INGENIEUR
ARRESTING THE CRISIS
OF CONFIDENCE IN
ARBITRATION – A
MALAYSIAN PERSPECTIVE
By Lam Wai Loon
Chartered Arbitrator
Partner at Harold & Lam Partnership
Chairman, Chartered Institute of Arbitrators, Malaysia Branch
Deputy President, Society of Construction Law, Malaysia
Vice President, Malaysian Society of Adjudicators
I
s there a crisis in arbitration? Whilst,
according to Kuala Lumpur Regional Centre for
Arbitration’s (KLRCA) Statistics on Arbitration
Cases Registered, although there was a marked
increase in the number of arbitration cases
registered with KLRCA since 2010, we see a
decrease in the number of cases registered with
KLRCA after year 2013. Based on the statistics,
there were a total of 22 cases handled by KLRCA
in year 2010; 52 cases in year 2011; 135 cases
in year 2012; 156 cases in year 2013; but in
year 2014, the number dropped to 112; and in
year 2015 (up to end of July) only 63 cases were
registered with KLRCA.
I submit that the decline is likely due to two
reasons. The first reason is the improved efficiency
in the speed of case disposal by the judicial
court system in recent years, which now make
arbitration proceedings seem to take a much
longer time and cost more than court proceedings,
and therefore less attractive compared to court
proceedings. The second reason is the enactment
of the fairly new Act called the Construction
Industry Payment and Adjudication Act 2012,
also popularly known as “CIPAA”, which came
into force on April 15,2014. CIPAA introduces a
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statutory adjudication regime which provides for
an interim, speedy and relatively cheap method
of resolution of construction payment disputes in
Malaysia. CIPAA allows the claimant to commence
an adjudication proceeding for a payment claim
under a construction contract during or after the
completion of the project works, separately or
concurrently with arbitration or court litigation on
the same subject matter.
Courts have become more efficient in terms
of speed of resolution of disputes since the
transformation exercise of the Malaysian judicial
system led by our previous Chief Justice Tun Zaki
bin Tun Azmi in 2009, and continued by our current
Chief Justice Tun Arifin bin Zakaria. Cases are
being disposed of faster, and this has in turn cut
down the legal costs incurred by litigants in court
proceedings. Today, commercial and civil cases
are generally completed within 9 – 12 months
from the date of filing, with only a small percentage
of cases dragged longer than 12 months. This has
invariably further raised the expectation of users
in arbitration - an alternative dispute resolution
(ADR) method which has long held itself out as
a more efficient and cost effective alternative to
litigation.