Pbjv Group Sdn Bhd v Petrofac (Malaysia-Pm 304) Limited (WA-24NCC(ARB)-2-01/2025)

There are two related applications before this Court arising from the same arbitral proceedings conducted under the AIAC Arbitration Rules 2018 between Petrofac (Malaysia-PM304) Limited (“Petrofac”) and PBJV Group Sdn Bhd (“PBJV”).

In Originating Summons No. WA-24NCC(ARB)-41-12/2024 (Enclosure 1) (“OS 41”), Petrofac, as Plaintiff, seeks to enforce the Final Award dated 22.10.2024 (“Final Award” or “Award”)) pursuant to section 38 of the Arbitration Act 2005.

In Originating Summons No. WA-24NCC(ARB)-2-01/2025 (Enclosure 1) (“OS 2”), PBJV, as Plaintiff, applies under sections 37(1)(b)(ii), 37(2)(b)(i) and 37(2)(b)(ii) of the Arbitration Act 2005 to set aside the Final Award, contending that the Award was tainted by breaches of the rules of natural justice and is therefore in conflict with the public policy of Malaysia.

Given that both applications (OS 41 and OS 2) concern the same Final Award, they were heard together and are disposed of by this common decision. A]

The dispute arises out of a contract dated 5.9.2013 between Petrofac and PBJV for the provision of hook-up, Page 5 of 15 commissioning and topside maintenance services for facilities in Block PM304, offshore Malaysia. Pursuant to the contract, Petrofac issued Work Order No. PML/2014/CP2-017C-01 dated 29.10.2014 for the provision of an accommodation work boat, the Armada Firman, which PBJV chartered through its subcontractor, Asian Kaliber Sdn Bhd.

On 6.11.2014, during a mooring operation involving the Armada Firman and another vessel, the Executive Pride (“EP”), an anchor transferred from AF to EP fell onto the seabed, allegedly damaging Petrofac’s subsea flowline. Petrofac carried out the necessary repairs and, after taking into account insurance recoveries, claimed USD1,190,676.82 from PBJV as the uninsured loss and deductible component.

The dispute was referred to arbitration before a three-member tribunal (Mr Kevin Prakash, Mr Lam Wai Loon, and Mr James P. David) under the AIAC Arbitration Rules 2018 (““Tribunal”). Petrofac was the Claimant and PBJV the Respondent.

The Tribunal heard evidence in August 2023 and on 22.10.2024 rendered its Final Award, holding PBJV liable and ordering payment of USD1,190,676.82 with interest and costs.

PBJV thereafter commenced OS 2 to set aside the Final Award, while Petrofac filed OS 41 to enforce it, giving rise to the present proceedings. Page 6 of 15 B]

In Enclosure 1 of OS 2 PBJV applied to set aside a Final Award dated 22.10.2024 under Section 37(1)(b)(ii), 37(2)(b)(i), and 37(2)(b)(ii) of the Arbitration Act 2005.

The application is premised on alleged breaches of natural justice by the Tribunal in connection with the making of the Award, said to conflict with the public policy of Malaysia.

The Tribunal had allowed Petrofac’s claim for the sum of USD1,190,676.82 pursuant to Article 20.3 of the parties’ contract, and found PBJV liable for damage to a subsea flowline during mooring operations involving the vessel Armada Firman. B1. PBJV’s Complaints and Grounds for Setting Aside

PBJV raises three principal complaints: i) First, that the Tribunal relied on double hearsay evidence, particularly reports prepared by third parties whose authors were not called to testify. ii) Second, that the Tribunal misconstrued PBJV’s pleadings as containing admissions of liability and quantum. Page 7 of 15 iii) Third, that the Tribunal awarded damages despite insufficient proof that Petrofac had actually incurred the sum claimed. B2. Analysis and Findings

Upon close scrutiny, these complaints do not in substance amount to any breach of natural justice. They reflect, instead, dissatisfaction with the Tribunal’s assessment of evidence and reasoning. These are precisely the kind of issues which, as emphasised by the Federal Court in Jan De Nul (M) Sdn Bhd v. Vincent Tan Chee Yioun [2019] 2 MLJ 413, fall squarely within the merits of the case and are outside the remit of a setting-aside application.

