M.E.I. Project Engineers Sdn Bhd v Syarikat Success Construction Sdn Bhd (WA-24C(ARB)-15-04/2023)

MEI’s application in Originating Summons No. WA-24C(ARB)- 15-04/2023 (‘O.S. No. 15’) to set aside the Final Award dated 7.4.2023 (‘Award’) by the learned Arbitrator, Ir. Zafrul Mahmood (‘Arbitrator’) pursuant to subparagraph 37(1)(b)(ii) and paragraph 37(2)(b) of the AA 2005 (‘Setting

Success’s application in O.S. No. WA-24C(ARB)-21-05/2023 (‘O.S. No. 21’) to enforce the Award pursuant to s 38 AA 2005 (‘Enforcement Application’). [3] After having considered the cause papers and the oral and written submissions of the parties, excluding MEI’s Further Notes dated 5.9.2023 (encl. 99) as it was filed without leave of the Court after the hearing date, I had dismissed the Setting Aside Application and allowed the Enforcement Application. [4] MEI is aggrieved with my decision and I now provide my full grounds of judgment. The Cause Papers [5] The cause papers for each application are as follows:

MEI’s O.S. dated 20.4.2023 (encl. 1);

MEI’s Affidavit In Support (‘AIS’) affirmed by its Managing Director, Dato’ Seri Ir Lim Kok Khong on 19.4.2023 (encls. 2 - 72);

Success’s Affidavit In Reply (‘AIR’) affirmed by its Director, Soon Eng Loo on 23.5.2023 (encl. 74); and

MEI’s AIR affirmed by the same deponent on 6.6.2023 (encl. 78).

Success’s O.S. dated 24.5.2023 (encl. 1);

Success’ AIS affirmed by the same deponent on 23.5.2023 (encls. 2 - 3);

MEI’s AIR affirmed by the same deponent on 16.6.2023 (encl. 5);

MEI’s Notice of Intention to Use Affidavit in O.S. No. 15 dated 19.6.2023 (encl. 6);

Success’s AIR affirmed by the same deponent on 20.6.2023 (encl. 7); and

Success’s Notice of Intention to Use Affidavit in O.S. No. 15 dated 23.6.2023 (encl. 8). Background Facts [6] MEI is a private limited company incorporated in Malaysia with its registered address at Level 7, 33B, Jalan Pahang, 10400 Georgetown, Penang and its business address at Level 20, BHL Tower, 51 Jalan Sultan Ahmad Shah, 10050 Georgetown, Penang. [7] Success is also a private limited company incorporated in Malaysia and having its registered address at Unit 8.3, 8th Floor, Wisma Leader, No. 8, Jalan Larut, 10050 Georgetown, Penang and business address at No. 142, Jalan Seang Tek, 10400 Georgetown, Penang. [8] Hershey Malaysia Sdn Bhd (‘Hershey’) is the owner of a project known as “Cadangan Membina Perindustrian Sederhana Yang Mengandungi: i) Sebuah Kilang Dan Gudang 1 Tingkat Berserta Pejabat 2 Tingkat, ii) 2 Unit Bangunan Utiliti 2 Tingkat, iii) 1 Unit Pondok Pengawal Berserta Jambatan Penimbang Lori Dan Tempat Rehat (Trucker Lounge), iv) 1 Unit Bangunan TNB (SSU), Di Atas Sebahagian Lot 1877, G.237289 (Lot Asal), Senai International Airport, Mukim Senai, Daerah Kulaijaya, Johor, Malaysia for M/S Hershey Malaysia Sdn Bhd” (‘Project’). [9]

IEM Form of Contract for Civil Engineering Works, Second Edition, July 2011 (‘Form of Contract’) which consists of the following:

Articles of Agreement; and

(ii) Conditions of Contract;

Appendix 2 – Some Salient Terms;

Appendix 3 – Additional Terms;

Good Manufacturing Practice Note; and

Green Building Index Note (hereinafter referred to collectively as the ‘Contract’). [12] On the same date, 25.9.2014, M.E.I Consultants Sdn Bhd was appointed as the Engineer for the Project. [13] Under Clause 6 of the LoA, the overall date of completion for the Project is on or before 28.2.2015 for practical completion. [14] Success applied for extension of time (‘EoT’) under the Contract but it claimed that the Engineer did not respond fairly to all the Applications for EoT. [15] MEI alleged that Success failed or neglected to complete the works by the original date of completion and this resulted in a series of Mutual Agreement (‘MA’) to revise the completion date as follows: Mutual Agreement Revised Completion Date MA 1 based on site discussion dated 21.11. 2014

