• Directly under the Arbitration Act 2005 (“AA 2005”); or
• By registering a seat-court confirmation judgment from a Commonwealth reciprocating country (as listed under the First Schedule) under the Reciprocal Enforcement of Judgments Act 1958 (“REJA 1958”).[1]

 

The FC, among others, rejected that lex specialis applies in finding that the AA 2005 does not oust, impliedly repeal, or subject the REJA 1958 to the AA 2005. The grounds for objection and the remedies available would be dependent on which enforcement route is pursued. Even on a REJA challenge, the Malaysian court conducts a minimal curial review, and not a de novo (afresh) re-hearing of the arbitral merits.

AA 2005   Foreign arbitral award obtained   Apply to Malaysian High Court under Section 38 of the AA 2005 to enforce arbitral award as judgment   Award recognised as a Malaysian Court judgment[2]

REJA 1958   Foreign arbitral award obtained   Apply to, and obtain from, the court in Commonwealth reciprocating country of the arbitration seat to recognise the award as judgment   Apply to enforce the confirmation judgment in Malaysia via the REJA 1958[3]   Award recognised as a Malaysian Court judgment[4]

 

BRIEF FACTS

The dispute stems from the Appellants’ claim that the Respondent (a Johor-based supplier of marine bunker fuels) owed payment for the supply of marine bunker fuels, under two (2) supply contracts (“Contracts”).

 

London Arbitral Award, And Enforcement Proceedings At & Confirmation Judgment By English High Court

In accordance with the governing law and arbitration agreement under the Contracts, the Appellants commenced arbitration proceedings in London against the Respondent (“London Arbitration”). The London arbitral tribunal (“London Tribunal”) ultimately ruled in favour of the Appellants on both jurisdiction and merits, and dismissed the Respondent’s challenge on jurisdiction[5] (“London Award”).

In or about November 2020, the Appellants applied to the English High Court for leave to enforce the London Award.[6] The Respondent did not contest the application. In December 2020, the English High Court entered judgment in terms of the London Award (“UK Confirmation Judgment”). Again, the Respondent took no steps to set aside or appeal against the UK Confirmation Judgment.

The REJA 1958 Proceedings In Malaysia High Court

Thereafter, in March 2021, the Appellants applied to register the UK Confirmation Judgment in Malaysia under the REJA 1958 and obtained an ex-parte order (“Malaysia HC Order”).

This time, the Respondent applied to set aside the Malaysia HC Order on the grounds of lack of jurisdiction, fraud, contravention of public policy and non-compliance with service requirements. In parallel to the above, the Respondent also applied for a trial on four (4) potential issues, amongst which lack of jurisdiction[7] formed one of them (“Application for Trial”).[8]

The High Court dismissed the Respondent’s application, holding, among others, that the Respondent’s application was an abuse of process, an attempt to prolong the proceedings in the High Court, and an attempt to re-litigate issues already determined in the London Arbitration. The High Court also held that oral evidence is not required for the determination of issues on jurisdiction of the original court which may be sufficiently determined on affidavit evidence alone.

Appeal in Malaysian Court of Appeal

The decision of the High Court was, however, overturned by the Court of Appeal (“COA”) which allowed the Respondent’s Application for Trial. The COA held, among others, that –

1. Enforcing the award in Malaysia through the REJA 1958 (by relying on the UK Confirmation Judgment) is inconsistent with Section 8 of the AA 2005 (which precludes a court from intervening in matters governed under the AA 2005), and more specifically Sections 38 and 39 of the AA 2005 (the recognition and enforcement regime for arbitral awards).[9] It is more appropriate to register and enforce the foreign arbitral award under the AA 2005 rather than the REJA 1958.[10]

 

2. The Respondent should not be deprived of the defences, against enforcement of an arbitral award, afforded under Section 39 of the AA 2005.[11]

 

3. The REJA 1958 could not supersede the AA 2005, which it characterised as the later and more specific legislation.[12]

 

4. There is a risk of ‘judgment laundering’ if enforcement of arbitral awards through the REJA 1958 is permitted.[13]

 

5. A tribunal’s ruling on its own jurisdiction is not final as it remains subject to challenge at the seat court (active remedy) and at the enforcement court (passive remedy).[14] As the Respondent’s application targeted the jurisdiction of the London Tribunal and that fraud was found to have been particularised, the COA ruled that the issue had to be determined independently and afresh, by way of a de novo re-hearing.[15]

CENTRAL ISSUES CONSIDERED BY THE FEDERAL COURT

Dissatisfied, the Appellants applied for, and obtained, leave to appeal to the FC. The FC addressed the following issues with respect to the enforcement of foreign arbitral awards (in the form of a confirmation judgment issued by the seat court of a reciprocating country identified under the REJA 1958) –

1. Whether the successful party in an arbitral award may choose between the REJA 1958 or the AA 2005 to enforce a foreign arbitral award which has been registered by the court of the country where the award was delivered (i.e., seat court), or the party can only enforce the foreign arbitral award vide the AA 2005?

