October 24, 2013
Datuk Sundra Rajoo’s speech at the launch of KLRCA’s Revised Rules 2013
Speech by YBhg Professor Datuk Sundra Rajoo, Director of KLRCA at the launch of KLRCA’s Revised Rules 2013, at Aloft KL Sentral on 24 October 2013.
A very good morning to:
Yang Berhormat Puan Hajah Nancy Haji Shukri, Minister in the Prime Minister’s Department
Yang Berbahagia Tan Sri Dato’ Cecil Abraham, KLRCA’s Advisory Board Member
Yang Berbahagia Tan Sri James Foong, retired Federal Court Judge
Members of the Media
Ladies and gentlemen,
On behalf of KLRCA, I would like to welcome all of you to the launch of KLRCA’s Revised Rules 2013 and Translation of the Rules in 6 different languages.
First of all, I would like to record my appreciation and gratitude for the continuous support from the Malaysian government. We are also highly fortunate to have the support of Yang Berhormat Hajah Nancy Binti Haji Shukri and her presence here today signifies the importance of this event as well as the significant role that dispute resolution has towards the nation.
Your Excellencies, ladies and gentlemen,
The KLRCA is a non-profit, non-governmental international arbitral institution that was established in 1978 under the auspices of the Asian-African Legal Consultative Organisation (AALCO). It was the first centre of its kind to be established by AALCO in Asia. Prior to 2010, and despite being the first regional arbitral institution to be established, the KLRCA was trailing behind the newer arbitral centres. The number of cases registered with the KLRCA were between 10 and 20 cases per year. Currently, the numbers have increased to more than 100 cases with the value of disputed amounts adding up to about RM4bil. And the KLRCA now has a 23-member management team compared to a paltry four member team just a few years ago and we are still small in numbers compared to the work being done.
Arbitration is clearly gaining traction quickly and becoming an essential part of the dispute resolution fabric in Asia. The 10 countries that make up the Association of Southeast Asian Nations (ASEAN) now have a combined population of more than 600 million and an aggregate economy worth some US$1.8trn (£1.1trn), and continue to grow at a rate of 6% per year. And with the rise in regional trade and investment there has been an increasing number of cross-border transactions which inevitably has given rise to cross-border disputes, which involve multinational organisations from across the globe. Given the complexity and sheer volume of resolving such disputes in national courts a large proportion of such disputes are referred to arbitration.
If Malaysia is to continue to develop as a major centre of commerce and finance, it needs to have a world class arbitral institution equipped with the best legal infrastructure in place.
A decade ago KLRCA would not have been mentioned in the same breath as other leading arbitration centres in the region. But times have changed and as international arbitration bodies around Asia-Pacific continue to innovate and re-sculpt their rules and laws on arbitration and ADR, the KLRCA has been closely monitoring the movement and have been relentless in our efforts to upgrade, revitalise and improve in order to be recognised as a world class trailblazer.
Of course, this success cannot be achieved overnight, nor can it be done in isolation. KLRCA is here today, due to the collective efforts by various parties and stakeholders.
Your Excellencies, ladies and gentlemen,
The statistics illustrate an astounding growth in arbitration cases in the Centre. In 2012, KLRCA registered 85 new cases and so far in 2013 there has aleady been around 110 cases referred for arbitration with 20% of them being international cases, showing a marked increase from past years. Malaysia has seen a growing volume of arbitration cases and this clearly attributable to modern arbitration laws and a supportive government, judiciary and the Bar.
Ongoing legislative, judicial and practical reforms are necessary to attract the international business community to look at Malaysia for their dispute resolution needs. The most recent amendments to the Legal Profession Act 1976 now allow both foreign Arbitrators and foreign lawyers to enter into Malaysia to participate in arbitral proceedings and are exempted from the “fly-in fly-out” prohibition. They will not be subject to the restriction of 60 days nor require immigration approval to enter into Malaysia to conduct arbitral proceedings. This is a positive step taken by the Malaysian government in its continued vision for arbitration in Malaysia.
Having addressed the larger issues, we must now look forward to a new challenge. We need to iron out the creases and ensure that KLRCA and Malaysian ADR community is able to offer the highest levels of service, on par with other international arbitral institutions.
Over the past several months, we in KLRCA has been working overtime analysing the Centre’s Rules whilst keeping in check the current international standards. Having identified areas which needed to be addressed, modifications were made to the Rules, namely, the KLRCA Arbitration Rules, KLRCA i-Arbitration Rules, the KLRCA Fast Track Rules and the KLRCA Mediation Rules. I invited Mr Campbell Bridge and Ms Shanti Abraham to help us with the Mediation Rules and we are grateful for their support and hardwork.
The amendments to the rules whilst keeping the costs attractive are aimed at enhancing the incorporation of international trends in arbitration proceedings and KLRCA’s functions, to run cohesively with current best practices in international commercial arbitration.
Your Excellencies, ladies and gentlemen,
Please allow me to briefly describe the salient points of the revised Rules.
KLRCA Arbitration Rules
The KLRCA Arbitration Rules now makes available a procedure for reference to emergency arbitrator where parties require an urgent interim and conservatory relief. This innovative provision empowers parties to seek the preservation of status quo prior to the constitution of the arbitral tribunal. By allowing the emergency arbitrator to provide this relief, it reduces the need for court intervention. Parties are now able to obtain the full breadth of commercial remedies within the auspices of their KLRCA administered arbitration proceedings.
