Ctrm Aero Composites Sdn Bhd v T7 Gastec Sdn Bhd (WA-24NCC(ARB)-44-11/2025)

By an Originating Summons dated 28-11-2025, the plaintiff seeks to set aside the 2nd Portion of an arbitration award dated 30-09- 2025 [“2nd Portion of the Award”], which had ordered [See Enclosure 2 Exhibit A-1 page 83 at page 178 paragraphs 257.4 to 227.5]: i. that the plaintiff is to pay the defendant the sum of RM 892,800.00, being the Monthly Fixed Fees for the period from January to June 2022, on the basis that the Equipment remained at the plaintiff’s premises during this period due to the Plaintiff’s refusal to permit demobilisation, together with interest at 8% per annum from 30-06-2022 until the date of full and final settlement; ii. that the defendant is entitled to recover losses arising from its inability to perform the Third-Party Agreement, caused by the plaintiff’s refusal to allow demobilisation, and that the plaintiff shall pay the defendant-a. RM 357,120.00, being the loss of monthly fees for the two months period from July to August 2022 (calculated S/N j0kjX9uzEkG4huWDEu81oQ at RM 178,560.00 per month), on the basis that the plaintiff prevented the defendant from supplying nitrogen gas to Marine Energy under the Third-Party Agreement which was due to commence commissioning on 23-06-2022; and b. RM 1,071,360.00 as liquidated damages paid by the defendant to Marine Energy, pursuant to the summary judgment obtained in Kuala Lumpur High Court dated 08-01-2024.

The plaintiff contends the 2nd Portion of the Award – i. deals with disputes and/or contain decisions beyond the scope of the arbitration and/or not submitted to Arbitration; ii. is in conflict with public policy; iii. gives rise to a breach of natural justice; and iv. sanctioned a deprivation of property contrary to Article 13 of the Federal Constitution without any adequate compensation. S/N j0kjX9uzEkG4huWDEu81oQ

On 30-03-2026, I heard the application and dismissed the same with costs of RM 15,000 subject to allocatur on the ground that the plaintiff failed to come within section 37 of the Arbitration Act 2005.

The plaintiff filed an appeal to the Court of Appeal dated 15-04-

Here are my Grounds of Decision.

The defendant commenced arbitration by a Notice of Arbitration dated 29-11-2022. The arbitration was registered with the AIAC on 20-01-2023 and proceeded under the AIAC Arbitration Rules 2021.

The Tribunal was constituted as a sole arbitrator, namely Dato’ Malik Imtiaz Sarwar.

The evidentiary hearing took place on 14-10-2024, 15-10-2024, 17-10-2024 and on 23-01-2025.

The Award was delivered on 30-09-2025 and is divided into two portions [See Enclosure 2 Exhibit A-1 page 83]: S/N j0kjX9uzEkG4huWDEu81oQ i. the 1st Portion, dealt primarily with outstanding Monthly Fixed Fees, termination issues, demobilisation fees and costs; ii. and the 2nd Portion, dealt with the issue whether following the termination of the Supply Agreement on 17-12-2021 the plaintiff impeded the defendant from demobilisation the Equipment, and if so what are the consequential losses. This issue as framed by the Tribunal can be seen in the Award at paragraph 218. [Enclosure 2 page 163].

The plaintiff seeks to set aside only the 2nd Portion of the Award. Grounds relied on by the plaintiff to set aside the 2nd Portion of the Award

The plaintiff relies on the following grounds to set aside the 2nd Portion of the Award-i. the 2nd Portion of the Award deals with disputes and/or contain decisions beyond the scope of the arbitration and/or not submitted to Arbitration; ii. the 2nd Portion of the Award is in conflict with public policy; S/N j0kjX9uzEkG4huWDEu81oQ iii. the 2nd Portion of the Award gives rise to a breach of natural justice; and iv. the 2nd Portion of the Award sanctioned a deprivation of property contrary to Article 13 of the Federal Constitution without any adequate compensation. Law on setting aside of an arbitration Award

Section 37 of the Arbitration Act 2005 states-

An award may be set aside by the High Court only if—

the party making the application provides proof that— …

(iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;

subject to subsection (3), the award contains decisions on matters beyond the scope of the submission to arbitration; or

the High Court finds that—

…

(ii) the award is in conflict with the public policy of Malaysia. S/N j0kjX9uzEkG4huWDEu81oQ 2) Without limiting the generality of subparagraph (1)(b)(ii), an award is in conflict with the public policy of Malaysia where—

the making of the award was induced or affected by fraud or corruption; or

a breach of the rules of natural justice occurred—

during the arbitral proceedings; or

(ii) in connection with the making of the award. [Emphasis added] Law - The Malaysian courts do not have the right to review the merits or correctness of an arbitral tribunal’s decision

It is trite law that the Malaysian courts do not have the right to review the merits or correctness of an arbitral tribunal’s decision. The courts do not sit in appellate capacity. [See The Government of India v Cairn Energy India Pty Ltd & Ors [2014] 9 MLJ 149, HC [“Government of India”], Hindustan Oil Exploration Co Ltd v Hardy Exploration & Production (India) Inc [2023] 4 MLJ 113, CA, and Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413, FC].

