November 25, 2020
Court Upholds Immunities of the AIAC and its Late Director
COURT UPHOLDS IMMUNITIES OF THE AIAC AND ITS LATE DIRECTOR
On 12th October 2020, the High Court of Kuala Lumpur delivered its decision to strike out two (2) Originating Summonses commenced by Prestij Mega Construction Sdn. Bhd. (“Prestij Mega”) against, amongst others, the late Director of the AIAC.
The Originating Summonses arose from two (2) Adjudication Decisions delivered in separate adjudication proceedings, which Prestij Mega sought to set aside on the ground, amongst others, that the appointments of the adjudicators by the late Director were invalid by reason of purported deficiencies in the process of the latter’s appointment.
Following the passing of the late Director on 8th March 2020, on Prestij Mega’s application, the High Court ordered the substitution of the late Director with his personal representative.
Both Originating Summonses were heard by Justice Datuk Wong Kian Kheong. His Lordship struck out the Originating Summonses upon the applications of the personal representative, on amongst others the following oral grounds:
- The dispute as regards the validity of the appointment of the late Director arose from the Host Country Agreement. The Host Country Agreement is an international treaty and it is non-justiciable by domestic courts.
- The late Director enjoyed immunity from these challenges in the discharge of his official duties. In this case, the late Director was discharging his duty in appointing adjudicators.
- In any event, the appointment of the adjudicators is not invalidated by any defect afterwards discovered, if any, in the appointment of the late Director.
- There is in law a presumption the official act of appointment of the late Director by the Government of Malaysia was regularly performed.
- It would defeat the purpose of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) and stifle its object to ensure speedy payment, if challenges of this nature are allowed.
These grounds may be supplemented or amended in the written grounds, which are not yet issued at the time of this announcement.
The decision is consistent with an earlier decision of the High Court of Kuala Lumpur in Mega Sasa Sdn Bhd v Kinta Bakti Sdn Bhd & Ors, in which the late Director and the AIAC were named as the 3rd and 4th Defendants, respectively. In delivering his decision, Justice Dato’ Lim Chong Fong on 23rd January 2020, held that:
- statutory adjudication under CIPAA does not violate Article 8(1) and Article 121 of the Federal Constitution;
- it is neither competent nor desirable for the court to adjudicate the dispute arising from the appointment of the late Director as the then Director of the AIAC;
- the adjudicator named in the action, the late Director and the AIAC are immune from the proceedings by virtue of section 34(1) of CIPAA, section 3(1) of the International Organizations (Privileges and Immunities) Act 1992 and Regulations 3 and 3A of the Kuala Lumpur Regional Centre for Arbitration (Privileges and Immunities) Regulations 1996.
These decisions of the High Court preserve the tenets of the Host Country Agreement and its non-justiciability as an international treaty, and reaffirms the immunities of person(s) occupying the office of the Director of the AIAC in respect of acts and things done in such capacity.
The AIAC remains committed in its provision of dispute resolution services as a global alternative dispute resolution (ADR) hub and will continue to strive to provide the best possible services and solutions for both, the domestic and international ADR community.
Established in 1978, the Centre was the first arbitration centre in Asia to be established under the AALCO, an international organisation comprising 47 member states from across the region. The Centre was first set up to provide institutional support as an independent and neutral venue for arbitration proceedings in Asia. Currently, it stands alongside only four other regional centres located in Egypt, Nigeria, Iran and Kenya. Further information on the Centre can be obtained from http://www.aiac.world.