Gumusut-Kakap Semi-Floating Production System (Labuan) Limited v Sabah Shell Petroleum Company Limited (W-02(C)(A)-125-01/2023)

In this judgment, I shall adopt the abbreviations for the parties as stated in the final award (Award) of a three-member arbitral tribunal (Tribunal).

Gumusut-Kakap Semi-Floating Production System (Labuan) Ltd. (GKL) and Sabah Shell Petroleum Co. Ltd (SSPC) entered into a contract no. C-591673 on 9.11.2012 (Contract) with regard to the "Gumusut Kakap Semi-Submersible Floating Production System" (Semi-FPS).

GKL instituted arbitral proceedings against SSPC before the Tribunal (Arbitration). In the Arbitration-

GKL claimed from SSPC for variation works which had been performed by GKL but had not been paid by SSPC (GKL's Claim). The following five issues arose with regard to GKL's Claim [5 Issues (GKL's Claim)]-

when was the "Handover Completion" of the Semi-FPS?;

whether SSPC had failed to achieve the "Commencement of Commercial Production" in a timely fashion;

whether variation works were performed by GKL and whether SSPC was due to make payment to GKL for the variation works;

whether SSPC was liable to repay USD20,000.000 for a call which was wrongly made on a bond under the Contract; and

whether the "Warranty Defect Action Form" used in the correction of defects was correctly administered; and

SSPC counterclaimed from GKL with regard to the cost of rectification works incurred by SSPC (SSPC's Counterclaim). In addition to the 5 Issues (GKL's Claim), the following three issues arose in respect of SSPC's Counterclaim-

whether GKL had properly completed its scope of works under the Contract and whether SSPC was entitled to payment for works done by SSPC to complete the works or to remedy the defects in GKL's works;

whether the Handover Completion was completed in accordance with the Contract and if not, whether SSPC was entitled to payment of liquidated damages from GKL; and

whether the functionality of the Semi-FPS was as required by the Contract and if not, whether SSPC was entitled to damages from GKL.

On 8.4.2020, the Tribunal issued the Award as follows:

the Handover Completion under the Contract did not occur prior to 11.10.2014;

SSPC shall pay GKL the Additional Lease Rate of USD43,336.01 per day from the date of the Award;

GKL shall pay SSPC the following sums:

USD324,695,970.59 for the Work Done Claims, Liquidated Damages and Overpayment in respect of the Semi-FPS Day Rate and sums awarded in the Adjudication Proceedings;

USD84,844,226.64 for interest up to the date of the Award;

USD12,746,570.70 for Costs under Article 12(9) of the KLRCA Rules; and

interest at 6.65% per annum (pa) on the sums awarded in the Award from the date of the Award until payment (the Award did not state "pa");

SSPC is entitled to set off the above claims against moneys owed by SSPC to GKL under the Contract, including but not limited to the Semi-FPS Day rate;

GKL and SSPC shall do everything necessary to account for any GST (Goods and Services Tax) that has already been paid or may be due on the sums awarded, as may be required by relevant GST legislation and practice; and

except as set out above, the Tribunal dismisses GKL's Claim and SSPC's Counterclaim. B. Proceedings in the High Court

GKL had filed against SSPC an originating summons (OS) no. WA-24C(ARB)-18-03/2021 in the High Court to set aside the Award (GKL's Setting Aside OS) under s 37 of the Arbitration Act 2005 (AA).

OS no. WA-24C(ARB)-10-05/2020 had been filed in the High Court by SSPC against GKL to enforce the Award pursuant to s 38 AA (SSPC's Enforcement OS).

In SSPC's Enforcement OS, the learned High Court Judge (as he then was) granted an ex parte order to enforce the Award (Ex Parte Enforcement Order). GKL applied to the High Court to set aside the Ex Parte Enforcement Order [GKL's Setting Aside Application (Ex Parte Enforcement Order)].

The High Court heard together GKL's Setting Aside OS and GKL's Setting Aside Application (Ex Parte Enforcement Order).

On 29.12.2022-

the High Court dismissed GKL's Setting Aside OS with costs of RM175,000.00 (subject to allocatur fee) [High Court's Decision (GKL's Setting Aside OS)]; and

GKL's Setting Aside Application (Ex Parte Enforcement Order) was refused by the High Court with costs of RM175,000.00 (subject to allocatur fee) [High Court's Decision (Ex Parte Enforcement Order)]. C. Proceedings in the Court of Appeal

GKL had lodged the following two appeals in the Court of Appeal:

appeal no. WA-02(IM)-124-01/2023 was filed against the High Court's Decision (Ex Parte Enforcement Order) [GKL's Appeal (High Court's Enforcement of Award)]; and

GKL lodged appeal no. WA-02(C)(A)-125-01/2023 against the High Court's Decision (GKL's Setting Aside OS) [GKL's Appeal (High Court's Dismissal of GKL's Setting Aside OS)]. I shall refer to GKL's Appeal (High Court's Enforcement of Award) and GKL's Appeal (High Court's Dismissal of GKL's Setting Aside OS) collectively in this judgment as "GKL's 2 Appeals".