The High Court in The Government of India v Cairn Energy India Pty Ltd & Ors [2014] 9 MLJ 149, HC, said-S/N j0kjX9uzEkG4huWDEu81oQ [171] There are still several other factors that must be borne in mind when considering the exercise of discretionary power under sub paras of 37(1)(a)(iv) and (v) and (b)(ii) of Act 646, and it is this — the court’s powers are not invoked in the field of appellate jurisdiction. The court’s powers here are specifically enacted under statute. Since the court does not sit in appellate capacity, the court does not scrutinise the merits of the parties’ respective case or responses before the arbitral tribunal. The court must also resist interfering in the decisions of the arbitral tribunal save where it is prescribed under the Arbitration Act 2005. [172] Quite aside from this, there is the principle which has remained constant, be it under the old Arbitration Act of 1952 or the new 2005 Act; and that is in the fundamental approach that courts generally bear when dealing with challenges of arbitral awards. Not only are courts slow to intervene even where there is discretion to do so, the courts are cognisant of the fact that as supervisory courts, there is a more than healthy respect for party autonomy and party choice. The courts here have long ascribed to this philosophy practiced in many jurisdictions.” [Emphasis added]

The principles cited in Government of India was affirmed by the Court of Appeal in Hindustan Oil Exploration Co Ltd v Hardy Exploration & Production (India) Inc [2023] 4 MLJ 113, CA- “[36] And specific to the determination of the propriety of the learned JC’s dismissal of the plaintiff’s OS to set aside the majority award, it is trite law that the court ought not to descend from the bench and enter into the arbitral arena to disturb the arbitral tribunal’s determinations and findings on merits (especially after the repeal of s 42 of the AA 2005) … S/N j0kjX9uzEkG4huWDEu81oQ [47] This court takes cognisance that s 37 of the AA 2005 is based on article 34 of the Model Law. In adopting the Model Law’s provision, the Malaysian courts do not have the right to review the merits or correctness of an arbitral tribunal’s decision. [48] It must also be acknowledged that the arbitral tribunal’s decision is final and binding on the parties. On this score, any errors of law and fact made by the arbitral tribunal is not appealable. In such instance, the Malaysians courts do not and must not sit in appeal over the arbitral tribunal ‘s decision.” [Emphasis added]

I shall now consider the four grounds relied on by the plaintiff to set aside the 2nd Portion of the Award. Grounds Ground 1 - The 2nd Portion of the Award deals with disputes and/or contain decisions beyond the scope of the arbitration and/or not submitted to Arbitration

It is clear that this ground of the plaintiff is devoid of merits. The 2nd Portion of the Award awarded reliefs based on Agreed Issues 4 and 5 (a) and (b) to be Tried [See pages 202 - 204 of plaintiff’s AIS Enclosure 2]. S/N j0kjX9uzEkG4huWDEu81oQ

An arbitrator is entitled to decide the dispute based on issues raised or addressed by parties. [See Kerajaan Malaysia v Perwira Bintang Holdings Sdn Bhd [2015] 1 CLJ 617, CA].

In Kerajaan Malaysia v Perwira Bintang Holdings Sdn Bhd [2015] 1 CLJ 617, CA, the Court of Appeal said- “[24] These persuasive cases, and others, that have been addressed by our courts lay down one basic principle - an arbitrator must decide the dispute according to the scope of the arbitration and he cannot decide the dispute on issues that have not been raised or addressed by the parties. This basic principle arose in the High Court case of Government of the Lao People's Democratic Republic v. Thai-Lao

I now move to Ground 2. Ground 2 - the 2nd Portion of the Award is in conflict with public policy Law S/N j0kjX9uzEkG4huWDEu81oQ

It is trite law that the public policy ground that is envisaged in section 37 (1) (b)(ii) of the Arbitration Act 2005 ought to be read narrowly and restrictively. The court's curiaI intervention should be sparingly used. To set aside an Award on public policy ground there must be ‘patent injustice’, ‘manifestly unlawful and unconscionable’, ‘substantial injustice’, ‘serious irregularity’ and other similar serious flaws in the arbitral process and award. [See Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413, FC, and Sigur Ros Sdn Bhd v Master Mulia Sdn Bhd [2018] 8 CLJ 291, CA] Application to facts

As the 2nd Portion of the Award is based on the Agreed Issues, I don’t see how the Award is in conflict with public policy.

