O The easy Production System Sdn Bhd (hereinafter referred to as “EPS”) bought a Group Personal Accident Policy from Guarantee Insurance Sdn Bhd for all its employees (hereinafter referred as “GI”) and paid a premium of Rm2,000 per month. The insurance policy covered the insured person named or referred to in the specification of Insured Persons (Insured). The Insurance policy, inter alia, was designed to cover the insured’s death during the period of coverage and if death or permanent disablement occurred, then in either case, the insured’s estate or the insured was entitled to a sum or RM120,000.
O However, the insurance policy would not cover any death or disablement resulted directly or indirectly from a suicide or attempted suicide. On 23 February 2010 which was during the period of coverage, one of EPS employees, Barbara died. A death certificate was issued by the government hospital and confirmed that the cause of death as ‘pulmonary aedema to acute drowning’. On 25 February 2010, EPS informed GI of the matter by a fax message.
O EPS claimed that the death was an accident and thus covered by the insurance policy. GI on the other hand said that the death was caused by a suicide and thus was outside the coverage of the insurance policy.O Clause 10 of the insurance policy provides that”O “All differences arising out of this policy shall be referred to arbitration in accordance with the the Arbitration Act 2005.”O EPS and GI seek your advice on the following:
a) What is the minimum and the maximum number or arbitrators to be appointed? (5 marks)
Answer:O Section12 (1) of the Arbitration Act 2005 (AA), the parties in dispute are free to determine the number of the arbitrators.O Usually in the arbitration agreement it includes a reference to a single arbitratorO Both parties to an agreement may each appoint an arbitrator. or a third party to nominate one arbitrator each.O Section 12 of the AA provides that the High Court has the power to appoint arbitrators.O Section 12 (2) (a) and (b) if it is under the case of an international arbitration, thus it needs to be consist of three arbitrators and in the case of a domestic arbitration, it shall consist of a single arbitrator.
O Section 13 of AA give power to the court to appoint arbitrator under such circumstancesO under section 13(4) (a) (b) of AA where: a party fails to appoint an arbitrator within 30 days of receipt or; the two arbitrator fail to agree on the third arbitrator within 30 days of their appointment or such extended period that agreed by both concerned parties.
O Thus, the minimum number of arbitrator is one and the maximum number of arbitrators is three or more than three in an odd number as according to situations.
b) How to appoint the arbitrator/s? (5 marks)
Answer:O 3 ways : O By agreement-Both parties consent O High Court (section 13 of AA) O KLRCA (section 13 of AA)
O Section 12 of the Arbitration Act 2005 (AA), the parties in dispute are free to determine the number of the arbitrators. Usually in the arbitration agreement it includes a reference to a single arbitrator, or both parties to an agreement may each appoint an arbitrator. Sometimes the arbitrator in an agreement may require a third party to nominate one arbitrator each.O section 12 (2) (a) and (b) if it is under the case of an international arbitration, thus it needs to be consist of three arbitrators and in the case of a domestic arbitration, it shall consist of a single arbitrator.O section 13 of the AA, that the High Court has the power to appoint arbitrators.
O However, this is only come to an effect under certain circumstances which are: the parties fail to agree on the appointment of a sole arbitrator, if the appointed arbitrator refuses to act, or is incapable of acting, or dies, and parties fail to appoint a replacement where the parties or two arbitrators are at the liberty to appoint an umpire or third arbitrator and do no appoint him where two arbitrator are required to appoint but do not appoint him.O The court may not intervene to appoint an arbitrator which does not fall within the above section.
O If the agreement provides an appointment to be made by the parties, then the parties are bounds by that agreement.O Case of Lim Su Sang v Teck Guan Construction & Development Co. Ltd, where it was held that once the Ltd intention and consequent agreement to go to arbitration are clear then in the absence of any appointment of an arbitrator it would seem to be undoubtedly clear that either the party is entitled to ask for an appointment by the court.
O 3 arbitrators tribunal; O Each party is to appoint one arbitrator each and the two arbitrators were to appoint the third arbitrator as the preceding arbitrator. O If fails; O Either party may apply to Director of KLRCA for appointments.
O Single arbitrator O Section 13(5) stated that where the parties fail to agree on the procedure of the proceeding or where the parties failed to agree on the arbitrator, either party may apply to the Director of KLRCA for the appointment of arbitration.
O In appointing an arbitrator O Director of KLRCA shall consider the qualifications required of the arbitrator by the agreement of the parties as well as the other consideration that are likely to secure the appointment of an independent and impartial arbitrator.
PART C Q1(C)GROUND FOR CHALLENGE- Section 14 of Arbitration Act 2005 1.when there is an existence of circumstances that give rise to that arbitrator’s impartiality or independence (Sec 14(3)(a))1.he does not possess qualifications that have been agreed by the dispute parties (Sec 14(3)(b))
STEPS IN MAKING THE CHALLENGE- Section 15 of Arbitration Act 2005 1. The party that intends to challenge the arbitrator must send a written statement about the reasons for the challenge(S.15(1)) 2. the tribunal must make a decision about the challenge unless the challenged arbitrator withdraws from the office or the other party agrees to the challenge the decision does not have to be made(S.15(2))
3. If the challenge is unsuccessful the challenging party can apply to high court to make the decision but only within 30 days after receiving the notice of the decision on the challenge (S.15(3))4. While this happen the arbitral tribunal together with the challenge arbitrator may continue the arbitral proceedings and make awards (S.15(4))
5. no appeal can be apply upon the decision of the High Court under subsection (3). (S.15(4)).
Question DO What are the processes involved in the arbitral proceedings conducted by the arbitrator/s? (15 marks)
O Firstly is to appoint an arbitrator or arbitrators. By three ways: -by the parties -by the third party -by the court
Section 22O (1) parties free to agree on the seat of arbitrationO (2) if failed to comply with (1), the arbitral tribunal will determine the seat of arbitration.
O Then, holds a preliminary meeting to settle : -matters of procedure -dates of hearing -inspection of relevant properties or papers -discovery and inspection of documents -etc..
Section 23O unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute shall commence on the date on which a request in writing for that dispute to be referred to arbitration is received by the respondent.
Section 21O (1) parties are free to agree on the procedure.O (2) failed to comply with (1), the arbitral tribunal will determine the procedure.
O Arbitrator may conduct the proceedings : - in accordance with the arbitration agreement. - decided by him if there is not stated. - generally follow the procedure of an ordinary action in the courts.
Section 25O (1) within a period of time agreed by parties, the claimant shall state his facts to support his claim, points at issue and the remedies he sought.O (3) either party may amend the claim or defense during the course of arbitral proceeding if both of them agreed to it.
Section 26O (1) if both parties agreed, the tribunal will decide whether to hold oral hearings or just on the basis of documents.O Both parties shall be given prior notice of any hearing.O (4) any documents, statements or any information submitted by one party shall be communicated to the other party.
Section 28O Expert may be appointed by the arbitral tribunal. Section 29O Parties may apply to High Court for the assistance in taking evidence with the approval of the tribunal.
Section 20O Both parties shall be treated in equality and be given a fair and reasonable oppurtunity of presenting that party’s case. Section 24O Gives freedom to parties to choose and agree on the language to be used in the arbitral proceedings.