We heard GKL's 2 Appeals together over the course of two days as both these appeals concerned the Award. Thereafter we reserved our decision with regard to GKL's 2 Appeals.

I have had the privilege to peruse a draft judgment for GKL's 2 Appeals which had been prepared by my learned brother, Ong Chee Kwan JCA (Ong Chee Kwan JCA's Draft).

I agree with all the contents of Ong Chee Kwan JCA's Draft except for one matter (Sole Disagreement). It is entirely my misfortune to have the Sole Disagreement. With respect, I am of the view that the court should exercise its discretion to sever the Award in accordance with -

s 37(1)(a)(iv) and/or (v) AA read with s 37(3) AA; and

s 39(1)(a)(iv) and/or (v) AA read with s 39(3) AA - when the Tribunal awarded a sum of USD324,695,97059 in favour of SSPC against GKL which exceeded a limitation of GKL's liability of USD200,000,000.00 to SSPC [which was expressly provided in Article 34.2 and 34.3 in Section II of the Contract ("Article 34.2" and "Article 34.3")].

This judgment sets out the reasons for the Sole Disagreement. A draft of this judgment (This Draft) had been forwarded to my learned brothers, Che Mohd. Ruzima bin Ghazali JCA (as he then was) and Ong Chee Kwan JCA. Che Mohd. Ruzima bin Ghazali JCA (as he then was) had expressed his agreement with This Draft. Hence, this judgment shall form the majority judgment for GKL's 2 Appeals. D. Court's discretionary power under ss 37(1)(a)(iv), (v), (3), 39(1)(a)(iv), (v) and (3) AA

Reproduced below are the relevant parts of ss 8,9,30,37,38 and 39 AA: "s 8. Extent of Court Intervention No court shall intervene in matters governed by [AA], except where so provided in [AA]. s 9. Definition and form of arbitration agreement

In this Act, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

An arbitration agreement may be in the form of an arbitration clause in an agreement or in the form of a separate agreement.

An arbitration agreement shall be in writing.

An arbitration agreement is in writing-

if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means; or

if it is contained in an exchange of statement of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.

The requirement that an arbitration agreement be in writing is met by any electronic communication that the parties make by means of data message if the information contained therein is accessible so as to be useable for subsequent reference.

A reference in an agreement to a document containing an arbitration clause shall constitute an arbitration agreement, provided that the agreement is in writing and the reference is such as to make that clause part of the agreement.

For the purpose of this section, "data message" means information generated, sent, received or stored by electronic, magnetic, optical or similar means, including, but not limited to, electronic data interchange, electronic mail, telegram, telex or telecopy.

The arbitral tribunal shall decide according to equity and conscience only if the parties have expressly authorized it to do so.

The arbitral tribunal shall, in all cases, decide in accordance with the terms of the agreement and shall take into account the usages of the trade applicable to the transaction.

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;

Where the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside.

Firstly, the scope of s 37(1)(a)(iv) and (v) AA had been explained by Jeffrey Tan FCJ in the Federal Court case of Thai-Lao Lignite Co Ltd & Anor v Government of the Lao People's Democratic Republic [2017] 6 AMR 219, at [197], as follows: [197] In relation to 'the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration' and 'the award contains decisions on matters beyond the scope of the submission to arbitration', William & Kawharu supra at 17.5.4 thus commented on the first limb of art 34(2)(a)(iii) of the NZ Arbitration Act (the equivalent of section 37(1)(a)(iv) and (v) of AA 2005): 'This ground for setting aside is directed at situations in which a tribunal has jurisdiction under a valid arbitration agreement, but has exceeded the authority by dealing in the award with matters that go beyond the terms of the arbitration agreement or the scope of the issues referred by the parties for resolution ... The tribunal also has an obligation to take particular care to keep within the confines of these matters that the parties have plainly put in issue ... If the tribunal exceeds its authority in respect of some matters only, and its decisions on those matters are severable from decisions on matters made within the submission to arbitration, the High Court may only set those parts of the award containing the decisions on matters not submitted to arbitration" (emphasis added).

