Tune Talk Sdn. Bhd v Padda Gurtaj Singh (W-02(IM)(CVV)-1712-10/2014)

(a) Section 38 of the AA;

(b) Section 39 of the AA; and

(c) Order 69 rule 8(2) of the Rules of Court 2012 (ROC). To fully appreciate the issue at hand, it is perhaps necessary to set out a brief background of the facts leading to the present appeal. For this purpose we adopt with some modification the brief background facts as set out by the learned judge in her judgment. Brief Background Facts [5] On 23.12.2008 a Shareholders’ Agreement (SA) was entered into between the plaintiff and the defendant together with several other parties. The SA contained an arbitration clause (clause 16.1). [6] A dispute arose between the parties and pursuant to clause 16.1 the dispute was referred to arbitration. The said arbitration clause, the scope of which is not disputed, is reproduced below for completeness:- “If any controversy, claim or dispute arises out of or in relation to this Agreement (including any question regarding its existence, validity or termination) or with respect to any breach thereof, the Parties shall seek to resolve the matter amicably through discussions between the Parties or by way of mediation. Only if the Parties fail to or compromise within sixty (60) days from the date of written notice of 4 the dispute, the aggrieved Party shall seek arbitration as set forth in this Clause 16.” [7] The arbitration proceedings commenced before a single arbitrator, Mr. Samuel Wong Chat Chor. After a full hearing the learned arbitrator issued the Final Award in favour of the plaintiff in the following terms:- “(1) The Claimant’s claim for a declaration that the Respondent is not entitled to remain on the Board of the Claimant is dismissed;

The learned High Court Judge failed to give sufficient or any consideration to the Respondent’s breach, in obtaining the Ex-Parte Registration Order, in failing to give full and frank disclosure;

The learned High Court Judge erred in failing to appreciate, sufficiently or at all, that there is or would be no material benefit or utility to be obtained by the registration and enforcement of an arbitral award which did not have any positive obligations or outstanding positive obligations or was otherwise only declaratory; 6

The learned High Court Judge erred in failing to appreciate, sufficiently or at all, that at the first ex-parte stage an applicant must comply with all requirements justifying registration of an award failing which such ex-parte registration is capable of challenge and ought to be set aside; and

The learned High Court Judge erred in directly applying the second stage test under section 39 of the Arbitration Act 2005 to the case at hand.” Discussion and Findings [12] Before dealing with the defendant’s grounds of appeal it is perhaps necessary to examine the grounds relied on by the defendant in their application to set aside the said ex parte Order (Enclosure 6):-

(a) Order 69 rule 8(2) of the Rules of Court 2012 (ROC) was not complied with by the plaintiff;

(b) Failure by the plaintiff to candidly state that the only positive order made in the Final Award dated 25.9.2013 was the question of costs which was an issue that had yet to be determined by the Arbitral Tribunal; and

(c) Failure by the plaintiff to candidly admit that there was a dispute over the interpretation of the Final Award namely whether the plaintiff could insist on remaining on the Board when his own position was that he was not bound by the variation of the Shareholders’ Agreement (SA). 7 [13] As can be seen from the above, the defendant’s grounds of appeal is an expansion of the grounds it relied on to set aside the said ex parte Order. [14] The crux of the defendant’s appeal is that there was non-compliance with the mandatory requirements of Order 69 rule 8(2)(b) of the ROC which rendered the said ex parte Order liable to be set aside. [15] The learned judge according to the defendant had therefore erred in law in dismissing the application to set aside the said ex parte Order, as it had misinterpreted the purport of sections 38 and 39 of the AA and Order 69 rule 8(2)(b) of the ROC. [16] Before dealing with the crux of the appeal as outlined above, it would be convenient to deal with the issue of the plaintiff’s failure to give a full and frank disclosure first as this is basically an issue of fact. (see para 4 of the defendant’s grounds of appeal) and grounds (b) and (c) of the defendant’s application to set aside the said ex parte Order (above)). [17] The law on the recognition and enforcement of an arbitration award is provided for under section 38(1) of the AA. This section states that 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 that section and section 39 of the AA be recognized as binding and be enforced by entry as a judgment in terms of the award or by action. The manner in which such application is to be made is set out in Order 69 rule 8(1) which stipulates that an application for permission to enforce an award in the same manner as a judgment or an order may be made without notice that is, on an ex parte basis by way of an arbitration claim originating summons. (originating summons). 8 [18] Under Order 69 rule 8(2), the originating summons shall state the following:-

(a) the name and the usual or last known place of abode or business of the applicant, and the respondent against whom it is sought to enforce the award, respectively; and

(b) either that the award has not been complied with or the extent to which it has not been complied with at the date of the application. (emphasis added) For our purposes, paragraph (b) (above) is the relevant provision. [19] Apart from the abovementioned requirement and consonant with the requirements of section 38(2) of the AA, Order 69 rule 8(3) requires the following documents to be produced:-

