MRCB BUILDERS SDN BHD v A.F.S. Engineering Sdn. Bhd. (WA-24C(ARB)-74-12/2024)

that the Final Award is in conflict with the public policy of Malaysia because it was given in breach of rules of natural justice both during the Arbitral proceeding and/or in connection with making of the Final Award in, inter alia, the following respects:- a) there were ex parte communications that took place between the Defendant and the Arbitrator in close proximity with and prior to the issuance of the Final Award; b) the appointed Secretary of the Arbitrator acted beyond the administrative scope and/or role that was consented to by the parties; c) there were further irregularities in the conduct of the arbitration proceedings including, inter alia, distasteful remark issued by the Arbitrator; d) the Arbitrator awarded interest on several of the Defendant’s claim without sufficient legal justification and/or basis to wit, there was no explanation on the nature of the interest imposed, the basis of the S/N K7w0BfBrJUOxcbcfcJYumg imposition of the interest and the basis upon which specific dates were taken to be the commencement date for the calculation of such interest without inviting the parties to address these issues; e) the Arbitrator further took into consideration entirely irrelevant matters in making his decision including evidence that was only tendered by the Defendant after the close of evidence during submission stage; f) the Arbitrator also failed to consider arguments that were raised by the Plaintiff throughout the Final Award; and g) the Arbitrator, on his own frolic, changed the completion date of the construction contract between the parties without giving the parties the opportunity to object or address the same. ii. these matters clearly had a material impact and/or causative effect in the Learned Arbitrator’s decision-making process which resulted in the Learned Arbitrator dismissing the Plaintiff’s counterclaim and allowing the Defendant’s claim. iii. the Learned Arbitrator had failed to properly assess the available evidence; S/N K7w0BfBrJUOxcbcfcJYumg iv. the Plaintiff has met the statutory requirements under Sections 37(1)(a) and (b), Sections 37(2)(b)(i) and 37(2)(b)(ii), 37(6) and Section 50 of the Arbitration Act 2005 as well as Orders 5, 7, 28, 69 and 92 Rule 4 of the Rules of Court 2012. [3] There is also before this Court an application by the Plaintiff under enclosure 2 that the enforcement of the Award be stayed pending determination and disposal of Enclosure 1. Brief Factual Background [4] Briefly, MRCB Builders Sdn Bhd, the Plaintif, appointed the Defendant, AFS Engineering Sdn Bhd, for the design, supply, delivery, installation, upgrading, testing and commissioning of the Public Address System (“PA System”) at the National Sports Complex at Bukit Jalil, Kuala Lumpur (“the Works”). [5] During the Defects Liability Period, the Defendant failed, refused and/or neglected to rectify defects that were identified by the Plaintiff. [6] As a result, the Plaintiff terminated the contract with the Defendant on 11.2.2020 and made a call on the Defendant’s Performance Bond on 19.2.2020. [7] The Defendant attempted to injunct the Plaintiff’s call on the Performance Bond. However, the Defendant was unsuccessful in the first instance at the Hight Court and on appeal at the Court of Appeal, the Court of Appeal found that the call on the Performance Bond was S/N K7w0BfBrJUOxcbcfcJYumg not unconscionable. On 6.7.2020, the sums under the Performance Bond were disbursed to the Plaintiff. [8] The Defendant then commenced arbitration against the Plaintiff. In turn, the Plaintiff mounted a counterclaim against the Defendant. [9] On 14.12.2024, the Arbitrator allowed the Defendant’s claim and dismissed the Plaintiff’s counterclaim against the Defendant. Hence, the Defendant filed the Setting Aside Application and the Stay Application herein. [10] At the arbitration proceedings, the Defendant claimed for the following reliefs:-

the balance retention sum of RM164,136.87 together with interest from 22.10.2019 (or such other date as may be determined) at 8% per centum;

RM55,339.04 being unauthorised backcharge;

RM96,173.84 being late payment interest;