In the Court of Appeal case of Garden Bay Sdn Bhd v Sime Darby Property Bhd [2021] 2 MLJ 281, at [60], [61], [65] and [66], Azizah Nawawi JCA (as she then was) decided as follows: "Dispute not contemplated by or not falling within the terms of the submission to arbitration [60] The other issue raised by the learned judge was whether the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration when the arbitrator decided that by conduct, the parties have accepted that Sime Darby's claim for rectification works is the sum retained as retention sum under the contract. [61] On the legal position, we agree that it is trite law that when parties refer their dispute to arbitration, the mandate of the arbitrator must be limited to the terms defined by the parties for him to exercise his jurisdiction. If the arbitrator strays from the confines of this mandate, he will be acting in excess of his jurisdiction, even though he may have the initial and primary jurisdiction to arbitrate between the parties. [65] In the first place, it is not correct for Sime Darby to submit that the issue submitted for arbitration was Garden Bay's claim for RM338,666.39 only, being the balance sum which remain unpaid by Sime Darby in Project. The issue on the rectification cost was also part of Sime Darby's counterclaim in the arbitration, and this was accepted by the learned trial Judge in paragraph [48] of the Judgment, that it was 'within the parties' submission to arbitration that the Arbitrator should decide on whether the Respondent was entitled to the sum of RM246,978.00 being the costs of rectification works or such other amount as may be assessed by the Arbitrator or not at all ...'. [66] Therefore, the issue posed by Sime Darby and accepted by the learned judge, that whether there was consent between the parties by conduct that Sime Darby had accepted the retention sum as payment for the rectification, was an issue within the contemplation of the parties on the rectification costs. As accepted by the learned judge, the arbitrator should decide on whether Sime Darby was entitled to the sum of RM246,978 being the costs of rectification works or such other amount as may be assessed by the Arbitrator or not at all." (emphasis added).

According to the judgment of Mary Lim J (as she then was) in the High Court case of Magna Prima Construction Sdn Bhd v Bina BMK Sdn Bhd and another case [2015] 11 MLJ 841, at [32] - [32] The tests under sub-para 37(1)(a)(v) require the plaintiff to satisfy the court that the learned arbitrator had exceeded his jurisdiction and had dealt with a matter beyond his jurisdiction. For this, at the very least, the points of claim, defence and reply must be considered as these documents define the limits of the learned arbitrator's jurisdiction." (emphasis added).

In resisting GKL's 2 Appeals, SSPC's learned counsel had relied on, among others, the judgment of Azimah Omar JCA (as she then was) in the Court of Appeal in Hindustan Oil Exploration Co Ltd v Hardy Exploration & Production (India) Inc [2023] 4 MLJ 113. I cite the following passages in Hindustan Oil Exploration, at [20], [40], [42] and [66] to [75]: [20] In its attempt to set aside the majority award, the plaintiff had advanced the following contentions before the learned judicial commissioner (now High Court judge):

