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<p><span style="font-size:22px"><span style="color:#009fe2"><strong>Arbitration Rules </strong></span></span></p> <p style="text-align:justify"><em><strong>What are the KLRCA Arbitration Rules?</strong></em></p> <p style="text-align:justify">The KLRCA Arbitration Rules are a set of procedural rules covering all aspects of the arbitration process, which parties may agree to in part or in whole in order to help resolve their domestic or international disputes. The KLRCA Arbitration Rules adopts the UNCITRAL Arbitration Rules 2010, in its second part, which provide, among other things:</p> <p style="text-align:justify">a) A model arbitration clause for contracts;</p> <p style="text-align:justify">b) Procedures for the appointment and challenge of arbitrators;</p> <p style="text-align:justify">c) Procedures for the conduct of arbitration proceedings; and</p> <hr /> <p style="text-align:justify"><em><strong>WHAT ARE THE KLRCA ARBITRATION RULES?</strong></em></p> <p style="text-align:justify">The KLRCA Arbitration Rules are a set of procedural rules covering all aspects of the arbitration process, which parties may agree to in part or in whole in order to help resolve their domestic or international disputes. The KLRCA Arbitration Rules adopts the UNCITRAL Arbitration Rules 2010, in its second part, which provide, among other things:</p> <ol> <li style="text-align:justify">A model arbitration clause for contracts;</li> <li style="text-align:justify">Procedures for the appointment and challenge of arbitrators;</li> <li style="text-align:justify">Procedures for the conduct of arbitration proceedings.</li> </ol> <hr /> <p style="text-align:justify"><em><strong>WHERE CAN I FIND THE KLRCA ARBITRATION RULES MODEL CLAUSE?</strong></em></p> <p style="text-align:justify">Parties who wish to resort to the KLRCA Arbitration Rules may resort to incorporate the KLRCA model clause in their agreement. The model clause can be found on Page 2 of the Rules.</p> <hr /> <p style="text-align:justify"><em><strong>WHAT DO I DO IF I DO NOT HAVE A MODEL ARBITRATION CLAUSE IN MY AGREEMENT?</strong></em></p> <p style="text-align:justify">Parties who wish to resort to the KLRCA Arbitration Rules may resort to incorporate the KLRCA model clause in their agreement. The model clause can be found under Schedule 3 of the Rules.</p> <hr /> <p style="text-align:justify"><em><strong>WHY DO THE RULES HAVE PART I AND PART II? WHICH PART IS APPLICABLE TO THE ARBITRATION?</strong></em></p> <p style="text-align:justify">The KLRCA Arbitration Rules has two Parts. Part I specifies the KLRCA Arbitration Rules and Part II specifies the UNCITRAL Rules. Part II is an incorporation of the UNCITRAL Arbitration Rules 2010, without any modifications. Modifications to the UNCITRAL Rules however appear under Part I of the Rules. Thus, Part II of the Rules shall be read subject to Part I of the Rules.</p> <hr /> <p style="text-align:justify"><em><strong>WHAT TYPE OF DISPUTES CAN BE RESOLVED BY ARBITRATION UNDER THE KLRCA ARBITRATION RULES?</strong></em></p> <p style="text-align:justify">The majority of disputes arise out of construction, commodities, insurance, energy or any other kind of commercial dispute.</p> <hr /> <p style="text-align:justify"><em><strong>WHAT IS THE EFFECT OF EXCLUSION OF PART III OF THE MALAYSIAN ARBITRATION ACT 2005?</strong></em></p> <p style="text-align:justify">The Rules (Rule 1(1)(c)) precludes the application of Section 41, 42, 43 and 46 of the Malaysian Arbitration Act 2005 where the seat of arbitration is in Malaysia, bringing domestic arbitrations in line with international standards.</p> <p style="text-align:justify">By agreeing to arbitrate under the Rules, parties therefore agree to waive their rights to apply to the High Court of Malaya for the reference and appeal of points of law.</p> <p style="text-align:justify">This brings the arbitration under the Rules in line with the UNCITRAL Model Law and the prevailing trends of minimal intervention by the curial courts. It ensures finality in respect of domestic arbitral awards.</p> <hr /> <p style="text-align:justify"><em><strong>HOW IS THE SEAT OF ARBITRATION DETERMINED?</strong></em></p> <p style="text-align:justify">Where parties have not clearly stipulated the seat of the arbitration, then pursuant Rule 6(1) of the Rules, the seat of arbitration shall be Kuala Lumpur, Malaysia unless the arbitral tribunal determines, having regard to all the circumstances of the case, that another seat is more appropriate.