RM318,873.15 together with interest of 8% per annum from 3.7.2020 until full settlement;

release of the Certificate of Making Good Defects (CMGD);

all legal charges for suit No. WA-24C-49-02/2020 with interest at 8% per annum; and

cost together with interest on cost. [11] In turn, the Plaintiff mounted a counterclaim against the Defendant. Essentially, the Plaintiff’s counterclaim is for costs that it had incurred in rectifying the defective works left behind by the Defendant amounting to RM429,951.55 and on cost charges of 60% amounting to RM257,970.93. [12] On 10.2.2021, the Arbitrator accepted his appointment as the Sole Arbitrator for the arbitration between the parties. [13] On 27.4.2021, the Arbitrator, among others, sought the parties’ consent to appoint one Ms. Eunice Tan, from Messrs. Eunice Tan & Partners, a partner in the law firm they are both practicing in as the Arbitrator’s secretary (“Secretary”) for the arbitration proceedings who was to be authorised to received copies of processes filed, to keep and maintain the confidential roster of the participants to the arbitration. This was consented to by the parties. [14] On 13.12.2024, the Arbitrator issued its Final Award dated 14.12.2024 and made the following pronouncements: - i) The Respondent shall pay back the amount of unauthorised backcharges during construction of S/N K7w0BfBrJUOxcbcfcJYumg RM55,339.04 at eight percent (8%) interest per annum from 22/07/2017 to full settlement within fourteen (14) days from the date of the Award. ii) The Respondent to release CMGD dated 16.6.2019 within fourteen (14) days from the date of the Award. iii) The Respondent to release 2nd moiety of the Retention Sum of RM164,136.87 with interest at eight percent (8%) per annum from 16.6.2019 until full settlement within fourteen (14) days from the date of the Award. iv) The Respondent to return RM318,873.15 for wrongful call of the Performance Bond with interest at eight percent (8%) per annum from 03.7.2020 until final settlement within fourteen (14) days from the date of the Award. v) The Respondent to pay RM90,892.57 plus (RM547.99 x No of days from 16.1.2021 to final settlement) within fourteen (14) days from the date of the Award. vi) The Respondent to pay RM5,000.00 to the Claimant as cost within fourteen (14) days from the date of the Award. vii) Legal Fees for suit No. WA-24C-49-02/2020 is dismissed. viii) Counter claims by the Respondent are dismissed. Anaslysis & Findings [15] To surmise the Plaintiff had claimed in respect of Enclosure 1 that S/N K7w0BfBrJUOxcbcfcJYumg 9 15.1 there were ex parte communications between the Arbitrator and the Defendant

15.2 the Arbitrator improperly communicated the Secretary on matters beyond the Secretary’s administrative scope