the majority of the tribunal decided Malaysian limitation laws and not Indian limitations laws applied to the dispute and found that no part of the defendant's claims was time barred （'applicable limitation laws decision'); [40] In order to determine whether the learned judicial commissioner was plainly wrong in arriving at her decisions, we shall delve into our deliberations by gradually determining the following three issues in the following sequence: Issue No (i) Whether the decision of the majority of the tribunal (in applying the Malaysian limitation law (as the seat of arbitration is Kuala Lumpur - article 17.12 of the JOA) instead of the Indian limitation laws (as prescribed by article 18 of the JOA - chosen law of the parties) was a decision that exceeded the tribunal's mandate scope of submission and jurisdiction, and thereby can be set aside under s 37(1)(a)(v) [AA]. [42] The plaintiff had disputed the defendant's claims on the ground that a large part of the defendant's claims was for expenses incurred more than three years before the commencement of the arbitration (on 17 March 2017) which according to the plaintiff ought to be time barred under the Indian limitation laws (s 3 of the Indian Limitation Act 1963). [66] Faced with this dilemma, it is pertinent that this court cast much needed light to unravel this Gordian knot. Firstly, specific to arbitral awards involving time limitation issues, it is pertinent that the tests and deliberation be tied back down to the pure determination between what is procedural law and what is substantive law. This is in light of the unique or niche circumstance that time limitation can both be considered to be part of the decision-making process (as procedural law) which can be caught under s 37, and also issue of law and fact under s 42. Thus, the mere identification between a matter of decision-making process or a matter of law or fact is not entirely helpful in specific cases such as the present appeal that involves the law on time limitation. [67] Thus, if the learned JC has found that time limitation is a procedural issue, then the learned JC must also remain consistent as to find that time limitation (as a procedure) is also an integral part of the decision-making process (which can fall within the ambit of s 37). Thus, this Court of Appeal must depart (albeit very slightly) from the learned JC's ratio decidendi that the arbitral tribunal's decision on time limitation (if indeed erroneous) cannot fall within s 37 [AA]. If indeed the arbitral tribunal had erred in their interpretation of the procedural law on time limitation, then the arbitral award is 'procedurally impaired'. Thus, such procedural impairment would fall within the meaning of 'decision making process' under s 37. Therefore, the High Court is indeed clothed with sufficient jurisdiction to examine the correctness of the arbitral tribunal's decision-making process (in its determination of the time limitation issue). [68] The High Court in addressing the issue of time limitation must ask the more helpful question, that is 'whether the disputation is purely procedural or the disputation would also involve the question and examination of merits'. To this court's mind, if a particular issue or disputation would remain unchanged notwithstanding the merits of a case, then that particular issue or disputation is purely procedural. Alike in an arbitral award involving time limitation, time limitation is a purely procedural issue that is entirely disjointed and unaffected by the merits of any parties' cases. Time limitation is entirely blind to whether or not a party can prove any measure of liability against another. Even if there was any form of civil wrong proven on merits, time limitation shall still prevail if the complaint of such civil wrong was not procedurally voiced out within the prescribed limitation period. Therefore, since time limitation is blind to the substance or merits of the case, it cannot at all be said that time limitation is a matter of substantive law. In this sense, this court is in full agreement with the learned JC's finding that time limitation is a matter of procedural law (and not of substantive law). [69] A more meaningful expansion of the term 'admissibility' as propounded in the case of BBA v BAZ, would be 'procedural admissibility'. Thus, instead of embarking on a lengthy discourse on whether time limitation is a matter of admissibility or jurisdiction, it would be infinitely more helpful to determine whether time limitation is an issue of procedural admissibility or an issue of merit (or substance). Thus, this court is inclined to adopt the expanded meaning of 'procedural admissibility', as opposed to the Singaporean court's classification exercise between a matter of admissibility or jurisdiction. Thus, this court does not entirely follow the test in BBA v BAZ to classify time limitation to either be a matter of admissibility or jurisdiction. [70] The more meaningful classification would be (as this court has previously stressed) is to classify whether or not the matter was purely a procedural issue (which remains unchanged and undisturbed notwithstanding the merits of the case) or a substantive issue (which is indubitably affected by the facts, evidence, and merits of the case). And clearly, time limitation is one procedural issue that is indeed blind to the merits of the case. [71] This manner of test and classification would effectively reconcile the appropriate approach to a time limitation issue in all aspects (in the face of the differences between s 37 and the repealed s 42, and the Malaysian Federal Court's (in Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413; [2019] 1 CLJ 1) classification of matters concerning the decision-making process (under s 37) and issue of law and fact which affects the parties' positions (under the repealed s 42). [72] Nonetheless, even if the High Court is clothed with the necessary jurisdiction to examine the arbitral tribunal's decision-making process (in applying time limitation), the High Court ought not to interfere with the arbitral tribunal's interpretation and application of the relevant time limitation if the arbitral tribunal's interpretation and application of time limitation is legally sound. [73] Notwithstanding the slight dissonance within the analysis and reasoning of the learned judicial commissioner, this court is still in agreement with the learned judicial commissioner's final conclusion that the issue of time limitation is purely and strictly a matter of curial or procedural law. Thus, the applicable law of time limitation shall be the governing procedural law of the seat of arbitration (that being the Malaysian law). [74] We are also in agreement with the learned judicial commissioner's finding that estoppel applies to estop the plaintiff from now denying that the proper curial law of limitation is Malaysian law considering that the plaintiff itself has relied upon the Malaysian Limitation Act 1953 in the plaintiff's own attempt to prove that its counterclaims were not barred by limitation. [75] Thus, there is no appealable errors within the final conclusion of the learned judicial commissioner's decision. Therefore, we answer issue No (i) in the negative." (emphasis added). I am of the following opinion regarding Hindustan Oil Exploration:

one of the grounds to set aside a majority decision of the arbitral tribunal's final award [Majority Decision (Tribunal)] under s 37(1)(a)(v) AA was that the Majority Decision (Tribunal) should have applied a provision in India's Limitation Act 1963 (Indian Limitation Law) and not the Limitation Act 1953 of Malaysia (LA);

the Court of Appeal upheld the High Court's dismissal of the application to set aside the Majority Decision (Tribunal) on the following five grounds-

the "time limitation" issue was a procedural issue which was "indeed blind to the merits of the case" - at [70];

even if the High Court is clothed with the necessary jurisdiction to examine the decision-making process of the Majority Decision (Tribunal) (in applying the time limitation issue), the High Court ought not to interfere with the interpretation and application of the relevant time limitation of the Majority Decision (Tribunal) if such interpretation and application of time limitation was "legally sound" - at [72];

as the seat of arbitration was in Malaysia, the Majority Decision (Tribunal) correctly applied the LA and not Indian Limitation Law - at [73];

the party (appellant) applying to set aside the Majority Decision (Tribunal) was estopped from relying on the Indian Limitation Law because the appellant also relied on the LA to submit that the appellant's counterclaim in the arbitral proceedings was not time-barred - at [74]; and

there were "no appealable errors" with the High Court's dismissal of the appellant's application to set aside the Majority Decision (Tribunal) - at [75]; and

unlike GKL's 2 Appeals, Hindustan Oil Exploration did not concern the application of a limitation of liability clause. Nor was there any discussion of s 37(1)(a)(iv) and (v) AA in Hindustan Oil Exploration.