Seat of arbitration
For clarity, the rules makes it clear that in default of parties’ agreement the seat of arbitration is Malaysia. And where the seat is Malaysia, the rules provides for opting out of Section 41, 42, 43 and 46 of the Malaysian Arbitration Act 2005 (Amended 2011). This effectively removes the procedure for reference on preliminary points of law and appeal to court on questions of law arising out of an arbitration award. It applies to both domestic and international arbitration and is in line with the spirits of international commercial arbitration projected by the UNCITRAL Model Law.
Consolidation and Concurrent Hearings
A consistent approach in relation to consolidation of proceedings and concurrent hearings are adopted for arbitrations seated in Malaysia and elsewhere. In effect, the tribunal may only consolidate or order for concurrent hearings with parties’ agreement.
Grant of pre-award interest
Arbitration legislations usually do not explicitly provide for the grant of pre-award interest. In most of the common law countries the arbitrator makes reference to case laws to justify the grant of pre-award interest. For purposes of consistency, where arbitration matter is administered under the KLRCA Rules, the arbitrator may now rely on the rule to provide for pre-award interest.
There is an upcoming trend in a number of arbitral institutions for the publication of redacted awards. KLRCA however will not be publishing any awards rendered in the spirit of ensuring that the requirement of confidentiality is maintained to the strictest sense.
To strengthen confidentiality requirement and in order to enhance privacy of proceedings, the only exception allowed is when the matter falls under the public domain or the disclosure is necessitated by legal requirement.
Fees and Costs
KLRCA has also revised the schedule of fees and administrative costs maintaining the Centre’s cost competitiveness. Parties are assured that the fees and costs of a matter administered under the auspices of KLRCA is 20% lesser than other established institutions in the region.
To contribute to a more fair and equitable arbitration to parties and preventing parties from making vexatious claims and/or counterclaims, the method for deposit collection have been improvised. Previously, the rules provide for equal contribution from parties of the fees and costs derived from the total amount of disputes. Now, where there is a huge disparity between claims, the KLRCA may require parties to contribute the deposits corresponding to its claims.
KLRCA i-Arbitration Rules
A significant amendment was also made to the KLRCA i-Arbitration Rules, in particular the provision on referral to a Shariah expert in Rule 11. The modification broadens the referral procedure to accommodate international parties and a wide range of schools of Islamic jurisprudence with no reference to a particular jurisdiction.
The revision further enables the tribunal to proceed on the issues should the shariah expert fail to provide its decision within the time limits. It is to encourage time efficiency and smooth progression into the arbitral proceedings to its finality.
The KLRCA i-Arbitration Rules now contains an optional mechanism in Rule 12 allowing the tribunal to award compensation to parties for late payment of an award in a Shariah related dispute. It is based on principles of ta’widh and gharamah, where ta’widh refers to compensationon actual loss and gharamah refers to penalty for late payment. It’s a widely accepted Shariah principle for parties to benefit full compensation.
KLRCA Fast Track Rules
The KLRCA Fast Track Arbitration Rules have also seen important amendments. The rules also provides for opting out of Section 41, 42, 43 and 46 of the Malaysian Arbitration Act 2005 (Amended 2011). There are revisions to the timelines enhancing expediency in procedure as well as in the completion of substantive oral hearings. Furthermore, the applicable rules for the appointment of a sole arbitrator and presiding arbitrator have been improved to encourage the smooth progression of the arbitration.
Most of the improvements made to the KLRCA Arbitration Rules in relation to fees and costs and collection of deposits were applied in the KLRCA’s Fast Track Rules.
The new set of rules provide for a simpler and practical mediation process aimed at providing a fast and cost efficient alternative dispute resolution. It improvises and simplifies the appointment process of the Mediator. Further, it sets out the conduct and ethics of the Mediator as well as the participation of Parties to the Mediation process. The confidentiality of the Mediation process is further enhanced in the new Rules. The fee tariffs have been simplified.
Your Excellencies, ladies and gentlemen,
This revision of the Rules is quite timely and is evidence of KLRCA’s determination to keep abreast with both global and national developments of alternative dispute resolution.
KLRCA has retained the essence of the Rules, and the modifications have been made with the sole intention of uplifting Malaysia to the same competitive ranks as the best that Asia-Pacific region can offer.
Translation of the rules in 6 different languages
In embarking towards this journey of internationalisation, the KLRCA has also sought other means to draw the interests of international parties and practitioners. We feel that one of the best methods to appeal to anyone is if we are able to speak their language. As such, we took the bold step of translating all of KLRCA’s Rules into six different languages such as Spanish, Arabic, Korean, Mandarin, Bahasa Indonesia and Bahasa Malaysia.
These endeavours, revising our rules and translating them in various international languages, represents our determination to consolidate Malaysia’s position in the arbitration world. I am personally very enthusiastic about it. I trust it will achieve its aim in raising the relevancy and standards of arbitration and dispute resolution in Malaysia.
In closing, I would like to express my appreciation and congratulations to my team at the KLRCA who worked hard to make today possible. Also to everyone who provided support, be it by providing input, sharing insights or for just being here today, your support is truly felt. I would also like to say a big thank you to Yang Berhormat Hajah Nancy Binti Haji Shukri for gracing this occasion with her honourable presence. The government’s support is invaluable to us.
I believe that together we can bring Malaysian arbitration to greater levels and before long our aim of becoming the leading arbitration centre in the region will materialise.
I end my speech today with a quote from Anatole France, who said “To accomplish great things, we must not only act, but also dream; not only plan, but also believe.”