 

2. Whether the REJA 1958 is displaced in Malaysia by the AA 2005 where it concerns foreign arbitral awards converted into confirmation judgments?

 

3. Whether the REJA 1958 is displaced on the grounds that the AA 2005 is lex specialis? Whether the REJA 1958 is to be read subject to the AA 2005?

 

4. Whether a challenge based on factual findings of fraud is, in law, a true jurisdictional challenge?

 

5. In an enforcement application under the REJA 1958, what extent does the enforcement court review the evidence relating to fraud where the issue has been tried and determined by the arbitral tribunal, and the award having been registered in that foreign jurisdiction? Will it undertake a minimal curial review or a de novo re-hearing?

Issue 1 – Whether the successful party in an arbitral award may choose between the REJA 1958 or the AA 2005 to enforce a foreign arbitral award which has been registered by the court of the country where the award was delivered (i.e., seat court), or the party can only enforce the foreign arbitral award vide the AA 2005?

Given the distinct and unconnected origins of the REJA 1958 and the AA 2005, the FC found both statutes provide separate and distinct avenues for the registration and enforcement of foreign arbitral awards.[16]

The AA 2005, which traces its origins to the Model Law which is connected to and is an expansion of the Convention of the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention), is the primary and ‘go-to’ statutory route for the registration and enforcement of foreign arbitral awards, and the most direct route for enforcement.[17]

Arbitral awards in the form of confirmation judgments are nevertheless capable of being recognised and enforced in Malaysia vide the REJA 1958, based on the principle of reciprocity and the definition of ‘judgment’ under Section 2 of the REJA 1958.[18]

Issues 2 & 3 – Whether the REJA 1958 is displaced in Malaysia by the AA 2005 where it concerns foreign arbitral awards converted into confirmation judgments? Whether the REJA 1958 is displaced on the grounds that the AA 2005 is lex specialis? Whether the REJA 1958 is to be read subject to the AA 2005?

Firstly, having considered the Hansard when the AA 2005 was enacted, the FC held that there was no legislative intent for the AA 2005 to prevail over the REJA 1958.

Secondly, the FC found that Section 8 of the AA 2005 is confined strictly to matters regulated within the AA 2005. Matters outside the scope of the AA 2005, including those within the purview of the REJA 1958, would not be caught by Section 8 of the AA 2005.[19] Naturally, the registration of the UK Confirmation Judgment is not a matter expressly governed under the AA 2005.

Additionally, the FC found that there was nothing to substantiate the argument that the AA 2005, as the more recent and more specific legislation governing arbitral matters, is the lex specialis and prevails over the REJA 1958 where it concerns the enforcement of foreign arbitral awards (in the form of confirmation judgments issued by a seat court in a reciprocating country identified under the REJA 1958).[20] The FC took the view that the REJA 1958 and the AA 2005 are distinct and co-existing legislation, and respectively lex specialis with regard to their respective scope.[21] The AA 2005 deals with the enforcement of arbitral awards, both domestic and foreign, whilst the REJA 1958 deals with judgments issued by any reciprocating country as identified under the REJA 1958. Both statutes do not conflict one another.[22]

Separately, the FC considered and distinguished the present case from the case of Strategic Technologies v Procurement Bureau of the Republic of China Ministry of Defence [2020] EWCA Civ 1604 (“Strategic”), in rejecting arguments of judgment laundering. The court in Strategic described “judgment laundering” as a judgment-on-a-judgment route. For example, a party first obtains a judgment in Country A (with no reciprocal regime), then converts it into a second judgment in Country B (which does have reciprocity with the target forum), and finally seeks registration in Country C by relying on Country B’s reciprocity. In Strategic, a Singapore default judgment was turned into a Cayman Islands’ judgment and then finally presented in England. The English Court of Appeal decided that the Cayman Islands’ judgment was not registrable and enforceable as it amounted to “judgment laundering”.[23]

In this instance, the FC distinguished Strategic on a simple footing that there were not two (2) foreign judgments from two (2) different countries. The UK Confirmation Judgment was a seat court confirmation of the London Award. Enforcing that confirmation judgment in Malaysia under the REJA 1958, premised on the principle of reciprocity with the UK, was not “judgment laundering”.[24]

Issue 4 – Whether a challenge based on factual findings of fraud is, in law, a true jurisdictional challenge?