Section 48(1)(a)(iv) of the Arbitration Act 2001 of Singapore [AA (Singapore)] is similar to our s 37(1)(a)(iv), (v) and (3) AA. I reproduce below s 48(1)(a)(iv) AA (Singapore): "s 48. Court may set aside award

An award may be set aside by the Court-

if the party who applies to the Court to set aside the award proves to the satisfaction of the Court that-

(iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, except that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; (emphasis added). As s 48(1)(a)(iv) AA (Singapore) is similar to our s 37(1)(a)(iv), (v) and (3) AA, cases from Singapore on that provision are persuasive and may be referred to. In this regard, I rely on the following judgment of the Court of Appeal of Singapore (its highest court) delivered by Chan Sek Keong CJ in PT Prima International Development v Kempinski Hotel SA & Other Appeals [2012] 4 SLR 98, at [31] to [34] and [47]: [31] In our view, the crucial point in relation to the pleadings argument is whether the legal effect of the New Management Contract was part of, or directly related to, the dispute which the parties submitted for arbitration. In PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597, this court made the following observations on the jurisdiction (in the sense of the mandate or authority) of an arbitral tribunal: [37] The law on the jurisdiction of an arbitral tribunal is well established. Article 34(2)(a)(iii) of the Model Law merely reflects the basic principle that an arbitral tribunal has no jurisdiction to decide any issue not referred to it for determination by the parties. In relation to this matter, we note Lord Halsbury's observations in London and North Western and Great Western Joint Railway Companies v J H Billington, Limited [1899] AC 79, where he noted, at 81, as follows: I do not think any lawyer could reasonably contend that, when parties are referring differences to arbitration, under whatever authority that reference is made, you could for the first time introduce a new difference after the order of arbitration was made. Therefore, upon that question I certainly do give a very strong opinion. [Court of Appeal's emphasis in PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA] In London and North Western and Great Western Joint Railway Companies v J H Billington, Limited [1899] AC 79 at 81, Lord Halsbury LC was making a general observation that where an arbitral award had been made on issues that had been submitted for arbitration, one party could not be allowed to introduce a new dispute which was not within the scope of the submission to arbitration. [32] An arbitration agreement is merely an agreement between parties to submit their disputes for arbitration. The disputes submitted for arbitration determine the scope of the arbitration. It is plain that the scope of an arbitration agreement in the broad sense is not the same as the scope of the submission to arbitration. The former must encompass the latter, but the converse does not necessarily apply, in that the particular matters submitted for arbitration may not be all the matters covered by the arbitration agreement. The parties to an arbitration agreement are not obliged to submit whatever disputes they may have for arbitration. Those disputes which they choose to submit for arbitration will demarcate the jurisdiction of the arbitral tribunal in the arbitral proceedings between them. An arbitral tribunal has no jurisdiction to resolve disputes which have not been referred to it in the submission to arbitration. Simply put, a party cannot raise a new dispute in an arbitration without the consent of the other party. These propositions flow inexorably from the consensual nature of arbitration. [33] The role of pleadings in arbitral proceedings is to provide a convenient way for the parties to define the jurisdiction of the arbitrator by setting out the precise nature and scope of the disputes in respect of which they seek the arbitrator's adjudication. It is for this purpose that Art 23 of the Model Law provides for the compulsory filing of pleadings as follows: [34] Additionally, r 18 of the SIAC Rules (1997 Ed) also provides for pleadings to be filed by the parties. Accordingly, in order to determine whether an arbitral tribunal has the jurisdiction to adjudicate on and make an award in respect of a particular dispute, it is necessary to refer to the pleaded case of each party to the arbitration and the issues of law or fact that are raised in the pleadings to see whether they encompass that dispute. [47] Having regard to the pleaded issues that were submitted for arbitration, which included Kempinski's claim for damages from 6 February 2002 onwards for "the remainder of the term of the [Management] Contract" and its alternative claim for specific performance, the issue of what legal effect the New Management Contract had on the continuing viability of these two claims after 28 April 2006 was, in our view, within the scope of the parties' submission to arbitration. ...” (emphasis added).

I am of the following view regarding the court's discretionary power under ss 37(1)(a)(iv), (v), (3), 39(1)(a)(iv), (v) and (3) AA:

in an application to set aside an arbitral award (Setting Aside Application), s 37(1)(a)(iv), (v) and (3) AA concern the court's discretionary power to sever an arbitral award. Such discretion is clear from the permissive term "may" used in s 37(1) and (3) AA; In an application for the court to recognise and enforce an arbitral award (Enforcement Application), the court's power under s 38(1) AA is subject to s 39 AA. By virtue of s 39(1)(a)(iv), (v) and (3) AA, the court has a discretion to enforce only part of the award in an Enforcement Application;

premised on the above four cases of Thai-Lao Lignite, Garden Bay, Magna Prima Construction and PT Prima International Development (which I shall refer in this judgment as the "Quadrilogy") , in deciding -

the "terms of the submission to arbitration" in ss 37(1)(a)(iv) and 39(1)(a)(iv) AA; and

the "scope of the submission to arbitration" in ss 37(1)(a)(v) and 39(1)(a)(v) AA: - the court shall consider the documents referred to in s 25(1)(a) to (c) AA. According to s 25(1) AA- "s 25. Statements of claim and defence