15.3 there were substantive errors in the Award [16] In reply to the Plaintiff’s submissions, the Defendant in essence states that the Plaintiff’s allegations do not warrant any interventionby this Court. [17] Having carefully considered the respective parties learned counsels arguments and examining the evidence before me, the following are these Court’s findings. Alleged Ex Parte Communications Between The Arbitrator And The Defendant [18] As to the allegation that there were ex parte communications between the Arbitrator and the Defendant, I have found that it was submitted via the Plaintiff’s affidavit in enclosure 3 and supported by exhibit P 13 in enclosure 14 inter alia that a. the Arbitrator did indeed request for payment of his fees via a letter dated 27.4.2024 S/N K7w0BfBrJUOxcbcfcJYumg b. there was a follow up email stating that there was no feedback received from the Plaintiff’s solicitors c. there was a telephone conversation between the Plaintiff’s counsel, Mr Julian Ch’ng and the Defendant’s counsel on 21.11.2024 as to the communication between the Arbitrator and the Defendant’s counsel where amongst others it was communicated to the Plaintiff’s lawyer that the Tribunal was not happy with the delay in the Plaintiff settling the fees for the Hearing days d. the Plaintiff’s lawyers then followed up with an email on 21.11.2024 to record amongst others the ex parte communication referred to above. [19] After reviewing the aforesaid documents, I find that the communications which the Plaintiff has raised are not serious enough or highly improper to warrant any form of interference by this Court as this alleged acts complained of was something done, at the most, in the course of an administrative action prior to the handing over of the Award due to the fees of the Arbitrator not being settled as yet and not to any matter substantive to the issue of the dispute itself which would require the participation of both sides to the Arbitration to be addressed. [20] This is quite different from the facts of Symbion Power LLC v Venco Imtiaz Construction Company, [2017] EWHC 348 (TCC) which Plaintiff’s counsel had relied on to support the impropriety of unilateral communications between an arbitrator and a party where in that case S/N K7w0BfBrJUOxcbcfcJYumg the facts show that the arbitrator concerned had sent an e-mail to Symbion's arbitration counsel but the same was not copied to any other member of the Tribunal or to any representative of Venco and the subject line was: “HIGHLY CONFIDENTIAL: NOT TO BE USED IN THE ARBITRATION”. To this the Arbitrator expressed the view that he could send such an e-mail to arbitration counsel because it was about the “selection” of the chairman but said that it was sent on the explicit condition that it could not be referred to in the arbitration or afterwards. The e-mail then went on to say that both party-appointed arbitrators were upset by the conduct of the chairman; it expressed highly negative views about him; and Arbitrator A said that he was meeting the chairman and would encourage him to resign, to which Counsel replied saying simply that he did not feel the need to discuss the matter but would keep the confidence. [21] The UK High Court in Symbion Power LLC (supra) then held inter alia “84. More to the point, I am astonished that such an e-mail was sent in the first place. Where arbitrators are nominated and/or appointed by the parties, it is inevitable that there will be some correspondence or discussion between them prior to appointment to which the other party will not be privy. That will be necessary to ascertain suitability for appointment, availability and so forth. That discussion may extend to the selection of the chairman for similar reasons. But once the tribunal is appointed, it seems to me wholly inappropriate for one arbitrator to communicate with the party that appointed him without notice to the other members of the tribunal and the other party.”. S/N K7w0BfBrJUOxcbcfcJYumg [22] Symbion Power LLC (supra) was therefore concerning an issue of the selection of the Chairman for the tribunal and where the Court therein rightly decided that the appointed arbitrators patently do not represent the party that appointed them and they are under a duty, as individual arbitrators and as a tribunal, to act fairly and impartially. The High Court therein then went on to say that “Any communication by one arbitrator with one party which concerns the arbitration may give rise to concerns that that arbitrator is not acting fairly or impartially for the simple reason that it creates the impression of a close relationship between the arbitrator and the party and raises the spectre of other such communications. Requiring the communication to be kept confidential does not remedy the problem: if anything, it highlights the arbitrator's awareness that this is communication he should not be having. Whether in any individual case there is the appearance of bias will, of course, turn on its particular facts but I have no doubt that such communications between one arbitrator and one party should be avoided.” [23] It was in that factual context particularly requiring that the communication be kept ‘confidential’ that the Court therein found that the ‘ex parte communication’ gave rise to concerns. With respect, there is no such similar factual situation before me. [24] To this I did also note that the Defendant’s did admit to sending 2 letters to the Arbitrator without copying the Plaintiff for which the Defendant’s had openly admitted was an oversight. These letters were dated 28.10.2024 and 4.11.2024 respectively. I have viewed these letters which can be found at enclosure 17 herein and find that S/N K7w0BfBrJUOxcbcfcJYumg there were in essence letters pertaining to amount of fees owed to the Arbitrator and nothing in my view turns on these letters as they were purely administrative issues which had nothing to do with the substance of the disputes before the Tribunal. [25] Consequently, I also do not find anything which in my view has been satisfactorily proven to me that this was an act which would render the Award to be set aside as at the end of the day I do not hold that the Arbitrator had acted impartially or the lawyers for the Defendant had acted in such a manner to undermine the Award. [26] In this court’s opinion there has been no ‘misconduct’ which denotes any non performance of the Arbitrator’s essential duties which has led to a failure to observe the rules of natural justice or that there was any appearance of bias or partiality as per the case of Leong Khum Whay v QBE Insurance (M) Sdn Bhd & Ors [2006] 1 MLJ 710 had been occasioned. [27] For the purposes of clarity, in QBE Insurance (supra) the Court of Appeal therein had held “The grounds on which an award may be set aside are limited to there being an error of law on the face of the record or some misconduct on the part of the arbitrator. ‘Misconduct’ in this context has no pejorative connotation. It is a word that appears in s 24(2) of the Arbitration Act 1952. It is one of the grounds on which an award may be set aside. [2006] 1 MLJ 710 at 717It has been defined as follows by Raja Azlan Shah J in Sharikat Pemborong S/N K7w0BfBrJUOxcbcfcJYumg Pertanian & Perumahan v Federal Land Development Authority [1971] 2 MLJ 210 at p 211: .. misconduct is used in its technical sense as denoting irregularity and not moral turpitude. It includes failure to perform the essential duties which are cast on an arbitrator as such, for instance, failure to observe the rules of natural justice, appearance of bias or partiality. It also includes any irregularity of action which is not consonant with the general principles of equity and good conscience. These illustrations are not meant to be exhaustive. But failure to analyse and appraise the evidence does not vitiate the award on the ground of misconduct. It is only when the evidence is material, relevant and had gone to affect the award that the award will be vitiated. In my judgment the plaintiffs’ complaint is sustainable only if the failure to do so had occasioned some irregularity causing a miscarriage of justice that is apparent on the face of the award.” [28] To the above, I therefore hold, based on the facts as presented to this Court, that there has been no procedural impropriety in the Tribunal proceedings in the matter before me. Alleged Improper Communication To The Secretary On Matters Beyond The Secretary’s Administrative Scope [29] As to the issue of the alleged improper communication to the Secretary by the Arbitrator on matters beyond the Secretary’s administrative scope, I find that the Secretary, Ms Eunice Tan was present during the Arbitration proceedings and had assisted the relevant parties by providing secretarial services but that the S/N K7w0BfBrJUOxcbcfcJYumg recordings show that there was no improper communication to the Secretary on matters beyond the Secretary’s administrative scope as the Arbitrator did not state that he would ‘consult’ with Ms Tan but only mentioned that he ‘..would discuss..’ with his said partner and there is no credible evidence before me to show that there was any form of discussion on the merits of the case in the said Tribunal proceedings. [30] With respect my above findings coupled with a lack of objection by the Plaintiff’s lawyers in the Tribunal proceedings at the material time, seems to me to be the Plaintiff ‘grasping at straws’ to raise some form of improper conduct on the part of the said Arbitrator without any hard evidence to support the contention. Alleged Substantive Errors In The Award [31] There are also before this court submissions by the Plaintiff that there were substantive errors in the Award which consisted of

