ARBITRATION (AMENDMENT) ACT 2024

It amends the Arbitration Act 2005 (AA 2005) to enhance Malaysia’s standing amongst the global international arbitration community by improving the organisational structure of the Asian International Arbitration Centre in line with the execution of the Supplementary Agreement between the Government of Malaysia and the Asian-African Legal Consultative Organization relating to the Asian International Arbitration Centre in Kuala Lumpur dated 20 February 2024, by harmonizing the provisions in AA 2005 with the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration (“UNCITRAL Model Law”) and by introducing the provisions on third party funding. This Amendment Act reflects the restructuring initiatives of the AIAC to be in line with the execution of the said Supplementary Agreement dated 20 February 2024.

Some significant amendments are: 

1. It introduced the definition of “President” which refers to the President of the Asian International Arbitration Centre (AIAC) Court of Arbitration in replacing the Director of AIAC. 

2. The insertion of the newly proposed Chapter 2 of Part III into AA 2005 on third party funding. 

3. An arbitration agreement is in writing if it is contained in an exchange of any other documents and not just in an exchange of statement of claim and statement of defence.

4. New section 9A is introduced to provide that if the parties to the arbitration fail to agree on the law applicable to their arbitration agreement, the law applicable to the arbitration agreement shall be the law of the seat of the arbitration.

5. Unless otherwise agreed by the parties, in the event any arbitrator including the presiding arbitrator is replaced, any hearings held previously may be repeated at the discretion of the arbitral tribunal. 

6. The signatures of the arbitrator on an award shall include the digital and electronic signatures of the arbitrators on the award. “Digital signature” shall have the meaning assigned to it in the Digital Signature Act 1997 whilst “electronic signature” shall have the meaning assigned to it in the Electronic Commerce Act 2006. 

7. The award made in respect of the arbitration, where the seat of arbitration is in Malaysia or an award from a foreign State, shall be recognized as binding at the first instance without requiring an application to be made to the High Court for its recognition. 

8. Part III of AA 2005 is divided into two Chapters to accommodate the introduction of provisions of third party funding of arbitration. With this provision, third party funding of arbitration and court proceedings in respect of an arbitration shall no longer be prohibited in Malaysia. The new section 46D empowered the Minister Minister to issue a code of practice setting out the practices and standards relating to third party funding in which third party funders are ordinarily expected to comply.

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