Within the period of time agreed by the parties or, failing such agreement, as determined by the arbitral tribunal, the claimant shall state-

the facts supporting his claim;

the points at issue; and

the relief or remedy sought, and the respondent shall state his defence in respect of the particulars set out in this subsection, unless the parties have otherwise agreed to the required elements of such statements." (emphasis added). The requirements in s 25(1) AA are mandatory. This is due to the fact that the legislature has employed the mandatory term "shall" twice - the first "shall" for a Statement of Claim and the second "shall" for a Defence. Notwithstanding the fact that s 25(1) AA is silent on a counterclaim, the mandatory requirements in s 25(1)(a) to (c) AA, shall also apply to a counterclaim;

the phrase "terms of the submission to arbitration" in ss 37(1)(a)(iv), (v), 39(1)(a)(iv) and (v) AA is wider than an "arbitration agreement" defined in s 2(1) read with s 9(1) AA (agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship) - please refer to PT Prima International Development, at [32]. This view is also supported by the following reasons-

according to s 9(2) AA, an arbitration agreement may be in the form of an "arbitration clause in an agreement" (Arbitration Clause). It is difficult to envisage an Arbitration Clause which contains all the "terms of the submission to arbitration"; and

an arbitration agreement has extended meanings pursuant to -

s 9(4)(a) AA, namely, the content of the arbitration agreement is recorded "in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means" {Arbitration Agreement [Section 9(4)(a) AA]}; and

(ii) s 9(4A) AA, ie., a written arbitration agreement may be in the form of "any electronic communication that the parties make by means of data message if the information contained therein is accessible so as to be useable for subsequent reference” {Arbitration Agreement [Section 9(4A) AA]}. "Data message" is given a wide meaning in s 9(6) AA. The Arbitration Agreement [Section 9(4)(a) AA] and Arbitration Agreement [Section 9(4A) AA], by their very nature, may not constitute all the "terms of the submission to arbitration" as understood in ss 37(1)(a)(iv), (v), 39(1)(a)(iv) and (v) AA; and

the provisions in s 30(4A) and (5) AA are not relevant in the exercise of the court's discretionary power pursuant to ss 37(1)(a)(iv), (v), (3), 39(1)(a)(iv), (v) and (3) AA. I rely on the following reasons-

Parliament has not provided for ss 37(1)(a)(iv), (v), (3), 39(1)(a)(iv), (v) and (3) AA to be subject to s 30(4A) and (5) AA. In fact, ss 37(1)(a)(iv), (v), (3), 39(1)(a)(iv), (v) and (3) AA do not even refer to s 30(4A) and (5) AA. By reason of s 8 AA which provides for a "minimalist" approach by courts in deciding Setting Aside Applications and Enforcement Applications, the court cannot take into account s 30(4A) and (5) AA in deciding Setting Aside Applications and Enforcement Applications; and

s 37(1)(a)(iv), (v) and (3) AA are placed in Chapter 7 AA (Recourse against award). Section 39(1)(a)(iv), (v) and (3) AA are contained in Chapter 8 AA (Recognition and enforcement of awards). Section 30 AA is however placed in Chapter 6 AA (Making of Award and Termination of Proceedings). According to s 2(1)(a) of the Interpretation Acts 1948 and 1967 (IA), Part 1 IA applies to the construction of AA (enacted after 18.5.1967). Section 16 IA (in Part 1 IA) provides as follows - "Notice to be taken of division into parts, chapters, etc.

Where an Act or subsidiary legislation is divided into parts or chapters or otherwise, the fact and particulars of the division shall, without express mention thereof in the Act or subsidiary legislation, be taken notice of in all courts and for all purposes whatsoever." (emphasis added). In Nor Hazliza bt Ismail & Anor v Mohamed Yusoff bin Shaik Madar [2024] 4 MLJ 770, at [11(1)] , the Court of Appeal had applied s 16 IA in the construction of the Courts of Judicature Act 1964. By virtue of s 16 IA, the court should take judicial notice of the different Chapters 6, 7 and 8 AA. Accordingly, s 30 AA should not be considered in the exercise of the court's discretionary power under ss 37(1)(a)(iv), (v), (3), 39(1)(a)(iv), (v) and (3) AA. E. Should the court exercise its discretionary power under ss 37(1)(a)(iv), (v), (3), 39(1)(a)(iv), (v) and (3) AA in this case?

Articles 34.2 and 34.3 are contained in Section II of the Contract (Conditions of Agreement). Article 34.2 and 34.3 state as follows: "ARTICLE 34 - CONSEQUENTIAL LOSS AND LIMITATION OF LIABILITY

34.2 Applicability Limitation Any exclusion or limitation specified in the CONTRACT shall apply to claims in contract, tort or otherwise at LAW in respect of matters covered by such exclusion or limitation.