30.5.2015 MA 2 based on site discussion and dated 1.4.2015

30.6.2015 MA 3 based on site discussion and signed on 16.4.2015

30.8.2015 MA 4 based on site discussion and dated 19.8.2015 and 26.8.2015

31.10.2015 MA 5 based on site discussion and signed on 30.9.2015

31.12.2015 Impugned MA 6

31.1.2016 Impugned MA 7

16.2.2016 [16] MEI took the position that, due to Success’s failure to complete 22 outstanding works, MA 6 and MA 7 are invalid and rendered unenforceable. [17] MEI sought to revert to MA 5 where the revised completion date is taken to be 31.12.2015 and imposed liquidated ascertained damages (‘LAD’) against Success for the amount of RM7,340,000.00. [18] MEI also issued a Certificate of Default and Certificate of Non-Completion (‘CNC’), both dated 29.11.2016, to Success. [19] Due to Success’ purported failure to comply with the terms of the MA No. 6 and No. 7, MEI further imposed liquidated ascertained damages (‘LAD’) in accordance with the Contract. [20] Disputes arose between MEI and Success in respect of the Contract. Two adjudication proceedings had been initiated which resulted in the Adjudication Decision (‘AD’) dated 31.7.2017 (‘1st AD’) and 2.1.2019 (‘2nd AD’). [21] The parties then referred the disputes to arbitration in accordance with the agreement to arbitrate subject to the IEM Arbitration Rules 2016. [22] On 7.4.2023, the Arbitrator delivered the Award as follows: “VI. SUMMARY

The Respondent’s claim for the sum of RM 7,340,000.00 as LD under the Contract is DISMISSED and that the same is due and payable by the Respondent to the Claimant.

The Respondent has failed in all their counterclaims.

The Respondent has not brought to my notice any offer made to settle the claim against them, or any valid reason why I should not award the Claimant their cost under the rule that “cost follow the event”.

The Respondent shall pay to the Claimant the sum of RM 7,340,000.00 (Ringgit Malaysia Seven Million Three Hundred Forty Thousand only) plus simple interest thereon calculated at 5% per annum from 16.02.2016 until the said sum is paid in full.

The Respondent shall pay to the Claimant, the Claimant's costs in the arbitration in the sum of RM529,709.80 (Ringgit Malaysia Five Hundred Twenty Nine Thousand Seven Hundred Nine And Eighty Cents) within 14 calendar days from the date of this Award consisting of: (RM) i. Cost of Representative 466,137.49 ii. AIAC Room Booking 11,024.00 iii. Claimant’s Expenses 7,082.04 iv. Scribe Transcript 5,446.27 v. Arbitrator’s Fees 40,020.00 TOTAL RM 529,709.80 Basis of allocation of costs: 1) Costs of Representative is calculated from 31.03.2021 invoice (to account for man hours related to preparation of the Statement of Claim submitted on 23.04.2021) until August/ September 2022 invoice. 2) Fifty percent (50%) of AIAC Room booking and Scribe Transcript respectively. 3) One hundred percent (100%) of Arbitrator’s fees and Claimant’s expenses respectively.”. [23] On the same date that Success filed the Enforcement Application, it also filed an application for security for payment under sub-s 37(7) AA

On 26.7.2023, I allowed the application and ordered that MEI shall, on or before 11.8.2023, pay into a stakeholder account held by Success’s solicitors the Award Sum totalling RM10,602,603.01 up to the date of the Order, pending the determination of the Setting Aside Application and Enforcement Application. MEI duly complied with the Order on 7.8.2023. The Setting Aside Application [24] Sub-s 36(1) AA 2005 provides that an award made by an arbitral tribunal pursuant to an arbitration agreement shall be final and binding on the parties. [25] This Court cannot intervene in matters governed by the AA 2005 except where so provided in the AA 2005 (see s 8). [26] There is a provision in the AA 2005 which serves as a firm reminder to arbitrators that the parties shall be treated with equality and each party shall be given a fair and reasonable opportunity of presenting that party’s case (see s 20). [27] Applications for setting aside of awards made by arbitral tribunals are governed by s 37 AA 2005. This is not a provision by which a party who is aggrieved with an award can appeal against the substance and merits of the award. Courts do not exercise appellate jurisdiction over arbitration awards (see Pancaran Prima Sdn Bhd v lswarabena Sdn Bhd and another appeal [2021] 1 MLJ 1, Pembinaan LCL Sdn Bhd v. SK Styrofoam (M) Sdn Bhd [2007] 4 MLJ 113 and The Government of India v Cairn Energy India Pty Ltd & Anor [2014] 9 MLJ 149). [28] MEI’s application was made pursuant to subparagraph 37(1)(b)(ii) and paragraph 37(2)(b) of the AA 2005 which read as follows: “37. (1) An award may be set aside by the High Court only if –

…

the High Court finds that –

…

(ii) the award is in conflict with the public policy of Malaysia.

Without limiting the generality of subparagraph

(1)(b)(ii), an award is in conflict with the public policy of Malaysia where –

…

a breach of the rules of natural justice occurred –

during the arbitral proceedings; or

(ii) in connection with the making of the award. …”. [29] Both learned counsels, Mr. Alvin Julian for MEI and Ms. Susan Tan for Success, cited the landmark decision by the Federal Court in Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413 which had explicated on the public policy ground for setting aside an arbitration award. Ms. Susan Tan had additionally referred to another oft-quoted case which had laid down the guiding principles on the exercise of residual discretion when an application for setting aside an award is grounded on breach of natural justice, namely, Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198. [30] In Transgrid Ventures Sdn Bhd v Colas Rail System Engineering Sdn Bhd (now known as CRSE Sdn Bhd) and other cases [2022] MLJU 3049, I had referred to these important decisions by the apex court in the following excerpt: “[104] In Master Mulia (supra), the Federal Court laid down the following guiding principles in an enquiry as to whether there is a breach of natural justice: “[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 rules 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 outcomes, 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

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.”. [105] The test of breach of public policy and/ or natural justice was expounded by the Federal Court in Jan De Nul (supra) in the following passage: “[58] The scope of public policy ground for setting aside an arbitral award could only be invoked in deserving case ie in instances where it appears a violation of the most basic notions of morality and justice. It covers fundamental principles of law and justice in substantive as well as procedural respect. Instances where the upholding of an arbitral award would shock the conscience, or clearly injurious to the public good, or wholly offensive to the ordinary reasonable and fully informed member of the public, had been held by courts in various jurisdiction to fall within the category of public policy ground for setting aside an arbitral award. Thus, instances such as ‘patent injustice’, ‘manifestly unlawful and unconscionable’, substantial injustice’, ‘serious irregularity’ and other similar serious flaws in the arbitral process and award, would also fall within the applicable concept of public policy and therefore by virtue of s 37(1)(b)(ii) of the AA 2005 when proven, can be a ground for the court to exercise its discretion to set aside the award....”.” [see too, the case authorities which have laid down useful guidelines on the meaning of “natural justice” in the context of paragraph 37(2)(b) and the legal principles surrounding the application of subparagraph 37(1)(b)(ii) read with paragraph 37(2)(b) of the AA 2005 as a ground to challenge an award, namely, Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR 86, Trustees of Rotoaira Forest Trust v Attorney-General [1999] 2 NZLR 452, Kyburn Investments Ltd v Beca Corporate Holdings Ltd [2015] 3 NZLR 644 and Sigur Ros Sdn Bhd v Master Mulia Sdn Bhd [2018] 3 MLJ 608 (CA); the legal principles in these cases were applied by this Court in, among others, Kris Heavy Engineering & Construction Sdn Bhd v. EP Engineering Sdn Bhd [2019] MLRHU 1536, Johawaki Development (supra), Sunway Creative Stones Sdn Bhd v Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd and another summons [2020] MLJU 658, Propel Synergy Sdn Bhd v Vistasik Sdn Bhd and another case [2022] MLJU 824 and M101 Entity Sdn Bhd v Geopancar Sdn Bhd and another case [2022] MLJU 1354]. [31] In Propel Synergy (supra), this Court said: “[45] In the context of an application grounded on subpara 37(1)(b)(ii) read with subpara 37(2)(b)(ii) AA 2005, even though the Court may find that a breach of the rules on natural justice has been established or that an arbitral award is in conflict with the public policy under s 37 AA 2005, it does not necessarily mean that the Award must be set aside as a matter of course. The power of the Court to set aside the Award is discretionary and will not be exercised automatically in every case where the complaints are established [see para 56 in Jan De Nul’s case (supra, at p 429 citing Kyburn Investments Ltd v Beca Corporate Holdings Ltd [2015] 3 NZLR 644 and Sigur Ros (supra)]. These discretionary powers must be exercised judiciously (see para 40 in SJIC Bina’s case).”. [32] In the O.S. (encl. 1), MEI did not state whether its application is pursuant to limb (i) or (ii) of paragraph 37(2)(b) AA 2005. At the hearing, Mr. Alvin Julian clarified that MEI was relying on subparagraph 37(2)(b)(ii) AA 2005 and the broader principle of public policy. [33] Ground (c) in the O.S. states that MEI’s challenge against the Award is premised on –

the Award being contrary to public policy as the Arbitrator has breached the basic notions of morality and justice by failing to consider or deal with or ignoring the admission made by Success’s main witness, Soon Eng Loon (‘CW1’s Admission’), regarding a fundamental fact in dispute in connection with the making of the Award; and

the Arbitrator having breached the rules of natural justice when he failed to deal with CW1’s Admission and this materially affected the outcome of the arbitral proceedings as the Arbitrator would have otherwise arrived at a different conclusion. [34] The remedy sought by MEI, which in my opinion is unusual, is that the entire Award be set aside and replaced with the following order, essentially allowing MEI’s counterclaim for the back charges for the defects or outstanding works in the arbitration, as follows: “2. …

The Defendant’s claim against the Plaintiff as set out in the Final Award dated 7.4.2023 be dismissed with cost;

The Plaintiff’s counterclaim against the Defendant is allowed and that judgement be entered for the Plaintiff against the Defendant upon the following terms:

Judgment for a sum of RM205,843 for the non-performing Flow Meter Works;

(ii) Judgment for a sum of 475,010.60 for the Non-Conformance of Painting Works;

(iii) Judgment for a sum of RM1,000.00 for the Toilet Leakages at Logistic Office;

(iv) Judgment for a sum of 238,840.00 for Roof Leakages throughout the Building;

Judgment for a sum of RM149,285.50 Installation of box culvert and pump system at substation;

(vi) Judgment for a sum of RM4,000.00 for the Turf Repair around the site compound;

(vii) Judgement sum of RM325,000.00 being advance payment made by the Plaintiff to the Defendant’s subcontractor Te Yi Construction Sdn Bhd; and

(viii) Judgement sum of RM150,000.00 being direct payment to the Defendant’s subcontractor Struts Building Technology Pte. Ltd.

The Defendant to pay the Plaintiff’s cost for the arbitration proceedings for the sum of RM529,709.80;”. [35] Based on the foregoing, the issues which arise for determination by this Court are whether –

the Award is in conflict with the public policy of Malaysia, whether within the broader concept of public policy in subparagraph 37(1)(b)(ii) AA 2005 or within subparagraph 37(1)(b)(ii) read together with subparagraph 37(2)(b)(ii) AA 2005 when the Arbitrator failed to consider or deal with or ignored CW1’s Admission during the arbitration hearing; and

the Court can make the order as set out in subparagraphs 2(a) and (b) and paragraph 3 in encl. 1. [36] The burden of proof lies on MEI to establish, on a balance of probabilities, its grounds of challenge to merit a setting aside of the Award. Analysis and Findings of the Court 1st Issue: Whether the Award is in conflict with the public policy of Malaysia, whether within the broader concept of public policy in subparagraph 37(1)(b)(ii) AA 2005 or within subparagraph 37(1)(b)(ii) read together with subparagraph 37(2)(b)(ii) AA 2005 when the Arbitrator failed to consider or deal with or ignored CW1’s Admission during the arbitration hearing [37] MEI submitted that the key issue to be determined by the Arbitrator was whether Success had failed or neglected to complete the works within the extended completion date. [38] It was further submitted that the intent and purpose of the MA were to afford Success with the benefit of an extended completion date and to avoid LAD from being imposed on Success. With regards to MA 6 and MA 7, the parties had mutually agreed to revise the Certificate of Practical Completion (‘CPC’) dates premised on the condition that Success will complete the following works: MA 6: CPC date revised to 31.1.2016 CPC BDG 1B (Reese Building) + BDG 05 (Trucker Lounge) + Guard House 1 & 2 + BDG06 (Detached Volatile Storage Room) + completion of all Infrastructural Works including landscape MA 7: CPC date revised to 16.2.2016 “… the few remaining comments by Steve especially the 22 items …” as mentioned in MEI’s e-mail dated 20.9.2016 to its “Principals” MEI contended that Success failed to complete the above-mentioned works and thus, did not satisfy the conditions in MA 6 and MA 7. In the premises, MA 6 and MA 7 are rendered unenforceable and without effect. It is for this reason that CW1’s Admission is said to be pertinent and of fundamental importance. [39] As MEI’s main argument relates to CW1’s Admission, the excerpt from the Notes of Proceedings dated 1.3.2022 when CW1 was cross-examined on the issue of whether MA 6 and MA 7 are conditional and whether Success has satisfied the conditions are re-produced below: “AJ Mr Soon, I now move on to what we have, what we Respondents have described as the, an impugned mutual agreement. This is in Respondent’s Bundle of Documents Volume 3 the same bundle we were in last time page 1073. Now this has been described as the sixth mutual agreement. Now Mr Soon, can you read the, is the document in front of you? Yes. Yes. So this is what you have described as the sixth mutual agreement. Now Mr Soon you’ll see that in this document it says that there is a revised schedule as follows, yes. 31.01.2016 – CPC building 1B Reese building. So am I right to understand that CPC, this is refers to CPC for building 1B Reese building, correct? Yes. Plus and I guess BDG 05 trucker lounge. So that’s another building yes what they’ve described as trucker lounge. Is that correct? Yes. And then it says guardhouse 1 and 2. That’s self-evident. Then it says BDG 06 detached volatile storage room. Are you able to explain to us what is meant by the detached volatile storage room? Mr Soon can you hear me? I just know the, I mean the detached volatile storage room only but what the rest I don’t know (11:19:40AM). So you, you don’t know what detached, I mean you can’t explain to us what detached volatile storage room means? Yes. Alright fair enough. And then it says completion of all infrastructural works including landscape. So the, so you’ll agree with me that this extension was conditional on completion of all the items stated in this document, correct? Yes. And you’ll and will you agree with me that the Claimant failed to comply with these conditions. Do you agree or disagree, Mr Soon? Agree.” (emphasis added). [40] MEI submitted that admission is the strongest evidence possible as decided in numerous case laws, for example So Thian Wan v. Tan Soon Teik [2021] 1 LNS 1261, Esso Malaysia Bhd v. Hills Agency (M) Sdn Bhd & Ors (1994) 1 MLJ 740, Lien Chong Credit And Leasing Sdn Bhd v Sri Saga Holdings Sdn Bhd & Ors [1996] 4 CLJ 168, Beyond Hallmark Sdn Bhd v Leong Tuck Onn & Anor [2018] MLJU 2051 and Kumarappa Reddi v Manavala Goundan (1918) 1 MLJ 104. [41] Mr. Alvin Julian ardently argued for MEI that this case falls within the broader concept of public policy, outside of the principles of natural justice. CW1’s Admission renders it an agreed fact that MA 6 and MA 7 are conditional and that Success failed to satisfy the conditions therein. Had the Arbitrator taken into account CW1’s Admission, the Arbitrator would have come to the irresistible conclusion that MA 6 and MA 7 are conditional and that the conditions were never satisfied by Success. This would mean that MEI had rightly imposed LAD on Success. Therefore, the Arbitrator’s finding that MA 6 and MA 7 are valid, and any works done post these MAs is considered to be within the defects liability period (‘DLP’) is manifestly wrong, unlawful, unconscionable and opens to serious doubt by members of the public. [42] The learned counsel further argued that the outcome of the Award in favour of Success is wholly offensive to the ordinary reasonable and fully informed members of the public. The enforcement of the Award would be an injury to the public good and an abuse of process and shock the conscience because any reasonable person that comes before a forum for dispute resolution would expect that, where a clear admission is made by his opponent of a fact in dispute would, as a basic and fundamental notion of justice, be treated by the forum as the best and strongest evidence. [43] Apart from the the broader concept of public policy outside of the principle of natural justice, MEI made the submission which is common in applications pursuant to subparagraph 37(1)(b)(ii) and paragraph 37(2)(b) of the AA 2005, namely that the Award is in breach of the rules of natural justice in connection with the making of the Award. [44] MEI asserted that the rule of audi alteram partem was breached by the Arbitrator in connection with making the Award when he failed to consider CW1’s Admission. This failure is tantamount to failing to hear MEI’s case. In the normal sequence of events, in any dispute resolution forum, an admission such as CW1’s Admission would render a judgment, decree or award being made in favour of the party in a similar circumstance as that of MEI. [45] Similarly, if the Arbitrator had dealt with CW1’s Admission, he would have found that Success did not fulfil the conditions for an EoT under MA 6 and MA 7 and MEI was correct in imposing LAD on Success in accordance with the terms of the Contract. [46] The words “Without limiting the generality of subparagraph (1)(b)(ii)” in sub-s 37(2) AA 2005 indicate that the grounds on which an award can be found to be in conflict with the public policy of Malaysia are not confined to those as expressed in paragraphs 37(2)(a) or (b) AA 2005 only i.e. where the award was induced or affected by fraud or corruption or where a breach of the rules of natural justice has occurred. [47] However, after having considered the affidavit evidence and submissions by the parties, I was not persuaded by MEI’s contention that the fact that the Arbitrator did not make any reference to CW1’s Admission in the Award shows that the Award is in conflict with the public policy of Malaysia, whether within the broader concept of public policy in subparagraph 37(1)(b)(ii) AA 2005 or within subparagraph 37(1)(b)(ii) read together with subparagraph 37(2)(b)(ii) AA 2005. My reasons are as follows:

In its submission after the hearing before the Arbitrator had ended, MEI submitted, among others, that the parties entered into MA 6 and MA 7, conditional upon Success fulfilling the works as required; that based on CW1’s Admission, the conditions prescribed were never completed; MA 6 and MA 7 were impugned and the completion date reverted to 31.12.2015 as per MA 5 (see paragraphs 22 - 26 in MEI’s After Trial Submission dated 15.9.2022 and paragraphs 18 - 22 in MEI’s Reply Submissions dated 11.10.2022).

The Arbitrator has stated that he has considered all documents, evidence and written submissions by the parties in paragraph 28 of the Award: “Now, I, Zafrul Mahmood, having accepted the appointment as arbitrator and having taken upon myself the burden of the arbitration, having heard the parties' claims and defence, having viewed and considered carefully all the documents, all the evidence presented and all the written submissions by them, do hereby make and publish this my final award as set out hereafter:”.

In paragraphs 67 - 81 of the Award, the Arbitrator dealt with the issue on whether MEI who signed MA 6 and MA 7 can unilaterally deem it as impugned. The Arbitrator made references to MEI’s position in the Statement of Defence, the evidence given by MEI’s witness (RW1); Success’s letter of reply dated 19.12.207 to MEI’s letter dated 8.12.2017; and the parties’ submissions before finding and concluding that: “74. Whilst I can agree with the Respondent with the principles as alluded in the laws of Saudah bt Ahmad v Mahatech Resources Sdn Bhd [2017] 9 MLJ 12 and RDC Concrete Pte Ltd v Sato Kogyo

(S) Pte Ltd and Another Appeal [2007] SGCA 39 in that the Respondent as in the case of this arbitration is entitled to terminate the contract or agreement for MA6 and MA7 subsequently reverting to MA5 terms, the Respondent has not offered any convincing legal position as to how the same law when applied in MA1 to MA5, had resulted in another cause of action where parties instead proceeded with another agreement upon the breach of contract, i.e., to extend the date of completion on the same terms.

Furthermore, I am not able to fathom as to how MA5 would in any event had been breached and terminated when MA6 was signed, that would later survive or become valid again when the Respondent had relied back on the completion date in MA5 as the basis for issuing the CNC.

… there is no documentary confirmation that would have shown that the Claimant had been made aware of such condition or term which would be applicable in MA6 and MA7 but not MA1 to MA5 at the point when the agreement was made contemporaneously. …

On the strength of the submissions before me, I have to agree with the Claimant, in that the thrust of the Mutual Agreements, is that parties had in fact reached an agreement in lieu of what the IEM 2011 Conditions of Contract had provided for in extending date of completion, i.e., For the Claimant i. Schedule for CPC is revised which extended the construction period; and ii. No imposition of LD up to the revised schedule. For the Respondent i. Wipe out the excusable delays caused by the Respondent and/or the Engineer with a certain cut-off date; and II. No claims associated with the revised CPC schedule for completion.

I hold that the only condition that is expressly clear and consistent throughout the 7 Mutual Agreements that tantamount to be also the imputed intention of the parties of MA6 and MA7 is that: i. Parties when signing agree to waive loss and expense claims (by the Claimant) and LD (by the Respondent) up to a specific date as particularized in each Mutual Agreement; ii. No express provisions in any of the MA neither requires the pre-conditions to be satisfied for each Mutual Agreement to have effect nor; iii. Requires an implied term of “date of CPC must be achieved” in order to give the agreement effect.

… I find that the express terms of the agreements shall be read as it is and that there shall not have been a re-making of a contract or agreement which the parties have made for themselves which turns out to have unexpected results.

Accordingly, I FIND the Respondent's position, who signed MAS and MA7, to unilaterally declare that the same are impugned, to be unlawful and DISMISSED.”. A scrutiny of this section of the Award shows that the Arbitrator had summarised the parties’ position and MEI’s submission on the issue of the validity of MA 6 and MA 7. The Arbitrator found that MEI’s arguments are unacceptable and made a finding of fact in favour of Success. Among the reasons given by the Arbitrator is that –

MEI never used the word “impugned” in the correspondence with Success until the commencement of the adjudication proceedings;

(ii) each time, the parties had proceeded to enter into a new MA to extend the completion dated although Success did not complete the items in the previous MA. In other words, by the conduct of the parties, the EoT as agreed under the MA was not regarded as conditional upon the completion of the items as stated in the respective MA; and

(iii) in all seven MAs, there is no express provision which requires the pre-conditions to be satisfied for each MA to have effect.

From a scrutiny of the Award, in particular paragraphs 28 and 67 - 81, it can be seen that the Arbitrator had considered the submissions of the parties whereby MEI’s position that MA 6 and MA 7 are impugned, ineffective or unenforceable as Success allegedly did not comply with the conditions therein and the completion date has reverted to 31.12.2015 was fully ventilated. In other words, MEI was afforded the right to be heard.

Natural justice does not demand that MEI is entitled to receive responses to all submissions and arguments presented, including that on CW1’s Admission. The Arbitrator is not obliged to regurgitate and deal with each of MEI’s arguments when arriving at his findings. The Arbitrator has dealt with the essential issues posed to him by the parties for determination.

MEI’s real complaint in this case is with the merits of the Award, which is not a permissible ground to set aside the Award under s 37 AA 2005. The mere fact that the Arbitrator had accepted the evidence and submissions put forth by Success over that by MEI, and arrived at a conclusion which is unfavourable to MEI, is not demonstrative of a breach of the rules of natural justice. [48] The learned counsel for Success had drawn the attention of this Court to the case of JY Creative Sdn Bhd v Meacs Construction Sdn Bhd [2022] 1 LNS 945 at paragraphs 56 and 59 where JY Creative Sdn Bhd (‘JYC’) had likewise blamed the arbitrator in failing to recognise that Meacs Construction Sdn Bhd (‘Meacs’) had already admitted liability to pay for the work done notwithstanding its complaint on the quality of JYC’s completed work. Lim Chong Fong J (now JCA) held that this complaint is in the nature of errors of fact and/ or law, which are not reviewable in a setting aside application. His Lordship said: “[40] I have carefully reviewed JYC's complaints on the findings of the Arbitrator in both the GPO Award and NCCS Award but I find them in nature and substance alleged errors on issues of fact or law or mixture of both issues which are not permissible grounds to set aside the Awards. They are, in other words, complaints on the substantive merits of the findings of the Arbitrator but not procedural irregularities committed by her that constituted breaches of natural justice. It is trite law under the framework of the AA that the application to set aside an award is not an appeal against the award. This is clearly dissimilar to a court trial appeal where the appellate court may entertain mis-applications of law and perverse findings of fact, particularly factual findings made without evidence or with inadmissible evidence. Consequently, the manner in which the Arbitrator dealt with the reception and cogency of the evidence adduced before her such as on the issues of alleged admissions made by MC or computation of liquidated damages imposable by MC are unreviewable. The dissatisfied party which is JYC in this case has to accept and live with the Awards notwithstanding it might suffer resultant serious prejudice and/or detriment as the losing party consequent to the substantive merits of the findings. Prejudice or detriment is not a relevant consideration here.”. [49] MEI’s counsel responded that Meacs’s admission was in a letter, which is open to interpretation, unlike CW1’s Admission which was made by a witness in an arbitration proceeding and goes to the nub of the parties’ dispute. In my opinion, the basic principle is the same; that the Arbitrator has considered all the evidence and has given his reasons in arriving at the conclusion as he did. MEI’s complaint pertains to alleged errors on issues of fact or law or both which is not a permissible ground to set aside the Award. Judging by the Arbitrator’s reasoning in the Award as discussed above, I do not think that there is “a violation of the most basic notions of morality and justice” such that the upholding of the Award would “shock the conscience, or clearly injurious to the public good, or wholly offensive to the ordinary reasonable and fully informed member of the public”. [50] In the upshot, MEI has not fulfilled the test as expounded by the Federal Court in Jan De Nul (supra). MEI has not proven, on a balance of probabilities, that the Award should be set aside for the reason that it is in conflict with the public policy of Malaysia, whether within the broader concept of public policy in subparagraph 37(1)(b)(ii) AA 2005 or within subparagraph 37(1)(b)(ii) read together with subparagraph 37(2)(b)(ii) AA 2005. 2nd Issue: Whether the Court can make the order as stated in subparagraphs 2(a) and (b) and paragraph 3 in encl. [51] Even though the 1st Issue is answered in the negative, for the sake of completeness, I will address the 2nd Issue as the prayers in O.S. No. 15, as remarked earlier, are uncommon in an application under s 37 AA 2005. [52] According to MEI, when a Court has exercised its discretion to intervene and set aside an Award, the Court is clothed with its inherent jurisdiction to prevent injustice. If the Court is with MEI that the Award should be set aside premised on CW1’s Admission, the Court must be able to deal with the consequential orders as set out in subparagraphs 2(b)(i) to (viii) in encl. 1, which stems from the setting aside of the Award to prevent injustice to the Plaintiff’s counterclaim. Otherwise, the parties are left in a vacuum as to their respective disputes. [53] Firstly, MEI is unable to indicate which particular limb under s 37 AA 2005 which empowers this Court to replace or vary the orders made in the Award. This is simply because such provision is non-existent. This fact was conceded by Mr. Alvin Julian. [54] There are no express provisions in the AA 2005 which allows for the Award to be substituted with orders as in subparagraphs 2(a) and (b) and paragraph 3 in encl. 1. At most, the Court may allow the arbitral tribunal to resume the proceedings or to take other action as stipulated in sub-s 37(6) AA 2005 as follows: “(6) On an application under subsection (1) the High Court may, where appropriate and so requested by a party, adjourn the proceedings for such period of time as it may determine in order to allow the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.”. [55] Secondly, the reliefs sought in paragraph 2, encl. 1 are akin to those found in a full-blown appeal or a rehearing of the matter which had been adjudicated earlier. This is clearly not countenanced under s 37 AA 2005 which does not empower this Court to entertain and reverse any perverse finding of facts, misappreciation of evidence, misapplication of the law, etc. This Court simply does not have appellate jurisdiction to encroach into the merits of the case or to review the correctness of the Award. And nor can, or should, the Court invoke its inherent jurisdiction to make the order as desired by MEI. The Enforcement Application [56] The Enforcement Application by Success is made pursuant to s 38 AA 2005 whereby sub-ss (1) and (2) provide as follows: “Recognition and Enforcement

(1) 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.

In an application under subsection (1) the applicant shall produce –

the duly authenticated original award or a duly certified copy of the award; and

the original arbitration agreement or a duly certified copy of the agreement.” …”. [57] Success has complied with all formal requirements under s 38 AA 2005 by exhibiting the duly certified copies of the arbitration agreement and the Award. [58] In the light of the decision of this Court that there is no merit in the Setting Aside Application, it necessarily follows that the Enforcement Application must be allowed. Conclusion [59] Based on all the considerations as outlined above, the Setting Aside Application was dismissed with costs of RM7,000.00, and the Enforcement Application was allowed with costs of RM5,000.00, to be paid by MEI to Success, subject to the payment of the allocator fees. [60] The Award Sum which was in the stakeholder account shall be released to Success within 10 working days from the date of decision instead of 7 working days as applied by MEI’s counsel without any strong objection by Success’s counsel. Dated: 30 December 2024 (ALIZA SULAIMAN) Judge High Court in Malaya Kuala Lumpur Counsels/ Solicitors: For the Plaintiff in O.S. No. 15 and Respondent in O.S. No. 21: Alvin Julian (Long Mohd Noor Adman bin Long Mohd Noor Affendi and Nur Nabila binti Roslee with him) Messrs. Firoz Julian Advocates & Solicitors Level 19-1, Menara Millenium Jalan Damanlela Pusat Bandar Damansara 50490 Kuala Lumpur For the Defendant in O.S. No. 15 and Applicant in O.S. No. 21: Susan Tan Shu Shuen (Koh Shien Lin and Noor Sumaeya Sofea binti Shamsudin with her) Messrs. Zul Rafique & Partners Advocates & Solicitors D3-3-8, Solaris Dutamas No.1, Jalan Dutamas 1 50480 Kuala Lumpur Cases, legislation and other sources referred to in the submissions by learned counsels and in the Grounds of Judgment: Cases: Allianz General Insurance Company v Virginia Surety Company Labuan Branch [2020] MLJU 331 Asean Bintulu Fertilizer Sdn Bhd v Wekajaya Sdn Bhd [2016] MLJU 354 Asean Bintulu Fertilizer Sdn Bhd v Wekajaya Sdn Bhd and another appeal [2018] 4 MLJ 799 Beyond Hallmark Sdn Bhd v Leong Tuck Onn & Anor [2018] MLJU 2051 Brunsfield Project Management Sdn Bhd v Ingeniur Bersekutu Consulting Engineers [2015] MLJU 2203 Danieli & C Officine Mecchaniche SPA v Southern HRC Sdn Bhd [2021] 10 MLJ 48; [2021] 5 CLJ 71 East Coast Economic Region Development Council V. MultiSpex Architects Sdn Bhd & Another Case [2022] 8 CLJ 103 Esso Malaysia Bh v. Hills Agency (M) Sdn Bhd & Ors (1994) 1 MLJ 740 Far East Holdings Bhd & Anor v Majlis Ugama Islam Dan Adat Resam Melayu Pahang & Other Appeals [2018] 1 MLJ 1 Infineon Technologies (M) Sdn Bhd v Orisoft Technology Sdn Bhd (previously known as Orisoft Technology Bhd) [2011] 7 MLJ 539 Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413; [2019] 1 CLJ 1 JY Creative Sdn Bhd v Meacs Construction Sdn Bhd [2022] 1 LNS 945 Kerajaan Malaysia v Perwira Bintang Holdings Sdn Bhd [2015] 6 MLJ 126 Kris Heavy Engineering & Construction Sdn Bhd v EP Engineering Sdn Bhd [2019] MLJU 1928 Kumarappa Reddi Versus Manavala Goundan (1918) 1 MLJ 104 La Kaffa International Co Ltd V. Loob Holding Sdn Bhd & Another Appeal [2018] 9 CLJ 593 Lien Chong Credit And Leasing Sdn Bhd v Sri Saga Holdings Sdn Bhd & Ors [1996] 4 CLJ 168 Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198 MRCB Engineering Sdn Bhd v Lee Hon Min & Ors [2018] MLJU 795 Muhibah Palm Products Sdn Bhd v. Agri Asia Oils & Fats Pte Ltd [2022] 1 LNS 2514 Oriental Housetop Sdn Bhd v Magna Haven Sdn Bhd [2021] 1 LNS 1260 Pancaran Prima Sdn Bhd v lswarabena Sdn Bhd and another appeal [2021] 1 MLJ 1 Pembinaan LCL Sdn Bhd v. SK Styrofoam (M) Sdn Bhd [2007] 4 MLJ 113 Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 5 MLJ 417 PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR 597 Siemens Industry Software GmbH & Co Kg (Germany) (formerly known as Innotec GmbH) v Jacob and Toralf Consulting Sdn Bhd (formerly known as Innotec Asia Pacific Sdn Bhd) (M) & Ors [2020] 3 MLJ 1 SJIC Bina Sdn Bhd v. Iskandar Regional Development Authority & Anor [2020] 1 LNS 2213 So Thian Wan v. Tan Soon Teik [2021] 1 LNS 1261 Stone World Sdn Bhd v. Engareh (M) Sdn Bhd [2020] 9 CLJ 358 Sundra Rajoo v. Mohamed Abd Majed & Anor [2011] 6 CLJ 923 Taman Bandar Baru Masai Sdn Bhd v Dindings Corporations Sdn Bhd [2010] 5 CLJ 83 The Government of India v Cairn Energy India Pty Ltd & Anor [2011] 6 MLJ 441 The Government of India v Cairn Energy India Pty Ltd & Ors [2014] 9 MLJ 149 Twin Advance (M) Sdn Bhd v Polar Express Europe BV [2013] 7 MLJ 811 Legislation: Arbitration Act 2005, ss 8, 36, 37 & 38 Rules of Court 2012, O. 7, O. 28 and O. 69, rr. 2, 4 & 5