The Federal Court in Master Mulia Sdn Bhd v. Sigur Rus Sdn Bhd [2020] 12 MLJ 198 has laid down a structured approach to determine whether an award may be set aside for breach of natural justice. The threshold is a high one: i) The applicant must identify the specific rule of natural justice that was breached; ii) Explain how it was breached; and iii) Show how the breach was connected to the making of the award. Page 8 of 15

PBJV has failed to discharge this burden. Its complaint regarding hearsay is not sustainable in arbitration proceedings where the strict rules of evidence do not apply. Under the Arbitration Act 2005, an arbitral tribunal is not bound by the technical provisions of the Evidence Act 1950, and the Court will not set aside an award merely because hearsay evidence was admitted or relied upon, unless the tribunal’s approach offended the rules of natural justice, disregarded mandatory curial principles, or was tainted by illegality (Asean Bintulu Fertilizer Sdn Bhd v. Wekajaya Sdn Bhd [2016] MLJU 354 (CA); Government of India v. Cairn Energy India Pty Ltd & Ors [2014] 9 MLJ 149).

Moreover, PBJV had access to the same material, referred to it in its own pleadings, and chose not to object or call the authors for cross-examination.

For completeness, PBJV relied on the High Court decision in Sabah Shell Petroleum Co Ltd & Anor v. The Owners of and/or Any Other Persons Interested in the Ship or Vessel the ‘Borcos Takdir’ [2012] 5 MLJ 515 to contend that the Tribunal’s acceptance of untested reports amounted to a procedural defect. However, Borcos Takdir (supra) is distinguishable in that the tribunal had relied exclusively on documents whose authors were unavailable and whose authenticity was disputed. In contrast, the Interim Report in this case was expressly exhibited by both parties, considered in PBJV’s own post-hearing submissions, and the Tribunal was Page 9 of 15 entitled to attach weight to it under section 19 of the Arbitration Act 2005, which allows tribunals to determine the admissibility and weight of any evidence. The use of such reports, without calling their authors, does not, by itself, constitute a breach of natural justice.

Similarly, the contention that the Tribunal misconstrued PBJV’s pleadings, particularly paragraph 23 of its Defence, is a challenge to how the Tribunal evaluated those pleadings in light of the surrounding evidence. This again is a matter of interpretation, not a breach of process.

The Tribunal’s reasoning shows that it treated PBJV’s pleadings in context. While PBJV argued that the alleged admission was only a reference to Petrofac’s insurance deductible, the Tribunal read it together with contemporaneous correspondence and PBJV’s own insurance claim documents, which acknowledged the figure of USD1,190,676.82. Whether such reading was correct or not is a matter of evidential evaluation, not procedural unfairness.

As for the quantum, the Tribunal found that the amount claimed was clearly pleaded, was not disputed by PBJV, and was consistent with PBJV’s own insurance communications. The weight to be given to such evidence is a matter entirely within the Tribunal’s jurisdiction. Page 10 of 15

The Federal Court in Pancaran Prima Sdn Bhd v. Iswarabena Sdn Bhd [2021] 1 MLJ 1 reaffirmed that courts do not sit in appellate review of arbitral decisions. Section 37 must be construed narrowly, as it provides for exceptional intervention only where there is a serious and material denial of a fair hearing.

Here, no such fundamental denial has occurred. The Tribunal engaged with the parties’ cases, evaluated the submissions and documentary evidence, and gave detailed reasons for its findings. B3. Natural Justice

Based on the foregoing, and applying the principles set out by the Federal Court in Master Mulia (supra), I am not satisfied that any serious breach of natural justice occurred.

Even if the alleged irregularity, such as reliance on hearsay or misinterpretation of the pleadings had occurred, it was neither material nor significant. There is no indication that PBJV was denied a meaningful opportunity to be heard, nor that the Tribunal disregarded its submissions or evidence.

The alleged breach, if any, had no real connection to the core findings in the Award and does not rise to the level of a fundamental failure of due process. There is no real risk of Page 11 of 15 patent injustice, and the Tribunal’s overall process was fair and even-handed. B4. Public Policy

In any event, the alleged irregularities do not engage the public policy threshold contemplated under Jan De Nul (supra), namely, that the award must shock the conscience, offend the most basic notions of morality or justice, or undermine the integrity of the arbitral process. The circumstances here fall far short of that standard.