The Respondent attempted to set aside the UK Confirmation Judgment, alleging among others that, the judgment was obtained by fraud. This was, however, rejected by the FC. Factual findings of fraud (which are issues presented before the arbitrator(s) in an arbitral proceeding) were distinguished from a jurisdictional challenge based on allegations of fraud (which concerns the arbitrator’s powers / jurisdiction). The Court held that the former does not amount to a true jurisdictional challenge in law.[25]

 

Issue 5 – In an enforcement application under the REJA 1958, what extent does the enforcement court review the evidence relating to fraud where the issue has been tried and determined by the arbitral tribunal, and the award having been registered in that foreign jurisdiction? Will it undertake a minimal curial review or a de novo re-hearing?

Having considered three (3) distinct approaches,[26] the FC preferred the ‘limited-in-scope’ merger theory which was held to be most consistent with the REJA 1958 in light of Section 5 of the REJA 1958.[27] The FC held that this approach allowed the enforcement court to review the underlying arbitral award which has been registered as a confirmation judgment in the seat court, as it treats the arbitral award and the confirmation judgment as separate and discrete within the foreign enforcement court.

Therefore, the arbitral award may be reviewed, to the extent provided by the enforcing statute (i.e., the REJA 1958).

In respect of the extent of review under Section 5 of the REJA 1958, the FC held that the proper approach was not by way of de novo re-hearing (which includes the examination of witnesses), but instead to consider the evidence on record before the Court. Allowing a full de novo re-hearing would effectively allow the Respondent a second bite of the cherry. The FC, echoing the jurisprudence in Singapore and India, found that the enforcement court under the REJA 1958 is not an appellate court, but rather an enforcing court with limited scope to review the arbitral award pursuant to Section 5 of the REJA 1958.[28]

Further, the FC found that the minimal curial review approach, which gives primary to party autonomy in arbitral proceedings and upholds primacy of arbitral awards, is consonant and consistent with the registration and enforcement of a confirmation judgment (based on an arbitral award) under the REJA 1958 which “cements the concept of comity and reciprocity…, allowing for the expeditious registration of judgments… while maintaining perennial importance of finality”.[29]

Accordingly, the decision of the COA allowing the Application for Trial was set aside.[30]

CONCLUSION

The Federal Court’s clarification is a welcome development. Holders of seat-court confirmation judgments from jurisdictions identified in the REJA 1958 retain an alternative enforcement route of an arbitral award in Malaysia, at their discretion.

If you have any queries, please contact Partner Lim Chee Yong (lhy@lh-ag.com), or Associate Stephanie Lim Shu Juin (lsj@lh-ag.com).

 

[1] Section 3(3), read with the First Schedule, of the REJA 1958.

[2] Provided the foreign arbitral award and the application to enforce the award, is not challenged by the judgment debtor (i.e., unsuccessful party), or if challenged, succeeds against the challenge under Section 39 of the AA 2005.

[3] The respondent in an application to enforce a foreign arbitral award (in the form of a confirmation judgment) under the REJA 1958 has the right to apply to set aside the confirmation judgment pursuant to Section 5 of the REJA 1958.

[4] Provided the confirmation judgment is not challenged by the judgment debtor (i.e., unsuccessful party), or if challenged, succeeds against the challenge under Section 5 of the REJA 1958.

[5] The Respondent participated in the arbitration under protest as to the jurisdiction of the London arbitral tribunal as it contended the existence of the Contracts. Subsequently, the Respondent again contended the London Tribunal’s jurisdiction based on a Set-Off agreement which contained an arbitration agreement for all disputes to be resolved by arbitration seated in Kuala Lumpur, Malaysia, in accordance with Malaysian law. After the London Award was delivered, the Respondents did not challenge the award but instead commenced an arbitration in Malaysia under the Asian International Arbitration Centre Rules of Arbitration, in respect of the same subject matter heard and disposed in the London Arbitration.

[6] Pursuant to Sections 66(1) and (2) of the UK Arbitration Act 1996.

[7] Namely, whether the UK Confirmation Judgment was obtained by fraud.

[8] The Application for Trial was made pursuant to Order 67 rule 9(2) of the Rules of Court 2012. The issue on lack of jurisdiction had already been determined in the London Arbitration.

[9] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [36(b)].

[10] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [36(b)].

[11] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [48].

[12] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [45].

[13] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [47].

[14] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [36(c) and (d)].

[15] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [43], [50] and [55].

[16] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [109].

[17] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [106] and [108].

[18] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [109].

[19] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [144].

[20] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [151].

[21] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [151 (iv)].

[22] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [151 (iii)].

[23] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [231], [232] and [234].

[24] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [236] and [237].

[25] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [264] and [266].

[26] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [191], [192] and [196]. The FC considered the following theories –

• The extraterritorial merger approach;
• The ‘limited-in-scope’ merger theory; and
• The parallel entitlement theory.

[27] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [208], [209], [225] and [227].

[28] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [279] to [288].

[29] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [312].

[30] ING Bank N V & Anor v Tumpuan Megah Development Sdn Bhd [2025] MLJU 2449 at [320].