31.1 back charges of RM55,339.54 31.2 late payment interest 31.3 refund of the Performance Bond, release of the CMGD and 2nd moiety retention sums and dismissal of the Plaintiff’s counter claim and set off Back Charges [32] With regards the back charges of RM55,339.54, it was contended by the Plaintiff that they were entitled to the set off of these amounts as S/N K7w0BfBrJUOxcbcfcJYumg they were monies allegedly due and wrong from the Defendant under the Construction Contract pursuant to clause 25 of the LOA and clause 33 of the CoC. [33] I have observed after reading the Award, that the Arbitrator had found on this issue of back charges that such imposition was unlawful and /or unauthorised after examining the evidence before him in particular the respective Notifications of Penalty (NOP) which the Arbitrator found the Defendant did not receive, the relevant IPC’s issued, the PWD203 contract clause 28, the NCR’s issued, and considering the submissions of parties. [34] All of the above does not in the view of this Court tantamount to or fulfil the requirements to set aside the Award pursuant to sections 37

(a), (1) (b) Arbitration Act 2005 which I will touch with later in my grounds herein. Late Payment Interest [35] On the issue of late payment interest, I find that the Arbitrator had inter alia referred to section 74 of the Contracts act and Annexure 1 of the Claim where the interests were stated being the sum of RM90,882,157 which he found was not disputed by the Plaintiff before awarding the total interest of RM840,532.48. [36] In this Court’s view, the Arbitrator had therefore stated or explained how he had come to impose the interest (i.e his reasoning thereto) and the basis thereof based on the above, and his conclusion thereto that the difference in IPC 5 dated 19.10.2017 was settled on S/N K7w0BfBrJUOxcbcfcJYumg 17 15.2.2018 and thus the interest was calculated on RM90,892.57 + RM547.99 x no of days from 16.1.2021 to final realisation which came to the sum of RM840,532.48. [37] For the above reasons, I therefore reject the Plaintiff’s contention that the Arbitrator’s finding was perverse for allegedly considering evidence tendered belatedly after close of evidence or that there is a defect in the chain of reasoning adopted by the Arbitrator. Issue With Regards The Refund Of The Performance Bond, Release Of The CMGD And 2nd Moiety Retention Sums And Dismissal Of The Plaintiff’s Counter Claim And Set Off [38] On the issues with regards the refund of the Performance Bond, release of the CMGD and 2nd moiety retention sums and dismissal of the Plaintiff’s counter claim and set off, I have observed that the Arbitrator did in the Award refer to clauses 39, 40, 48 of PWD 203, the Supplementary Letter of Award, the relevant documents submitted and found no defect list, no certificate of non completion and no certificate of extension of time, and found it strange that the Plaintiff had offered an extension of time when the Defendant did not need or want. [39] As to the rectification of defects, the Arbitrator held that the Plaintiff had committed ‘nefarious conduct’ and gave his reasons for the same e.g not issuing the CPC on the actual completion date, concealment of the fact, that the government had issued the CPC for more than a year, inducing the Defendant to agree not to claim for loss and expense amongst others. S/N K7w0BfBrJUOxcbcfcJYumg [40] With regards the Performance Bond, the Arbitrator had expressly stated when the same can only be called upon i.e if the contract is terminated under clause 51.1(b) PWD 203. [41] The Arbitrator had also in part H of the Award held that the Schedule of Defects List was only issued after the cut off date and the defects allegedly referred to defects not related to the Defendant’s scope of works which led the Arbitrator to therefore dismiss the Plaintiff’s counter claim. [42] In my view after reading the Award, the Arbitrator’s chain of reasoning is as and can be found in his Award and is sufficient to enable the parties to know why the decision was made. Summary [43] The Plaintiff in summary thus attempted to show that