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

(b) the original arbitration agreement or a duly certified copy of the agreement before the Court can grant an order for recognition and enforcement of the award. [20] It is not disputed that the aforesaid formal requirements of Order 69 rule 8(3) have been complied with by the plaintiff. 9 [21] As regards the contention that the plaintiff had failed to provide full and frank disclosure by failing to state that the only positive order made in the Final Award was the issue of costs, the plaintiff did, in their originating summons state that the Final Award substantively denies the claims or relief sought by the defendant against the plaintiff rather than directing specific positive action, save in respect of payment of costs. (see para 10 of the plaintiff’s affidavit in support, pg. 4, ROA (Jld. 2 – Bah. B & C). [22] On the defendant’s contention that the plaintiff had failed to candidly admit that there was a dispute over the interpretation of the Final Award, as submitted by learned counsel for the plaintiff, it can be seen from Enclosure 1 itself and the affidavits in support that it was the defendant themselves who had raised the question with regards to the interpretation of the Final Award when they filed the section 35 (of the AA) application for clarification (see Bah. A, Jld. 1, Encl. 1, item (f), page 29 Record of Appeal (ROA), Bah. B, Jld. 2, Encl. 2 paragraph 10.3, page 48; ROA – Bah. B, Jld. 2, Encl. (2) Exhibit P-6, pages 202-205). [23] The defendant subsequently withdrew the section 35 application and as submitted by the plaintiff the Final Award stands in its original terms. [24] On this issue of failure to provide full and frank disclosure raised by the defendant, we agree with the learned judge that based on the facts and documentary evidence as shown above, the defendant’s contention was clearly without merit. The requirement of Order 69 rule 8(2)(b) of the ROC read together with section 38 of the AA in this regard had been complied by the plaintiff. 10 [25] The plaintiff’s submission was that he had in the same paragraph 10 set out in detail the events that had taken place since the issuance of the Final Award including the defendant’s request at the material time that the plaintiff voluntarily step down from the Board of Directors of the defendant’s. [26] We reproduce below para 10:- “10.1 On 7.11.2013, the Defendant through its solicitors sent an urgent facsimile to Messrs. Harry Elias Partnership, my solicitors in the arbitration proceedings requesting that I voluntarily step down from the Board of the Defendant.

10.2 I responded to this facsimile through Messrs. Harry Elias Partnership’s letter dated 12.11.2013 addressed to the Defendant’s solicitors.

10.3 On 19.11.2013 the Defendant made an application to the Sole Arbitration under section 35 of the Arbitration Act 2005 (“Section 35 Application”).

10.4 By a letter dated 22.11.2013 Messrs. Harry Elias Partnership wrote to the Sole Arbitrator to set out my stand on the Defendant’s Section 35 Application.

10.5 I state that to my knowledge, no determination has been made by the Sole Arbitrator on the Defendant’s Section 35 Application. I verily believe that as at the date of the Affidavit, the Final Award remains, in form and in content as set out in Exhibit “P-3”. 11

10.6 The quantum of costs payable by the Defendant to me in respect of the arbitration has yet to be determined.” [27] The events narrated above show the extent to which the defendant has not complied with the Final Award. Given the nature of the award itself the plaintiff claimed he had sufficiently complied with the provision of Order 69 rule 8(2)(b) which required him to:- “state either that the award has not been complied with or the extent to which it has not been complied with at the date of the application.” [28] The plaintiff’s contention found favour with the learned judge who held as follows:- “In Paragraph 10 of the Affidavit in Support the Plaintiff has stated (sic) detail the extent to which the Final Award has not been complied with as at the date of the said application for recognition and enforcement of the award as required pursuant to Order 69 Rule 8(2) ROC). Therefore the Plaintiff has complied with the requirement as provided under Order 69 rule 8(2) ROC for recognition and enforcement of the Final Award.” [29] The defendant disagreed with the learned judge’s finding alleging that the defendant’s intention to remove the plaintiff was not an example of non-compliance bearing in mind that the Final Award itself was open to interpretation. [30] Learned counsel for the defendant argued that the learned judge had failed to give due consideration to the fact that the Final Award did not make any positive ruling (which was capable of being enforced) except 12 in relation to costs which was pending taxation by the Arbitration Tribunal at the time the plaintiff filed its application under section 38 of the AA. [31] By the time Encl. 6 was heard, these costs had been taxed and paid. Thus in the defendant’s view there was nothing which was capable of being enforced (or otherwise not complied with) and “accordingly, no utility to the plaintiff’s application save the tactical purpose of bolstering his claim in the Shah Alam Proceedings.” The Shah Alam proceedings referred to by counsel relates to the proceedings filed by the plaintiff in the Shah Alam High Court (Originating Summons No. 396-2014) seeking relief under Section 181 of the Companies Act 1965, based on, inter-alia the ex parte Order. [32] Now coming to the crux of the defendant’s appeal that there had been non-compliance with the mandatory requirements in that there had been no non-compliance with the Final Award as required by Order 69 rule 8(2)(b). Learned counsel submitted that the pre-requisite for such a requirement of non-compliance with the Final Award is that there must be a positive order. [33] In this regard it was counsel’s contention that the requirement under the said Order that the applicant must plead non-compliance of the award, necessarily implies that a positive order is a pre-requisite before a court can grant recognition and enforcement of an arbitral award. In fact the expression “enforcement” requires some positive order made by the award which needs to be enforced for a purpose. [34] Learned counsel cited the case of Christopher Brown Ltd v Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbertriebe Registrierte Genossenschaft Mit 13 Beschrankter Haftung [1953] 2 AER 1039, where the English High Court recognized that to enforce an award, the plaintiff must show that there was something positive in the award that had not been complied with as seen from the passage of Perkin J’s (as he then was) judgment below: “To succeed, therefore, the plaintiffs first … the making of the contract which contains the submission; secondly … that the dispute which arose was within the terms of the submission; thirdly, that arbitrators were appointed in accordance with the clause that contains the submission; fourthly, … the making of the award; and, lastly, … the amount awarded has not been paid.” [35] Learned counsel further contended that it is settled law that a declaratory judgment or award is not capable of execution or enforcement as held by the Federal Court in Takako Sakao (f) v Ng Pek Yuen (f) & Anor (No 3) [2010] 2 MLJ 141 when it concluded as follows:- “There is an added point in so far as staying the effect of the principal judgment is concerned. All that judgment does, inter alia, is to hold that the appellant is a beneficiary under a constructive trust of which the second respondent is a trustee. In short it declares the existence of a constructive trust. It makes no positive order. The weakness of the remedy of declaration lies in the want of its enforceability. A declaration cannot be enforced by execution. In Prakash Chand v SS Grewal (1975) Cri LJ 679, the court held as follows: “A declaratory decree cannot be executed as it only declares the rights of the decree-holder qua the judgement-debtor and does not, in terms, direct the judgement-debtor to do or to refrain from doing any particular act or things. Since there is no command issued to the judgement-debtor to obey, the civil 14 process cannot be issued for the compliance of that mandate or command.” In other words, there can be no committal or other execution process issued to enforce a declaration.” [36] Learned counsel for the defendant pointed out that the position is the same in other jurisdictions citing in support the Indian case of P. Venkata Kasi Viswanadham v Vallabha Vyas AIR 1983 AP 64 in which the Court held as follows: “In so far as the decree in question is concerned, in my judgment, it is a declaratory decree simpliciter. I do not find any ambiguity whatsoever in the decree so as to spell out as to what it contains. It merely confers the title in regard to the right of light and air to the plaintiff and it also says that he is entitled to an injunction restraining the opposite party from interfering with. But, then there is no positive direction along with the declaration of the right, for the implementation of the said order prescribing the course of action in case the order and directions are not implemented.” [37] In this regard, learned counsel argued that if a declaratory award is incapable of enforcement then a fortiori a negative declaratory award (such as in the present case) cannot be enforced. [38] The reason, according to learned counsel is because the act of enforcement envisages some purpose or utility to it, the most common of which is to secure the material benefit of preventing an inconsistent judgment being given by a court in another jurisdiction as held by the English Court of Appeal in West Tankers Inc. v Allianz SpA and another [2012] EWCA Civ 27. In this case, the arbitral award was in the form of 15 a negative declaration. The arbitration tribunal held that the successful party was under no legal liability to the other party (the claimant). [39] Learned counsel submitted that the Court of Appeal had upheld the decision and reasoning of Field J who concluded thus:- “The purpose of s 66(1) and (2) is to provide a means by which the victorious party in an arbitration can obtain the material benefit of the award in his favour other than by suing on it. Where the award is in the nature of a declaration and there is no appreciable risk of the losing party obtaining an inconsistent judgment in a member state which he might try to enforce within the jurisdiction, leave will not generally stand to be granted because the victorious party will not thereby obtain any benefit which he does not already have by virtue of the award per se. In short, in such a case, the grant of leave will not facilitate the realization of the benefit of the award. Where, however, as here, the victorious party’s objective in obtaining an order under s 66(1) and (2) is to establish the primacy of a declaratory award over an inconsistent judgment, the court will have jurisdiction to make a s 66 order because to do so will be to make a positive contribution to the securing of the material benefit of the award.” (emphasis added) [40] Learned counsel also drew the Court’s attention to the Court of Appeal’s opinion that a declaratory judgment is not “executory” in form in that it does not formally order either party to do or to refrain from doing anything in support of its contention that the High Court erred in holding that a negative declaratory order can be enforced under Order 69 rule 8(b). 16 [41] Further reliance was placed by learned counsel for the defendant, inter-alia,

(a) Tridon Australia Pty Ltd & Anor v ACD Tridon Inc (Incorporated in Ontario) [2004] NSWCA 146; and

(b) London Steam Ship Owners Mutual Insurance Association Ltd v The Kingdom of Spain and Another (the “Prestige”) (No 2) [2013] EWHC 3188 (Comm). [42] Consequently learned counsel submitted that the learned judge was plainly in error when she held that a negative declaratory award could be enforced as the plaintiff had not shown what utility or benefit could be gained by the plaintiff in having the award enforced. [43] In rejecting the proposition that the plaintiff must show some benefit or utility that could be derived from enforcing an arbitral award, the learned judge opined that “in an application made pursuant to the said section 38, the Applicant need only to produce the following document, (i) the duly authenticated original award or a duly certified copy of the award; and (ii) the original arbitration agreement or a duly certified copy of the agreement, to enable the court to grant an order for recognition and enforcement.” [44] Learned counsel contended that in holding so, the learned judge “had effectively reduced the court’s role to no more than one of rubber-stamping applications under section 38.” 17 [45] Her Ladyship’s view, according to counsel was inconsistent with the position in other jurisdictions which recognized that the court has a discretion in deciding whether to enforce an award. [46] The following decisions of the Calcutta High Court and the Patna High Court respectively reflect this position:- Soorajmull Nagarmal v Golden Fibre & Products AIR 1969 Cal. 381; and Deo Narain Singh v Siabar Singh AIR 1952 Pat 461. [47] On this issue which as we had stated earlier forms the crux of the plaintiff’s appeal before us, it is important that we restate the legal regime governing the recognition and enforcement of arbitral awards in Malaysia, viz, Sections 38 and 39 of the AA and Order 69 rule 8 of the ROC Section 38(1) of the AA provides:- “(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.” For such purpose, section 38(2) sets out the formal requirements that has to be complied with:- “(2) In an application under subsection (1) the applicant shall produce-

(a) the duly authenticated original award or a duly certified copy of the award; and 18

(b) the original arbitration agreement or a duly certified copy of the agreement.” [48] Section 39(1) on the other hand, sets out the various grounds upon which the recognition and enforcement of an arbitral award may be refused and it states as follows:- “(1) 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-

(a) where that party provides to the High Court proof that-

(i) a party to the arbitration agreement was under any incapacity;

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

(b) if the High Court finds that-

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

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

(b) the original arbitration agreement or a duly certified copy of the agreement.” 20 [50] As provided in rule 8(1), the application which is by way of originating sums may be made ex parte (without notice) which was the case here. [51] Learned counsel for the defendant contended as one of his grounds of appeal that the learned judge fell into error when she failed to appreciate that there is a two (2) stage approach in dealing with applications for recognition and enforcement under section 38 of the AA. Under this two stage approach, the plaintiff (or applicant) must first, satisfy the requirement of section 38 read together with Order 69, rule 8(2)(b) of the ROC. Only after these requirements have been met or satisfied can the applicant proceed to the second stage, where section 39 of the AA then becomes relevant. [52] The learned judge in the defendant’s view has misdirected herself when she proceeded to consider section 39 without first properly determining whether the plaintiff had complied with the requirements of the first stage (i.e. Order 69 rule 8(2)(b) read together with section 38 of the AA). In the present case, the defendant’s contention was that the plaintiff had fail to pass the first stage, therefore section 39 of the AA did not arise. [53] We are, with due respect unable to agree with learned counsel for the defendant that an application for recognition and enforcement under section 38 of the AA involves a two-stage approach in the manner suggested by learned counsel. The case of Agrovenus LLP (supra) relied on by learned counsel does not support the plaintiff’s proposition. [54] This is clear from the judgment of the Court of Appeal, which, whilst appearing to suggest that there is a two-stage approach to the recognition 21 and enforcement of an arbitral award under section 38 nevertheless accepted that a formalistic approach by simply producing the arbitration agreement and the arbitration award would provide sufficient compliance with the requirements of section 38. It is then for the party opposing the recognition and enforcement to satisfy the court of one of the grounds set out in section 39(1)(a)(i) to (vii) of the AA. This was how the Court of Appeal put it:- “[13] In our view, s 38 reflects the obvious. An applicant for recognition or enforcement of an award must first satisfy the court that there is an award and an arbitration agreement that authorized it. That would show if the tribunal that made the award sought to be recognized and enforced is the tribunal referred to in the arbitration agreement. Although an objection as to jurisdiction of the arbitral tribunal could be argued on the basis of the terms of the arbitration agreement, we accept that a formalistic approach to compliance with s 38, by production of the copy of the award and the sale contract of 3 April 2009 relating to the transaction in dispute and containing an arbitration agreement suffices under s 38 as prima facie proof. [14] We held the view that the second stage is s 39, which deals with the request and grounds relied upon for refusal of the recognition or enforcement sought, and that this second stage is where questions relating to jurisdiction of the arbitral tribunal as well as whether, inter alia, the arbitral tribunal exceeded its jurisdiction or dealt with any dispute not contemplated or not falling within the terms of the submission to arbitration may properly be addressed.” [55] Thus the learned judge did not err or misdirected herself when she held, inter-alia as follows:- 22 “As such in an application made pursuant to the said section, the Applicant need only to produce the following documents:-

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

(a) the Final Award carries a positive order which requires the assistance of the court to enforce the Award, and

(b) there has been compliance with Order 69 rule 8 (2)(b) of the ROC i.e. that the affidavit in-support of the application must state either that the award has been complied with or the extent to which it has not been complied with at the date of the application. In other words the plaintiff must show in their 23 affidavit that there has been non-compliance with the (Final) Award. [58] Only after the court has determined that these two conditions have been satisfied can the court grant leave to enforce under Order 69 rule 8 of the ROC read with section 38 of the AA. After having satisfied itself that these two conditions have been fulfilled, the court will then proceed to consider the applicability of section 39 of the AA. The defendant submitted that in granting leave to enforce an arbitral award under section 38 of the AA, the court does not, as opined by the learned judge in her judgment (paras 55 and 56 ante) just “act robotically” (see IM Aviation Solutions Pty Ltd v Altain Khuder LLC (2011) 282 ALR 717) nor is the court merely undertaking “an administrative rubber-stamping exercise” when exercising its powers therein (see West Tankers Inc (supra)). [59] For the reasons stated earlier we would disagree with the defendant’s position that an application for recognition and enforcement under section 38 of the AA and under Order 69 rule 8(2)(b) involves a 2 stage process as contended above. [60] Neither could we agree with learned counsel for the defendant’s contention that the learned judge in the judgment appears to treat the application under Order 69 rule 8(2)(b) as an “administrative rubber stamping exercise” or “acting robotically” when considering an application under that Order read together with section 38 of the AA. [61] It is clear from her judgment that after satisfying herself that the formal requirement of Order 69 rule 8(2)(b) have been complied with, the learned judge will then have to consider whether there are grounds for refusing to recognize the Award (under section 39 of the AA) before 24 deciding whether to grant permission to recognize and enforce the judgment under the said Order read with section 38 of the AA. [62] We have considered learned counsel for the defendant’s submission that:-

(a) The plaintiff has not complied with the allegedly mandatory requirements of Order 69 rule 8(2)(b).

(i) Order 69 rule 8(2)(b) requires the plaintiff to state either the award has been complied with or the extent to which it has not been complied with at the date of the application;

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

(b) the original arbitration agreement or a duly certified copy of the agreement. [67] It is not disputed that these requirements have been complied with. Section 39 of the AA sets out the grounds upon which an award may be refused recognition or enforcement (see para 48 ante). [68] Thus it would appear from section 38(1) that so long as the formal requirements of that section are complied with and absent any ground(s) 26 under s. 39 upon which recognition and enforcement may be refused, it is incumbent on the court to grant recognition and enforcement of an arbitration award upon such an application being made to the High Court under that section. (In other words, see Kelana Erat Sdn. Bhd. v. Niche Properties Sdn. Bhd. and another application [2012] 5 MLJ 809; Bauer

(M) Sdn. Bhd. v. Embassy Count Sdn. Bhd. [2010] 1 LNS 1260 para 17, Agrovenus, Sisma Enterprise Sdn. Bhd. v. Solstad Offshore Asia Pacific Ltd [2013] 1 LNS 335). [69] In this regard we had earlier expressed the view that an application for recognition and enforcement under section 38(1) of the AA is not a 2 step approach as contended by the plaintiff. Rather as we have shown above the court when deciding whether or not to recognize and enforce the Final Award under section 38(1) will have to consider, apart from the formal requirements of section 38(1) of the AA, whether any of the ground(s) under section 39(1) of the AA apply. After having satisfied itself that the requirements of s. 38(1) have been complied with and there are no grounds under section 39(1) for refusing to recognize and enforce the award, it is then mandatory for the court to recognize and enforce the (Final) award. [70] Thus in relation to the plaintiff’s application (Enclosure 6), when is the subject matter of this appeal, the question that arises is whether the plaintiff has raised and satisfied one of the grounds under s. 39(1) of the AA in order for the court to refuse the recognition of the award by setting aside the 4.3.2014 Order. [71] If we were to examine the grounds raised by the defendant in their application, it is immediately clear that the defendant has failed to raise any ground which falls under s. 39(1) of the AA. In fact, as pointed out by 27 learned counsel for the plaintiff, the defendant does not even appear to rely on s. 39. It is of course settled law that the onus of establishing a ground(s) under s. 39 AA in order to set aside the 4.3.2014 Order is with the plaintiff. (see Open Type Joint Stock Co Efirnoye (‘EFKO’) v. Alfa Trading Ltd [2012] 1 MLJ 685 at paragraphs 23 and 24 and Ngo Chew Hong Oils & Fas (M) Sdn. Bhd. v. Karya Rumpun Sdn. Bhd. [2009] 1 LNS 1321). [72] We agree with the defendant that s. 39(1) of the AA is exhaustive in respect of the basis for refusal to recognize and enforce an arbitration award. The failure of the plaintiff to raise any of these exhaustive grounds must necessarily mean that the learned judge was right in dismissing Enclosure 6. (see Kelana Erat and Bauer (both supra)). [73] The plaintiff however is seeking to set aside the 4.3.2014 Order not on any of the grounds set out in section 39 AA, as indicated earlier, but on the somewhat nebulous ground of non-compliance with Order 69 rule 8(2) of the ROC read together with section 38(1) of the AA. [74] We had in this regard requested counsel to consider the principles of interpretation applicable to the question of whether or not Order 69 rule 8(2)(b) of the ROC imposes a substantive requirement of non-compliance as contended by the defendant and if it does whether such a construction can be read harmoniously with sections 38 and 39 of the AA. [75] The substantive requirement referred to by the defendant (the requirement of question) is that the plaintiff must show in his application for recognition and enforcement either that the award has not been complied with or the extent to which it has not been complied with at the date of the application. 28 [76] We have considered carefully the submissions advanced by both counsel in respect of this issue and we find ourselves in agreement with the plaintiff’s submission, the gist of which is as follows:-

(i) Section 38 and 39 of the AA are meant to be exhaustive. There is no room for any other substantive requirement to be fulfilled for the recognition and enforcement of an arbitration award. (see Hari Bhadur Gale v Public Prosecutor [2012] 6 MLJ 597 where the Federal Court laid down the principles of statutory interpretation. The principles laid down therein are also reflected in the subsequent Court of Appeal decision of Magudar bin Ambit v Rambilin bt Ambit & Ors [2014] 5 MLJ 873 at 885 and 886)). Further, section 17A of the Interpretation Acts 1948 and 1967 provides that in interpreting a statutory provision, the Court should ascertain the intention of Parliament in relation to the said provision. The following principles therefore can be distilled from the above authorities, in interpreting the provisions of a statute:-

(i) The meaning of the words in the statutes must be ascertained.

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

(b) the original arbitration agreement or a duly certified copy of the agreement.” The grounds upon which an arbitration award may be refused recognition and enforcement are set out in section 39(1). These grounds (9 altogether) as stated earlier are exhaustive. The word “shall” in section 38(1) AA is, as the word denotes, a mandatory requirement. (see Low Cheng Soon v TA Securities Sdn. Bhd. [2003] 1 MLJ 389 and Yap Teck Ngian v Yap Hong Lang @ Yap Fong Mei & Ors [2006] 6 MLJ 607). As the word “shall” in section 38 of the AA denotes a mandatory requirement it therefore means that there is no room for the exercise of any discretionary power by the High Court if both substantive 30 requirements in that section are fulfilled (which is the case here) and there are no grounds for refusal of recognition and enforcement under section 39 of the AA. It is not disputed that the defendant fulfilled the requirements under section 38(1) and (2) of the AA. Further, it is not disputed that the plaintiff did not raise any ground under section 39 of the AA. Further, there is no “general ground” which would allow the High Court room to exercise its discretion to set aside an arbitration award. Therefore, the Award “shall” be recognized and enforced by entry as a judgment of the court under section 38(1) AA. Defendant’s counsel contended that if there was no discretion granted to the court to refuse recognition and enforcement of an Arbitration Award, the court would simply be engaged in “rubber stamping” and that cannot be the case. We have stated earlier that we disagree with counsel’s contention. In our view, the court does have a significant role to play. The court determines if section 38 of the AA is satisfied and if any circumstances exist under section 39 of the AA. In particular, the court may refuse recognition and enforcement under section 39(1)(b) of the AA if the High Court finds that a subject matter is incapable of being settled by arbitration under Malaysian laws or if the award is in conflict with the public policy of Malaysia. To suggest that the Court would merely be engaged in a “rubber stamping” exercise if it is would vested with any discretion is wholly inaccurate. Thus, based on the unambiguous and clear wording of the AA, the only by substantive requirements to be fulfilled are set out in the AA itself. The 31 requirement in question contained in the Rules of Court 2012, cannot by virtue if the clear words of section 38 be construed as a substantive requirement. Even if one were to contend that the wording of section 38 of the AA is ambiguous or lacks clarity (which is certainly not the case here) adopting a purposive approach (section 17A of the Interpretation Acts 1948 and 1967) would generate the same result, that is, that the only substantive requirements for the recognition and enforcement of an award are found in the AA. (see Chor Phaik Har v. Farlim Properties Sdn Bhd [1994] 3 MLJ 345 at 360. Parliament’s intent in enacting the AA in 2005 may be discerned through a reading of the Hansard dated 7.12.2005 (“Hansard”) where at the 2nd and 3rd readings of the Arbitration Bill 2005 in Parliament, the Minister stated as follows:. “Semasa menggubal Rang Undang-undang Timbang Tara 2005, undang-undang timbang tara di Negara lain seperti Singapura, New Zealand, India Kanada, dan United Kingdom telah dikaji. Rang Undang-Undang Timbang Tara 2005 yang dicadangkan ini telah mengadaptasikan Model Law untuk disesuaikan dengan keadaan di Malaysia seperti yang telah dilakukan oleh negara-negara itu. Akta Konvensyen Mengenai Pengiktirafan dan Penguatkuasaan Award Timbang Tara Asing 1985, Akta 320 membolehkan Award Timbang Tara yang dibuat di luar Malaysia dikuatkuasakan di Malaysia. Peruntukan Akta 320 telah disatukan dalam Rang Undang-Undang Timbang Tara 2005.” 32 As can be seen from the above, Parliament enacted the AA in place of the Arbitration Act 1952 and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 1985 (“CREFA”) as a “user friendly” Act for parties intending to settle matters through Arbitration to lighten the burden in relation to the number of cases pending in Court as well as to draw in international disputes to be settled by arbitration in this country. If sections 38 and 39 of the AA did not contain all substantive requirements and if subsidiary legislation (like the Rules of Court 2012) or the Courts could impose further conditions for the recognition and enforcement of awards, this necessarily render awards less effective. More critically an interpretation of sections 38 and 39 AA to the effect that these do not contain all substantive requirements, would be contrary to the clear intent of Parliament which is to encourage recourse to arbitration as a means of settling disputes. It is also pertinent to note that Article 35 and Article 36 of the UNCITRAL Model Law on International Commercial Arbitration 1985, upon which the AA was modelled, provide the conditions under which an arbitration award should be recognized and enforced in the competent courts and the grounds for refusing such recognition and enforcement. Article 35 and Article 36 reads as follows:- Articles 35. Recognition and enforcement

(a) at the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:

(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or

(b) if the court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or

(i) Under Order 2 rule 1 (1) of the Rules of Court 2012, “non-compliance” with the requirements of the Rules “shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment of order therein.”

(a) it carries a positive order (otherwise the question of non-compliance as required by order 69 rule 8(2)(b) ROC does not arise); and

(b) it confers a material benefit or utility to the applicant (the plaintiff in this case). As set out in this judgment (ante) the defendant relied on the following authorities for the aforesaid proposition:

(a) the English High Court cases of Christopher Brown and London Steam Ship Owners Mutual Insurance;

(b) the English Court of Appeal case of West Tankers Inc.; and

(c) the Australian case of Tridon. The defendant argued that as the Final Award is only a negative declaration which does not confer any material benefit to the plaintiff, the Award ought not to be registered (recognized) and enforced. In this regard, the defendant submitted that it is settled law, based on the decision of the Federal Court in Takako Sakao (supra) that a declaratory judgment or award is not capable of execution or enforcement. On the requirement that the Final Award must carry a positive order, the learned judge discussed this issue at length in her judgment stating as follows:- “Similarly the AA is an act that sets out the law relating to arbitration including the recognition and enforcement of the awards and related 39 matters. The ROC on the other hand, regulates and prescribes the civil procedure and practice to be followed in the High Court. Similarly section 38 AA gives the power to the court to grant leave for an award to be recognized and enforced. There is no prerequisite that there must be a positive order before action can be taken as suggested by Learned Counsel for the Defendant. As such in an application made pursuant to the said section, the Applicant need only to produce the following documents,

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

(i) The empowering or enabling provision of the law in some of the Commonwealth countries allows discretion to the Courts (unlike our Section 38 of the AA) to impose further requirements for recognition and enforcement of an award;

(a) Express discretion is given to the UK Courts as to whether or not to enforce an award. The word “may” is used in the empowering statute as opposed to the word “shall” employed in our AA. It is because of this that case law has developed in the UK that only certain types of awards are to be enforced.

(b) The AA refers to recognition and enforcement of an Award by entry as a judgment of the High Court. In other words, the 47 manner of recognition and enforcement is already provided for in the AA.

(c) The UK Act refers only to enforcement whereas Section 38 AA speaks of recognition and enforcement.

(d) The UK position also seems to be that declaratory awards can be enforced if there is material benefit. It can be argued in the present case that there is material benefit since the defendant has not complied with the Award. [88] The defendant had also cited the Australian case of Tridon (supra) in support of its position. However as with the UK position, the governing law in New South Wales at the material time, clearly provides for the recognition and enforcement of arbitration awards to be discretionary. Section 33 of the Commercial Arbitration Act 1984 stipulates that “an award…may, by leave of the Court, be enforced in the same manner as a judgment or order of the Court to the same effect…”. (emphasis ours) In view of that the court in New South Wales may refuse leave to enforce an arbitration award. [89] The Commercial Arbitration Act 1984 was subsequently repealed and replaced by the Commercial Arbitration Act 2010 which provides under section 35(1), “An arbitral award, irrespective of the State or Territory in which it was made, is to be recognized in this state as binding and, on application in writing to the Court, is to be enforced subject to the provisions of this section and section 36.” Section 36, is similar to our section 39 of the AA and provides for the grounds for refusing recognition or enforcement of an arbitration award. 48 [90] Learned counsel for the plaintiff had also cited to us the case of AED Oil Limited v Puffin FPSO Limited [2010] VSCA 37 a decision of the Victoria Supreme Court. Similar to the Commercial Arbitration Act 1984 applicable in New South Wales at the material time, section 33 of the Victorian Commercial Arbitration Act 1984, (the law applicable then) bore the same wording as section 33 of the former. In other words the court in Victoria had the discretion to refuse to grant leave. [91] The significance of this case is that the court there rejected Puffin’s argument that a declaration contained in an arbitral award is unlikely to be recognized and enforced as judgment and therefore the parties intended to free themselves to enable them to seek declaratory relief from a court. The Supreme Court followed an earlier Australian authority and held, inter-alia, as follows:- “[20] There is Australian authority which support the proposition that declaratory awards made by arbitrators are enforceable. In Electra Air Conditioning BV v Seeley International Pty Ltd, the Full Court of the Federal Court said (at [42] and [44]): It may be assumed that an arbitrator can make an award which contains injunctive or declaratory relief provided that the arbitration agreement signed by the parties gives the arbitrator that power… We think the Model Law gives an arbitrator appointed under that law power to make an order in the nature of an injunction and, if necessary, a declaration.” 49 As with the Commercial Arbitration Act 1984, the Victorian Commercial Arbitration Act 1984 have now been repealed and replaced by the Commercial Arbitration Act 2010. [92] Based on the above, the position in two of the Australian states, i.e. New South Wales and Victoria (as set out in Tridon and AED Oil Limited respectively (above)) clearly differ from that of our law (i.e. Section 38 of the AA) as the provisions of the governing law at the material time in those jurisdictions confer on the courts the discretion to refuse leave. [93] Be that as it may as we have shown above, the Australian cases have held that declaratory awards are enforceable. [94] With the enactment of the Commercial Arbitration Act 2010, it would appear that Australia too is moving away from its earlier position of allowing courts the discretion in respect of the recognition and enforcement of arbitration awards, towards a position which is more in line with the UNCITRAL Model Law. [95] The position in Hong Kong is similar to the position in the UK in that their courts are granted the discretionary power when deciding whether to grant leave to enforce an arbitration award. Section 84 of the Arbitration Ordinance 2010 states as follows:- “(1) Subject to section 26(2), an award, whether made in or outside Hong Kong, in arbitral proceedings by an arbitral tribunal is enforceable in the same manner as a judgment of the Court that has the same effect, but only with the leave of the Court.. 50

(1) Subject to this Part, a foreign award may be enforced in a court either by action or in the same manner as an award of an arbitrator made in Singapore is enforceable under section 19. 51

(1) In any proceedings in which a person seeks to enforce a foreign award by virtue of this Part, he shall produce to the court-

(a) the duty authenticated original award or a duly certified copy thereof;

(b) the original arbitration agreement under which the award purports to have been made, or a duly certified copy thereof; and

(c) where the award or agreement is in a foreign language, a translation of it in the English language, duly certified in English as a correct translation by a sworn translator or by an official or by a diplomatic or consular agent of the country in which the award was made.” (emphasis added) [97] Thus, as quite rightly pointed out by learned counsel for the plaintiff the provisions governing the enforcement of arbitration awards in Singapore, whether they are domestic or international arbitration awards, are somewhat similar to the English provisions as they confer some discretion to the courts, unlike the position in Malaysia. As such their cases may not be directly applicable to the present case. [98] Having said that it would appear from the decision of the Singapore High Court in Aloe Vera of America Inc v Asianic Food (S) Pte Ltd and Another [2006] 3 SLR 174 that the court would only allow enforcement to be refused if the defendant is able to establish one of the grounds set out 52 in section 31(2) of the International Arbitration Act. To quote the learned judge:- “…As the enforcement court, I can only permit Mr. Chiew to resist enforcement if he is able to establish one of the grounds set out in s. 31(2) of the Act.” Section 31(2)(b) of the International Arbitration Act sets out the grounds for refusal of enforcement of an arbitration award which are similar to the grounds laid down in section 39 of our AA. [99] From the above it would appear that the Singapore courts did not draw any distinction between types of awards or require non-compliance before an award will be recognized and enforced. (see also Denmark Skibstekniske Konsulenter A/S | Likvidation (Formely Known As Knud E Hansen A/S) v. Ultrapolis 3000 Investments Ltd (Formerly Known As Ultrapolis 3000 Theme Park Investments Ltd) [2010] 3 SLR

