdn Bhd [2020] 3 MLJ 1 Thai-Lao Lignite Co Ltd & Anor v Government of The Lao People's Democratic Republic [2017] MLJU 1196 Legislation(s) referred to: