Why does the business community prefer to arbitrate instead of litigate commercial disputes? SHAILA KOSHY speaks to former Court of Appeal Judge Datuk V.C. George whose calendar has been full, since retirement, hearing arbitrations.
Q: THERE'S a rumour you're the most sought after arbitrator in town. Is this true Datuk V.C. George?
A: Ah, Miss Koshy that’s actually a rumour I started (replied in vintage VC George).
But the arbitral community will verify that George is definitely one of the popular ones, together with his former brothers-at-law retired Federal Court judge Tan Sri Edgar Joseph and retired Court of Appeal judge Datuk Mahadev Shanker. George has seen many commercial disputes from both sides of the Bar table. He was a lawyer for 25 years before serving 15 years as a judge. It was natural for him to take on arbitration after retirement.
Q: Why is arbitration a closed-door affair when trials are in open court?
A: No company wants to have an allegation of breach of contract heard in public or that they were ordered to pay, say RM30mil. A big claim could affect a company's standing and no company wants the details of its business dealings made public.
Q: What are the benefits of arbitration over a trial?
A: It’s more expeditious. If you go to the High Court, you will have to join the long queue there. There’s a queue for popular arbitrators but not like the courts. As for hearings, some arbitrations may take just one day and others months. Most of the arbitrators in Kuala Lumpur can usually give a hearing date in about six months. The length of the hearing itself depends on the type of dispute. The other important aspect is that parties can choose the arbitrator they want. In court, you don't have that luxury.
Also, the parties can choose the language of the proceedings. In court, the general rule is to use the national language. Judges are entitled, however, to use English if the justice of the case calls for it. The business community worldwide is known for its paranoia of judicial intervention.
Q: When is there judicial intervention here?
A: According to the Malaysian Arbitration Act 1952, the High Court has a supervisory role in domestic arbitrations. There is no appeal against an award but a party can apply to set it aside on grounds of misconduct of the arbitrator.
Q: But doesn’t that put commercial disputes back into the court queue?
A: The role of the court has become and continues to be the cause of unhappiness in the case of many multinational companies doing business with local companies. They appear to prefer that the courts do not interfere. They (both foreign and local companies) prefer to choose their own arbitrator and agree to accept the award whichever way it goes. It is because of this the government has introduced Section 34 into the Malaysian Act to preclude the High Court from interfering in arbitrations conducted according to the rules of the Kuala Lumpur Regional Centre for Arbitration.
Q: Companies wanting to delay paying damages have abused the stated case procedure. Why do some arbitral regimes allow it?
A: In certain situations, the parties can say they want the arbitrator to refer a question. It is very helpful, remember, arbitrators don’t necessarily have to be lawyers. You have architects, engineers and surveyors sitting as arbitrators and in their case particularly, when questions of law arise, it is useful for them to be able to refer them to the court and ask for a ruling.
Q: Is the existing arbitral regime satisfactory?
A: The 1952 Act must be revamped. The Bar Council has an excellent draft which deals with both domestic and international arbitrations and that the Malaysian International Chamber of Commerce and Industry is of the view the draft would be acceptable to international companies.
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