In Siemens Industry Software GmbH & Co KG v Jacob & Toralf Consulting Sdn Bhd,(1) the appellant commenced arbitration against a group of respondents in Singapore, claiming, among other things, a sum exceeding €3 million. The arbitral tribunal dismissed the appellant’s claim in its entirety and awarded costs, fees, and expenses in the respondents’ favour.
High Court Decision
The respondents filed an originating summons pursuant to Section 38 of the Arbitration Act 2005 in the High Court to enforce and recognise the entire award as a High Court judgment. The appellant did not file a setting-aside application under Section 39 of the Arbitration Act but instead opposed the originating summons on the ground that only the dispositive portion of the award (which sets out the orders or reliefs) — and not the entire award — could be registered.
The court allowed part of the originating summons, finding that only the dispositive portion of the award, and not the entire award, could be recognised and enforced.
The court’s decision was based on the following grounds:
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According to the meaning of “award” under Section 2 of the Arbitration Act and the dictionary definition of “decision”, the latter refers to the arbitral tribunal’s final conclusion, excluding the reasoning leading to it. Thus, the appellant had failed to comply with the mandatory formal requirements under Section 38.
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An enforcement court should not go beyond matters that were dealt with in arbitration.
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Registering the entire award would contradict the principles of confidentiality in arbitration.
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The approach under the Reciprocal Enforcement of Judgments Act 1956 (REJA), which concerns the registration of the operative part of a foreign judgment, applied.(2)
Court of Appeal Decision
The respondents appealed to the Court of Appeal, which set aside the High Court’s order.
The Court of Appeal’s decision was based on the following grounds:
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Once the formal requirements under Section 38 of the Arbitration Act are met, an award should, by right, be registered unless there are grounds against registration under Sections 38 or 39. No such grounds were established in this case.
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If only the dispositive part of an award is registered, the enforcement court is deprived of understanding the arbitral tribunal’s reasoning. Section 38 does not allow partial enforcement of an award.
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The High Court had no jurisdiction to refuse registration on the grounds of confidentiality since this is not provided for under Section 39.
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The REJA does not apply to arbitration awards.(3)
Federal Court Decision
The appellant was granted leave to appeal the Court of Appeal’s decision on the following question of law:
Whether, for the purposes of an application made under Section 38 of the Arbitration Act 2005 and Order 69 rule 8 of the Rules of Court 2012 (“Recognition and Enforcement Application”), the recognition and enforcement of an arbitration award by way of entry as a judgment of the High Court of Malaya ought to relate only to the disposition of the said award and not the entire award containing the reasoning, evidentiary, and factual findings of the arbitral tribunal.
The Federal Court answered this question in the affirmative and allowed the appeal. It held that the High Court had not erred in recognising and enforcing only the dispositive portion of the award as a High Court judgment.
The Federal Court’s decision was based on the following grounds:
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Section 38 of the Arbitration Act enables the successful party to convert an arbitral award into a judgment for enforcement purposes. The phrase “in terms of the award” indicates that only the dispositive portion is to be enforced. The requirement to produce the entire award is purely evidentiary and does not mean the whole award must be converted into a judgment.
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Section 2 defines “award” as “a decision of the arbitral tribunal on the substance of the dispute”, meaning the dispositive conclusion.
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A dispositive award is akin to a judgment, whereas the entire award is akin to grounds of judgment. Hence, it is illogical for the full reasoning and analysis to be enforced. This approach aligns with REJA, Order 42 Rule 5, and Form 75 of the Rules of Court 2012.
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The tribunal’s reasoning or findings are relevant only when considering the merits of the award (e.g., in a setting-aside application under Section 39). An enforcement court under Section 38 is not concerned with the merits. If the formal requirements are satisfied, registration is granted by right.
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Registering the entire award would undermine the confidentiality of arbitration proceedings.(4)
Comment
Chief Justice Tengku Maimun’s analogy that the dispositive portion of an arbitration award is akin to a court’s judgment or order — while the entire award is akin to the grounds of judgment — makes legal, practical, and logical sense.
In enforcement proceedings, such as garnishee, writ of seizure and sale, or winding-up, courts are concerned only with the actual order or dispositive portion of the award, not the reasoning. This decision reaffirms that in applications for recognition and enforcement under Section 38 of the Arbitration Act, only the dispositive portion of the award should be incorporated as prayers in the originating summons.
Authored by:
Lee Xin Div
Senior Associate, Gan Partnership
xindiv@ganlaw.my
Endnotes
(1) Siemens Industry Software GmbH & Co KG v Jacob & Toralf Consulting Sdn Bhd [2020] 1 LNS 249 (27 March 2020).
(2) Jacob & Toralf Consulting Sdn Bhd v Siemens Industry Software GmbH & Co KG [2018] 1 LNS 460, per Khadijah Idris JC.
(3) Jacob & Toralf Consulting Sdn Bhd v Siemens Industry Software GmbH & Co KG [2020] 2 MLJ 537, per Vernon Ong JCA (with Hasnah Hashim and Harmindar Singh JJCA).
(4) Federal Court panel: Tengku Maimun CJ, Mohd Zawawi Salleh FCJ, Idrus Harun FCJ, Nallini Pathmanathan FCJ, and Abdul Rahman Sebli FCJ.