Therefore, the alleged breach does not meet the threshold of seriousness or materiality envisaged under Section 37(2)(b)(ii) of the Arbitration Act 2005. B5. Conclusion

The complaints advanced by PBJV are, in essence, challenges to the Tribunal’s assessment of evidence and interpretation of the parties’ positions, and do not establish a serious procedural failure or injustice.

They fall outside the narrow grounds permitted under Section 37, and are an impermissible attempt to re-open the merits of the Award. Page 12 of 15

For the reasons above, PBJV’s (Plaintiff) application in Enclosure 1 of OS 2 is dismissed with costs. C]

Having found no merit in PBJV’s application to set aside the Final Award, there remains no impediment under Section 38 of the Arbitration Act 2005 (“AA 2005”) to the enforcement and recognition of the Award.

Section 36(1) of the AA 2005 provides that an arbitral award shall be final and binding on the parties, and Section 38 allows a prevailing party to apply for its enforcement in the same manner as a judgment of the Court. The statutory grounds for refusing enforcement mirror, in substance, those for setting aside under Section 37.

For the reasons already given in dismissing the setting-aside application in OS 2, namely that no breach of natural justice or public policy has been established, none of the exceptions to enforcement apply. Accordingly, there is no legal impediment to the enforcement of the Award under section 38 of the Arbitration Act 2005.

I would add that the Award, on its face, discloses a reasoned and coherent decision and does not offend Malaysian public policy as established in Jan De Nul (supra) and Pancaran Prima (supra). Its recognition and enforcement are therefore Page 13 of 15 consistent with the finality contemplated by the Arbitration Act 2005.

The enforcement proceedings are procedural in nature. I am satisfied that Petrofac has complied with all the procedural requirements under Section 38(2) of the Arbitration Act 2005 and Order 69 rule 8 of the Rules of Court 2012. There is therefore no procedural bar to enforcement.

Accordingly, Petrofac’s (Plaintiff) application in Enclosure 1 of OS 41 to register and enforce the Final Award is allowed, with costs. Dated this 4th day of November, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) JUDGE HIGH COURT OF MALAYA, (COMMERCIAL DIVISION (NCC 3)) HIGH COURT OF KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA Page 14 of 15 COUNSEL FOR THE PLAINTIFF (OS 41) AND DEFENDANT (OS 2) : Saritha Devi Kirupalani (Nur Nabila Roslee bersamanya together with her) Messrs Firoz Julian Level 19-1, Menara Millenium, Pusat Bandar Damansara, 50490 Kuala Lumpur Tel: 03-20879999 Email: general@fjlaw.com.my COUNSEL FOR THE DEFENDANT (OS 41) AND PLAINTIFF (OS 2) : Jaqdesh Singh Johal Messrs Dinesh Praveen Nair C3-3-13, Solaris Dutamas, Jalan Dutamas 1, 50480 Kuala Lumpur Tel: 03-62114817 Email: nair@dineshnair.net LEGISLATION / RULES CITED Arbitration Act 2005 ▪ Section 19 ▪ Section 36(1) ▪ Section 37(1)(b)(ii) ▪ Section 37(2)(b)(i), (ii) ▪ Section 38 Rules of Court 2012 ▪ Order 69 rule 8 Page 15 of 15

Asean Bintulu Fertilizer Sdn Bhd v. Wekajaya Sdn Bhd [2016]

Government of India v. Cairn Energy India Pty Ltd & Ors [2014]

Jan De Nul (M) Sdn Bhd v. Vincent Tan Chee Yioun [2019] 2 MLJ 413

Master Mulia Sdn Bhd v. Sigur Rus Sdn Bhd [2020] 12 MLJ 198

Pancaran Prima Sdn Bhd v. Iswarabena Sdn Bhd [2021] 1 MLJ 1

Sabah Shell Petroleum Co Ltd & Anor v. The Owners of and/or Any Other Persons Interested in the Ship or Vessel the ‘Borcos Takdir’ [2012] 5 MLJ 515