</p> <p style="text-align:justify">The Rules provides for certainty and smooth progression of arbitral proceedings.</p> <hr /> <p style="text-align:justify"><em><strong>WHAT ARE THE ADVANTAGES OF USING THE KLRCA ARBITRATION RULES?</strong></em></p> <p style="text-align:justify">The KLRCA Arbitration Rules incorporates the UNCITRAL Arbitration Rules which are comprehensive, time tested and internationally accepted. The KLRCA provides administrative assistance to the tribunal and parties by making available facilities, through the appointment of arbitrators, by getting involved in challenges of arbitrators, by providing a reasonable fixed schedule of fees and by providing a balanced account of the fees and costs applied to the proceedings. The KLRCA&rsquo;s roles and functions are identified in Part I of the Rules.</p> <hr /> <p style="text-align:justify"><em><strong>HOW DO I BEGIN A MATTER UNDER THE KLRCA ARBITRATION RULES?</strong></em></p> <p style="text-align:justify">A party initiating the dispute shall be required to submit a written request to the Director of the KLRCA together with a copy of the Notice of Arbitration served on the Respondent in the form and manner required under Article 3 of Part II, pay a non-refundable registration fee of USD500.00 for international arbitration or RM1000.00 for other types of arbitration and provide the following documentation:-</p> <ol> <li style="text-align:justify">The arbitration clause and contract document containing the arbitration clause; and</li> <li style="text-align:justify">Confirmation and proof of service of the Notice of Arbitration.</li> </ol> <hr /> <p style="text-align:justify"><em><strong>WHEN IS THE ARBITRATION DEEMED TO HAVE COMMENCED UNDER THE KLRCA ARBITRATION RULES?</strong></em></p> <p style="text-align:justify">Arbitration under the auspices of the KLRCA shall be deemed to commence on the date the Director of the KLRCA receives a written request from the party initiating the arbitration complete with the relevant documentation and registration fee.</p> <hr /> <p style="text-align:justify"><em><strong>HOW MUCH WILL IT COST TO ARBITRATE UNDER THE KLRCA ARBITRATION RULES?</strong></em></p> <p style="text-align:justify">The KLRCA Schedule of Fees will be applicable to the arbitration unless the arbitral tribunal and parties agree otherwise and such agreement must be reached within the period of 30 days from the appointment of the arbitral tribunal.</p> <p style="text-align:justify">The cost to arbitrate would include the payment of a non-refundable registration fee by the Claimant amounting to USD500.00 for an international matter and RM1000.00 for a domestic matter.</p> <p style="text-align:justify">The arbitral tribunal&rsquo;s fees and the KLRCA&rsquo;s administrative costs shall be calculated on an ad valorem basis depending on the amount of the dispute. The scale for purposes of determination of fees appears in Schedule 1 Part III of the KLRCA Arbitration Rules. A note to the Schedule of Fees has been included in Appendix D of Schedule 1 Part III to regulate the payment of disbursements to the arbitral tribunal and KLRCA&rsquo;s administrative costs and expenses.</p> <hr /> <p style="text-align:justify"><em><strong>HOW ARE ARBITRATORS APPOINTED UNDER THE KLRCA ARBITRATION RULES?</strong></em></p> <p style="text-align:justify">The arbitrator&rsquo;s appointment shall be made by the Director of the KLRCA. The Director of the KLRCA will now confirm the appointment of arbitrators appointed by parties or any appointing authority agreed by them. An agreement between the parties to appoint an arbitrator by them or any appointing authority agreed by them shall be treated as an agreement to nominate an arbitrator and not an agreement to appoint an arbitrator.</p> <hr /> <p style="text-align:justify"><em><strong>CAN AN APPOINTED ARBITRATOR BE CHALLENGED UNDER THE RULES?</strong></em></p> <p style="text-align:justify">Yes. Under the revised Rules, the arbitrator&rsquo;s appointment can be challenged by the parties. The detailed procedure for challenge has been incorporated under Rule 5. Upon receipt of the notice of challenge, if the other party does not agree and if an arbitrator refuses to withdraw, the party challenging may apply to the Director of the KLRCA to decide on the challenge.</p> <hr /> <p style="text-align:justify"><em><strong>WHAT HAPPENS IF PARTIES FAIL TO PAY THE REQUIRED PROVISIONAL OR ADDITIONAL DEPOSITS?</strong></em></p> <p style="text-align:justify">Payments of deposits are regulated under Rule 13. If parties fail to pay the required deposits, the Director of the KLRCA shall ask the other party to pay on behalf of the other.