34.3 Limitation of Liability Notwithstanding any other provision of this CONTRACT, the total liability of the CONTRACTOR [GKL] to the COMPANY [SSPC] arising howsoever out of or in connection with the CONTRACT in respect of all claims, loss and/or expenses of every kind and nature whatsoever whether by way of indemnity or by reason of any breach of the CONTRACT (including without limitation any payment of Liquidated Damages) and/or in tort (including without limitation, negligence or gross negligence) or breach of any duty (statutory or otherwise), shall not exceed UNITED STATES DOLLARS TWO HUNDRED MILLION (USD200,000,000.00) in aggregate. The provision of this Article shall not apply to any indemnities given by the CONTRACTOR [GKL] under Article 29 headed INSURANCE BY THE CONTRACTOR [GKL], Article 23 headed TAXES AND TAX EXEMPTION CERTIFICATES, Article 27 headed PATENTS AND OTHER PROPRIETARY RIGHTS, Article 28 headed LIABILITIES AND INDEMNITIES, Article 32 headed CONFIDENTIALITY and Article 30 headed PERMITS, LAWS AND REGULATIONS." (emphasis added).

My interpretation of Articles 34.2 and 34.3 is as follows:

as the Contract was a commercial one, Articles 34.2 and 34.3 should be construed by the court in a manner which makes business common sense (Business Common Sense Construction) - please refer to the judgment of Zainun Ali FCJ in the Federal Court case of SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464, at [78];

according to Article 2.1 of the Contract, the heading, index, title, subtitle, subheading or marginal note of the Contract "shall" not "limit, alter or affect the meaning or operation" of the Contract;

Article 2.7 of the Contract provides that the words "other" and "including" in Article 34.3 do "connote limitations in any way" on the meaning of Article 34.3;

a Business Common Sense Construction of Article 34.3 clearly imposed a maximum liability of USD200,000,000.00 on the part of GKL as a "total liability" which was due from GKL to SSPC "arising howsoever out of or in connection with" the Contract "in respect of all claims, loss and/or expenses of every kind and nature whatsoever whether by way of indemnity or by reason of any breach of the Contract (including without limitation any payment of Liquidated Damages) and/or in tort (including without limitation, negligence or gross negligence) or breach of any duty (statutory or otherwise)" [GKL's Maximum Liability (USD200,000,000.00)];

Article 34.3 had expressly provided for certain exceptions to GKL's Maximum Liability (USD200,000,000.00) {Article 34.3 "shall not apply to any indemnities given by [GKL] under Article 29 ..., Article 23 ..., Article 27 ..., Article 28 ..., Article 32 ... and Article 30 ... } [Exceptions to GKL's Maximum Liability (USD200,000,000.00)];

save for the Exceptions to GKL's Maximum Liability (USD200,000,000.00), GKL's Maximum Liability (USD200,000,000.00) in Article 34.3 should prevail over all other provisions of the Contract. This was clear from the phrase "Notwithstanding any other provision of this Contract" as the opening words in Article 34.3; and

the above Business Common Sense Construction of Article 34.3 is supported by Article 34.2 (Any ... limitation specified in the Contract shall apply to claims in contract, tort or otherwise at law in respect of matters covered by such ... limitation).

Premised on the Quadrilogy, in deciding -

the "terms of the submission to arbitration" in ss 37(1)(a)(iv) and 39(1)(a)(iv) AA; and

the "scope of the submission to arbitration" in ss 37(1)(a)(v) and 39(1)(a)(v) AA: the court shall consider the following documents -

GKL's Statement of Claim (GKL's SOC) - please refer to s 25(1)(a) to (c) AA;

SSPC's Defence and Counterclaim (SSPC's DCC); and

GKL's Reply and Defence to Counterclaim (GKL's RDCC); and

SSPC's rejoinder to GKL's RDCC (SSPC's Rejoinder).

Firstly, GKL's SOC did not allude to GKL's Maximum Liability (USD200,000,000.00) because GKL was the claimant in the Arbitration.

Secondly, as a counter claimant, it was understandable why SSPC's DCC was silent regarding GKL's Maximum Liability (USD200,000,000.00).

In paragraphs 475 (Part E8), 516(iii) (Part E12), 527 to 531 and 1181 of GKL's RDCC, GKL had expressly relied on GKL's Maximum Liability (USD200,000,000.00).

GKL's Maximum Liability (USD200,000,000.00) had been denied in SSPC's Rejoinder [which repeated at length the total sum of SSPC's Counterclaim against GKL in excess of GKL's Maximum Liability (USD200,000,000.00)].

