BENEFITS OF ARBITRATION

Arbitration is an alternate dispute resolution process to the usual process of the Courts. This avenue is usually resorted by parties when their contract provides for a pre-existing arbitration clause or where parties collectively agree to arbitrate their existing dispute before an arbitrator instead of a judge.

The arbitration proceedings in Malaysia are usually administered by the Asian International Arbitration Centre (AIAC) and are governed by its arbitration rules (AIAC Arbitration Rules 2026, as at 01.01.2026).

An Overview of the Arbitration Process

The arbitration process begins with a written notice of arbitration sent by the claimant to the respondent, demanding the appointment of an arbitrator or arbitration, as stipulated in the contract. At this stage, parties may agree on a suitable arbitrator to preside over the proceedings. However, should the parties be unable to come to a consensus over the appointment of an arbitrator, the Director of the AIAC would handle the appointment of the said arbitrator.

With the appointment of the arbitrator, the arbitrator would hold preliminary meetings which are similar to the case management process in courts where instructions or procedural orders are given to the parties to ensure efficiency, equality and fairness. These would include the exchange of the Statement of Claim, Statement of Defence, written statements or submissions, the exchange of documents and hearing dates. Parties are also at liberty to agree on the language of the arbitration (however, where the language of the arbitration has not been agreed upon, the default language shall be English).

The Evidence Act 1950 shall not apply to arbitration proceedings. Instead, each part shall have the burden of proving the facts relied on to support its claim or defence. In that regard, the arbitrator may also conduct interviews of any actual or potential witnesses prior to them presenting oral evidence at the hearing.

During the hearing, parties may request for the presentation of evidence by witnesses, including expert witnesses or for oral arguments to be put forth. In the absence of such request by parties, the arbitrator shall decide whether oral testimonies are to be given or whether the arbitration shall be conducted on a documents-only basis. Witnesses called to provide oral testimonies would then be heard and examined under the conditions set out by the arbitrator.

Subsequently, an arbitrator may, after consulting the parties, appoint one or more independent experts to prepare a report on specific issues to be determined by the arbitrator. In such cases, parties would be given an opportunity to express their opinion on the report in writing and shall be entitled to examine any documents which the expert has relied upon in their report. At the hearing, parties shall have the opportunity to examine the expert and call any expert of their own to testify on the points in issue.

Within 45 days from the last directed substantive oral or written submissions in respect of matters to be decided in the Award, the arbitrator shall declare the closure of proceedings, provided that it is satisfied that the parties have no further relevant and material evidence to produce or submissions to present about such matters. Thereafter, the arbitrator shall inform parties and the AIAC of the anticipated date for submissions of the draft Award to the AIAC Court for a technical review. In the circumstances, an arbitrator may make separate Awards on different issues at different times.

Benefits of Arbitration

1. Expeditious and flexible, parties and the arbitrator can determine shorter deadlines and the manner in which they intend to resolve the issues in dispute.
2. Private and confidential, any party to the proceedings are prohibited from disclosing any statement, admission or document made or produced during the proceedings.
3. Expertise on the issue in dispute, parties may appoint an expert in the field of the issue in dispute to sit as the arbitrator. This expert often possesses the specific technical knowledge or industry knowledge to best appreciate the evidence put forward by parties.
4. Final and binding, all Awards shall be in writing and shall be final and binding on the parties.
   

   This article is written by

   Ng Ken Yong
   Senior Associate, Low & Partners