</p> <p style="text-align:justify">The arbitral tribunal shall not proceed with the arbitral proceedings unless the provisional deposits are paid in full by one or more of the parties. In instances where the claimant pays on behalf of the respondent, the Director of the KLRCA may advise the arbitral tribunal to proceed with the matter without consideration of the counterclaim raised by the respondent.</p> <p style="text-align:justify">However, if the claimant defaults in paying its share, the arbitral tribunal has the authority under the Rules to suspend the arbitration proceedings until the required payments are made or terminate the proceedings or any part thereof.</p> <hr /> <p style="text-align:justify"><em><strong>ARE ARBITRATION PROCEEDINGS CONFIDENTIAL IN NATURE?</strong></em></p> <p style="text-align:justify">Yes. Arbitration under the KLRCA Arbitration Rules is private and confidential in nature as provided under Article 28 and Rule 15. The arbitral tribunal, the parties and the KLRCA shall keep confidential all matters relating to the arbitral proceedings. Confidentiality also extends to any award, except where its disclosure is necessary for purposes of implementation and enforcement. Article 28 of the KLRCA Arbitration Rules specifies that hearings shall be held in camera unless the parties agree otherwise.</p> <hr /> <p style="text-align:justify"><em><strong>ARE PARTIES RESTRICTED TO APPOINTING ARBITRATORS FROM KLRCA&rsquo;S PANELS OF ARBITRATORS WHEN ARBITRATING UNDER THE KLRCA ARBITRATION RULES?</strong></em></p> <p style="text-align:justify">No. There are no restrictions imposed and parties are free to appoint arbitrators of their choice. However, under the revised Rules, parties&rsquo; appointment of arbitrators shall be deemed as a nomination only, subject to confirmation of appointment by the Director of the KLRCA.</p> <hr /> <p style="text-align:justify"><em><strong>HOW LONG WOULD THE ENTIRE PROCEEDINGS TAKE?</strong></em></p> <p style="text-align:justify">There are no restrictions on time taken to complete an arbitration under the KLRCA Arbitration Rules. However, there are certain mechanisms which ensure that arbitration proceeds in a time efficient manner.</p> <p style="text-align:justify">For instance, under Rule 7 the arbitral tribunal is accorded with powers to conduct the matter in such manner as it considers appropriate and may limit the time available for each party to present its case. Under Rule 11 the arbitral tribunal is required to render its final award within a period of 3 months from the date of delivery of the closing oral submissions or written statements.</p> <p style="text-align:justify">There are extensions of time allowed which are subject to the approval of the Director of the KLRCA. Another provision dealing with time under Part II, Article 25, is that the periods of time fixed by the arbitral tribunal for the communication of written statements (including the statement of claim and statement of defence) shall not exceed 45 days.</p> <hr /> <p style="text-align:justify"><em><strong>HOW DOES A PARTY APPLY FOR AN EMERGENCY ARBITRATOR?</strong></em></p> <p style="text-align:justify">The new provision for the appointment of emergency arbitrators is found under Schedule 2. Rule 7 and Schedule 2 allows the party in need of emergency interim relief to make such an application and the application must be made concurrently with or after the filing of a Notice of Arbitration but not after the constitution of the arbitral tribunal.</p> <hr /> <p style="text-align:justify"><em><strong>WHAT ARE THE TYPES OF INTERIM MEASURES A PARTY MAY APPLY FOR?</strong></em></p> <p style="text-align:justify">The interim measures are as found under Article 26 under Part II.</p> <hr /> <p style="text-align:justify"><em><strong>WHAT ARE THE POWERS OF THE EMERGENCY ARBITRATOR?</strong></em></p> <p style="text-align:justify">The emergency arbitrator shall act to determine all applications for emergency interim relief until the constitution of the proper arbitral tribunal. Emergency interim relief order or award granted by an emergency arbitrator shall have the same effect as an award and shall be binding on the parties (refer to Schedule 2 and Rule 12).</p> <hr /> <p style="text-align:justify"><em><strong>ARE THE DECISIONS OF THE EMERGENCY ARBITRATOR APPEALABLE?</strong></em></p> <p style="text-align:justify">The decisions of the emergency arbitrator are not appealable (Schedule 2 and Rule 12). It may however be modified, varied or vacated by the subsequent arbitral tribunal upon review (refer to Schedule 2 and Rule 7).</p>