Based on GKL's RDCC and SSPC's Rejoinder -

the "terms of the submission" to the Arbitration within the meaning in ss 37(1)(a)(iv) and 39(1)(a)(iv) AA [Terms of Submission (Arbitration)]; and

the "scope of the submission" to the Arbitration as understood in ss 37(1)(a)(v) and 39(1)(a)(v) AA [Scope of Submission (Arbitration)] included, among others, the requirement that SSPC's Counterclaim should be limited by GKL's Maximum Liability (USD200,000,000.00).

Inexplicably, in an extremely long Award of 3461 paragraphs, the Tribunal only alluded to GKL's Maximum Liability (USD200,000,000.00) in one paragraph as follows [Paragraph 2714 (Award)]: [2714] It follows that the Tribunal does not consider that, apart from the claim for Liquidated Damages under Clause 37.1 of Section II of the Contract, any of the claims made by SSPC are caught by the limit of liability of USD200 million under provisions of Clause 34.3." (emphasis added).

I am of the following view:

Paragraph 2714 (Award) had dealt with a dispute not contemplated by or not falling within the Terms of Submission (Arbitration) regarding GKL's Maximum Liability (USD200,000,000.00);

Paragraph 2714 (Award) contained a decision on a matter beyond the Scope of Submission (Arbitration) in respect of GKL's Maximum Liability (USD200,000,000.00);

contrary to the Quadrilogy, the High Court had committed an error in law in not perusing GKL's RDCC and SSPC's Rejoinder so as to ascertain the Terms of Submission (Arbitration) and Scope of Submission (Arbitration) with regard to GKL's Maximum Liability (USD200,000,000.00); and

I have no hesitation to exercise my discretion to sever the Award in accordance with ss 37(3) and 39(3) AA so as to confine the amount to be paid by GKL to SSPC, to an aggregate sum of USD200,000,000.00 [GKL's Total Liability (SSPC)]. Such exercise of discretion is due to the fact that GKL's Maximum Liability (USD200,000,000.00) had been expressly agreed to by both GKL and SSPC (represented by legal counsel) after extensive negotiations at arm's length with regard to the high risks involved in the extraction of crude oil from sea bed. GKL is bound to pay interest on GKL's Total Liability (SSPC) at the rate stated in the Award. Based on GKL's Total Liability (SSPC), the sum of USD84,844,266.64 (pre Award interest in the Award) shall be varied accordingly,.

As GKL is partially successful in GKL's 2 Appeals, GKL is only entitled to a part of the costs for GKL's 2 Appeals.

On Friday, 5.12.2025, after the delivery of -

my decision; and

the decision of Ong Chee Kwan JCA we have unanimously agreed to the following order of costs here and below (subject to allocatur fee) -

SSPC shall pay to GKL costs in a sum of RM75,000.00 for GKL's Appeal (High Court's Dismissal of GKL's Setting Aside OS);

costs of RM75,000.00 for GKL's Appeal (High Court's Enforcement of Award), shall be borne by SSPC in favour of GKL; and

the High Court's two orders for costs in GKL's Setting Aside OS and GKL's Setting Aside Application (Ex Parte Enforcement Order) (High Court's 2 Costs Orders), are maintained.

GKL's 2 Appeals are allowed with the following order:

the Award is varied wherein -

GKL is only liable to SSPC with regard to GKL's Total Liability (SSPC); and

the amount of interest, pre-Award and post-Award shall be premised on GKL's Total Liability (SSPC);

the High Court's Decision (GKL's Setting Aside OS) and High Court's Decision (Ex Parte Enforcement Order) are varied as stated in the above sub-paragraphs (1)(a) and (b);

the High Court's 2 Costs Orders are maintained; and

SSPC shall pay to GKL costs for GKL's 2 Appeals as stated in the above sub-paragraphs 33(a) and (b).

In closing, I must express my gratitude to all learned counsel for their able assistance in GKL's 2 Appeals, without which this judgment would not have been possible. DATE: 5 DECEMBER 2025 WONG KIAN KHEONG Judge Court of Appeal For both appeals Counsel for Dato' Dr. Cyrus Das, Dato' Lim Chee Wee, the Appellant: Mr. Lee Shih, Mr. Kwan Will Sen, Encik Muayyad bin Khairulmaini & Ms. Emily Ho Mei Li (Messrs Lim Chee Wee Partnership) Counsel for Mr. Christopher Leong Sau Foo, Respondent: Ms. Janet Chai Pei Ying, Ms. Chloe Chew Khe Ying & Mr. Umesh Nerwin Nair a/l Sivakumar (Messrs Chooi & Company)

On an application in writing to the High Court, an award made in respect of an arbitration where the seat of arbitration is in Malaysia or an award from a foreign State shall, subject to this section and section 39 be recognized as binding and be enforced by entry as a judgment in terms of the award or by action. s 39. Grounds for refusing recognition or enforcement

Recognition or enforcement of an award, irrespective of the State in which it was made, may be refused only at the request of the party against whom it is invoked-

where that party provides to the High Court 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;

Where the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced." (emphasis added).