I now move to Ground 3 Ground 3 - the 2nd Portion of the Award gives rise to a breach of natural justice Law S/N j0kjX9uzEkG4huWDEu81oQ

The Federal Court in Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198, FC, has laid down the following guiding principles: - “[53] In the light of the above, we think that the guiding principles on the exercise of residual discretion when an application for setting aside an award is grounded on breach of natural justice may be stated as follows:

first, the court must consider: (a) which rule of natural justice was breached; (b) how it was breached; and (c) in what way the breach was connected to the making of the award;

second, the court must consider the seriousness of the breach in the sense of whether the breach was material to the outcome of the arbitral proceeding;

third, if the breach is relatively immaterial or was not likely to have affected the outcome, discretion will be refused;

fourth, even if the court finds that there is a serious breach, if the fact of the breach would not have any real impact on the result and that the arbitral tribunal would not have reached a different conclusion the court may refuse to set aside the award;

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

sixth, in some instances, the significance of the breach may be so great that the setting aside of the award is practically automatic, regardless of the effect on the outcome of the award;

seventh, the discretion given the court was intended to confer a wide discretion dependent on the nature of the breach and its impact. Therefore, the materiality of the breach and the possible effect on the outcome are relevant factors for consideration by the court; and S/N j0kjX9uzEkG4huWDEu81oQ

eighth, whilst materiality and causative factors are necessary to be established, prejudice is not a pre-requisite or requirement to set aside an award for breach of the rules of natural justice. … [62] …, a mere finding of a breach of the rules of natural justice is in itself insufficient. It must be shown that the breach was significant or serious such as to have an impact on the outcome of the arbitration. Prejudice, though, a relevant consideration, is not a requirement.” [Emphasis added] Application to facts

As the 2nd Portion of the Award is based on the Agreed Issues, I don’t see how the Award gives rise to a breach of natural justice.

The plaintiff contends the Tribunal, inter alia, disregarded the express terms of the Supply Agreement, in particular Schedule 4 as well as the defendant’s witnesses’ own admissions. These are matters that go to the merits and do not amount to a breach of natural justice. S/N j0kjX9uzEkG4huWDEu81oQ Ground 4 - the 2nd Portion of the Award sanctioned a deprivation of property contrary to Article 13 of the Federal Constitution without any adequate compensation

As the 2nd Portion of the Award did not sanction a deprivation of property of the plaintiff, this ground is devoid of any merits.

For the reasons above, I dismiss the application with costs of RM 15,000 subject to allocatur on the ground that the plaintiff failed to come within section 37 of the Arbitration Act 2005. Dated: 14th May 2026 ………(signed)………… Leong Wai Hong Judge High Court of Malaya Kuala Lumpur (NCC 6) S/N j0kjX9uzEkG4huWDEu81oQ Counsel for Plaintiff: Shaikh Abdul Saleem bin Shaikh Abdul Karim and Nurul Ameerah Natasya binti Ismail Ridha Shaikh David & Co. (Kuala Lumpur). Counsel for Defendant: Ian Shang Kuan and Frankie Tan Kah Hian. Ian Shang Kuan (Johor Bahru). CASES REFERRED TO: 1) Government of the Lao People's Democratic Republic v. Thai-Lao Lignite Co Ltd ("TLL") A Thai Company & Anor [2013] 1 LNS 83. 2) Hindustan Oil Exploration Co Ltd v Hardy Exploration & Production (India) Inc [2023] 4 MLJ 113, CA. 3) Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413, FC. 4) Kerajaan Malaysia v Perwira Bintang Holdings Sdn Bhd [2015] 1 CLJ 617, CA. S/N j0kjX9uzEkG4huWDEu81oQ 5) Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198, FC. 6) Sigur Ros Sdn Bhd v Master Mulia Sdn Bhd [2018] 8 CLJ 291, CA. 7) The Government of India v Cairn Energy India Pty Ltd & Ors [2014] 9 MLJ 149, HC. LEGISLATION REFERRED TO: 1) Arbitration Act 2005, section 37. S/N j0kjX9uzEkG4huWDEu81oQ