[100] Finally, as the defendant had relied on the Indian case of P. Venkatta, in support of their contention that a declaratory arbitral award is not enforceable, learned counsel for the plaintiff drew our attention to section 36 of the Indian Arbitration and Conciliation Act 1996 to highlight to us the position in India on this matter. Section 36 states as follows: “36. Enforcement – Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be endorsed under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court.” 53 As can be seen from the above provision, the position in India as regards enforcement of arbitration awards is similar if not the same as the position in Malaysia. [101] This is apparent from the judgment of Madras High Court in the case of Sundaram Brake Linings Ltd v Kotak Mahindra Bank Ltd. A. No. 8078 of 2007, @ paragraph 38 where the Court recognized that the Arbitration and Conciliation Act 1996 is adopted (be it fully or with modifications) from the UNCITRAL Model Law, and compared the provisions in the Act to the Model Law. [102] In comparing section 36 of the Act to the equivalent article in the Model Law, i.e. Articles 35 and 36, the Indian Court recognized that, based on the wording in section 36, the Act deviates from the Model Law “in the sense that the Act does not provide for the refusal to recognize or enforce an arbitral award.” [103] From the Indian Act and the Sundaram case above, it can be safely concluded that as that no room for discretion is given to the Indian courts. It would appear long as an arbitration award is not set aside, the recognition and enforcement of the award is mandatory as the Indian Act does not provide any ground for refusal. [104] The case of P. Venkata cited by the defendant is not concerned with the application for recognition or enforcement of arbitral awards. It concerns a decree for mandatory injunction granted by the Court but which lacked material particulars, which rendered the Court unable to execute the same in the absence of such particulars. 54 [105] It is therefore not directly relevant for the purpose of our case as it did not address the meaning of recognition and enforcement in the context of an arbitral award. Conclusion

The learned judge did not err when she dismissed Enclosure 6; as the plaintiff had fully complied with the requirements under section 38 and 39 of the AA as well as Order 69 rule 8(2) of the ROC. The defendant did not challenge the Final Award on any of the grounds listed under section 39 of the AA nor did the defendant apply to set aside the Final Award.

Sections 38 and 39 of the AA are meant to be exhaustive. There is no room for any other substantive requirements to be satisfied for the recognition and enforcement of an arbitration award under the AA.

The requirement in question (Order 69 rule 2(b)(2) of the ROC) is merely a procedural requirement. It is not a substantive requirement, non-compliance of which is fatal to an application for recognition and enforcement.

The defendant’s assertion that the following common law principles be applied in an application for recognition and enforcement under section 38 of the AA, viz:

(a) An arbitration award in the form of a negative declaration which purportedly has no material benefit or utility to the recipient of the award cannot be recognized and enforced; 55

(b) (Hence) the need for a positive order in the arbitral award, is not sustainable as such additional requirements are not contemplated by the legislation. In any event as we have seen above courts in England and Australia have granted leave to enforce arbitral awards which are declaratory in nature.

The aforesaid common law principles were developed by the English courts as the law governing the enforcement of arbitration awards (section 66 of the Arbitration Act 1996), confers broad discretion on the courts. These common law principles were adopted and applied by those jurisdictions in the Commonwealth whose statutory regime in respect of the enforcement of arbitration awards are similar to that of the UK such as Hong Kong, Australia and Singapore.

No such discretion is conferred on our courts based on the mandatory language of section 38 of the AA.

Whilst Order 69 rule 8(2)(b) of the ROC uses the word ‘permission’, it cannot be construed such as to confer discretion on the court in the same manner that discretion is conferred on the courts in UK, Singapore and to a certain extent Australia. The discretion conferred on the courts in those jurisdictions are provided for in the statute itself not in subsidiary legislation as in the case here. To construe it as such would render the provision (Order 69 rule 8(2)(b) inconsistent with and in conflict with the clear words of section 38 of the AA. The word ‘permission’ in Order 69 rule 8(2)(b) of the ROC is, in the context of the AA, merely formalistic. 56

Finally, it is our view that if the requirement in question is construed as imposing a substantial requirement in an application for it would lead to the diminishment of arbitration awards and their utility which recognition and enforcement would be contrary to the intent of the AA. [106] For the above reasons, we are constrained to dismiss the appeal with costs. The learned judge came to the right conclusion that despite the Final Award being declaratory in nature and/or without positive order, the plaintiff has the right under law to apply for judicial recognition of the Final Award as the plaintiff had fulfilled all the necessary requirements under the law. ALIZATUL KHAIR BINTI OSMAN KHAIRUDDIN Judge Court of Appeal Dated: 18th January 2019 For the Appellant: Logan Sabapathy and Carmelia Cheong Messrs Logan Sabapathy & Co Advocates & Solicitors Suite 2002, Tingkat 20 Wisma Hamzah-KH No. 1 Leboh Ampang 50100 Kuala Lumpur 57 For the Respondent: Shamala Balasundram, Tan Hui Xian and Mohd Aerie Rahman Messrs Chooi & Company Advocates & Solicitors Level 5, Menara BRDB 285 Jalan Maarof Bukit Bandaraya 59000 Kuala Lumpur