43.1 the Arbitrator took into consideration irrelevant issues,

43.2 there was no legal analysis and 43.3 there was an absence of a chain of reasoning. [44] After perusing the Award and looking at the Arbitrator’s findings and decision in toto, I hold that the Plaintiff’s contentions are untenable and was in fact (a) an attempt to challenge the merits of the Arbitrator’s findings, (b) a complain as to the findings on factual matters before the Tribunal and (c) amounted to an appeal against the decision or the Award itself. S/N K7w0BfBrJUOxcbcfcJYumg [45] I do agree with learned counsel for the Defendant that the Award should, at the end of the day, be read in full and that this Court after a full perusal of the Award has found that there is a flow in the Arbitrator’s decision in coming to the Award. There is in my decision no necessity nor a need for the Arbitrator to make any specific reference in the Award to the submissions made at the Tribunal, be it written or orally, which in this Courts view he would have considered before he would have made the Award. [46] Thus, I am unable to find any defects in the Arbitrator’s chain of reasoning as contended and it is my view that this was not something that the Plaintiff’s could not have submitted in full for the Arbitrator’s consideration or could not have forseen that the Arbitrator would have decided in such a manner as the issues of back charges etc were issues before the Tribunal. Stay of Award [47] This Court had earlier given an ad interim stay of the Award on 5.2.2025, but be that as it may with this Court’s decision herein on Enclosure 1, I hold that Enclosure 2 with regards the Stay of the Award is now academic and I therefore dismiss the same with costs. Conclusion & Decision [48] Section 37 of the Arbitration Act 2005 is clear in that it provides S/N K7w0BfBrJUOxcbcfcJYumg 1) An award may be set aside by the High Court only if:

the party making the application provides proof that:

a party to the arbitration agreement was under any incapacity;

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the laws of Malaysia;

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present that party's case;

(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

(vi) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this act; or

the High Court finds that:

the subject-matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or

(ii) the award is in conflict with the public policy of Malaysia. S/N K7w0BfBrJUOxcbcfcJYumg

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. [49] In conclusion, and at the sake of repetition, I find none of the circumstances as per Section 37 of the Arbitration Act 2005 exists to set aside the Award herein and particular I hold that there has been no breach of the fair hearing rule or any breach of natural justice occurring in the Tribunal proceedings for all of my above reasons aforementioned. [50] I therefore hold that the Award is not contrary to the public policy of Malaysia and that the Award, as per clause 19.6 of the Arbitration contract had already stated ‘The Award of the Arbitrator shall be final and binding on the parties”. [51] I therefore also dismiss the Plaintiff’ claim in Enclosure 1 with costs. Dated: 2nd day of September 2025 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 S/N K7w0BfBrJUOxcbcfcJYumg COUNSEL FOR THE PLAINTIFF: Muhammad Faisal Moideen and Julian Ch’ng Wei Shen (Messrs Moideen & Max) COUNSEL FOR THE DEFENDANT: Gainneos Jacob Goldie (Messrs Jacob Goldie S.S. Chew) S/N K7w0BfBrJUOxcbcfcJYumg