LEGALLY SPEAKING Enforceability of arbitration awards

"SIMPLIFY, Simplify, Simplify!" A quote we all attribute to Albert Einstein. The contemporary approach to dispute resolution between corporate Goliaths who wish to resolve disputes, contractual or otherwise, without the negative publicity or complex procedures that come with court proceedings is alternative dispute resolution ("ADR") which opens up a world of possibilities, allowing parties to obtain what they would not be able to obtain should they proceed with court proceedings.
The most common methods of ADR include negotiations, mediation and arbitration. The trend nowadays for parties seeking a controlled environment for resolving the disputes between them seems to be leaning towards arbitration. However, judgments of the court are enforceable in their own right, but what about the decisions or awards arrived at under ADR?
Reading the recent Arbitration Act of 2005 ("AA 2005"), it is apparent that it was Parliament's intention that ADR would ease the burden on the Courts of Law. In pursuance of that objective, it is intended that the award granted should be final and binding.
This is enshrined in Section 36 of the AA 2005 which reads, "An award made by an arbitral tribunal pursuant to an arbitration agreement shall be final and binding on the parties and may be relied upon by any party by way of defence, set-off or otherwise in any proceedings in any court". So what now, after arbitration?
It should be noted that arbitration awards are not enforceable the moment they are given. They have to be registered in the High Court pursuant to Section 38 of the AA 2005 before they are recognised as binding and can be enforced by entry as a judgment in terms of the award or by action against the losing party. This takes place by a written application to the High Court from the winning party to register the award. Once it is registered, it has the same effect as a judgment or order of the court and can be executed as such.
A party seeking to enforce an arbitration award would also be prudent to keep track of the ticking clock as various time frames operate to limit registration and subsequent enforcement of the awards. In Christopher Martin Boyd v Deb Brata Das Gupta [2014] 9 CLJ 887, the Federal Court resolved the issue as to the limitation period for the enforcement of an arbitral award.
Summarily speaking, the winning party would have to observe a six-year limitation period as stated in section 6(1) of the Limitation Act.
The award would then be recognised as an order or judgment of the court from that date forth. Thereafter, the 12-year period in section 6(3) of the Limitation Act operates for the winning party to act upon the award (which is now recognised as a judgment), be it execution, winding up or whatever course of action the party decides to take.

As stated earlier, arbitration awards are meant to be final and binding. In the words of Scrutton LJ in African & East Malaya Ltd v White Palmer & Co Ltd [1930] 36 Lloyd's LR 114, "if you choose to go to Caesar you must take Caesar's judgment."
Those very words were cited by our Federal Court in the case of The Government of India v Cairn Energy India Pty Ltd & Anor [2011] 6 MLJ 441.
Nonetheless, some think that Caesar's judgment may be a little too barbaric and the inability to avail oneself of recourse against a flagrantly wrong award or decision is anachronistic in today's legal landscape.
So what if the losing party wishes to challenge the award? There are still grounds, although limited, on which a party can challenge an arbitration award.
The grounds for recourse against arbitration awards are entrenched in Sections 37 and 39 of the AA 2005. The grounds have been reduced compared to the 1952 Arbitration Act.
This was made in line with the decision that arbitration awards were to be final binding in nature and the courts should be shy to intervene in matters of arbitration unless the haloed clarion call of natural justice demands the courts intervention.

In conclusion, arbitration is a viable option for parties who wish to steer clear of the stringent time frames and negative publicity that may accompany court proceedings. The award, in most occasions, would be final and binding. In any event, unless there is a clear deviation from the course of justice, an application to set aside or vary the award would be stopped at the doors of the court.
Contributed by Ian Tan Zhi Yan of Christopher & Lee Ong (www.christopherleeong.com).