What is Arbitration?
While the majority of us have a general understanding of what court processes entail, few are familiar with an alternate dispute resolution process called “arbitration.” While arbitration and court processes have the same objective (resolving a dispute), arbitration centers is a private process conducted without the presence of a judge and can even be completed in your workplace conference room.
Here are some facts concerning arbitration in Malaysia that you should be aware of:
While Party Autonomy is Essential, It May Come at An Additional Cost
The only way arbitration can happen is if both parties agree to it. A contract should have a clause in it that says that if there is a dispute, the parties should agree to go to court. This means that arbitration is all about giving parties a lot of control over how the arbitration should go. Parties are usually free to decide how the arbitration should go. Like in court, parties can choose the arbitrator, what language they will use, what arbitration rules they will follow, and etc.
Due to the concept of party autonomy, arbitration is generally perceived as less formal than court proceedings. Parties avoid the formality and complexities of a court process such as courtroom etiquette. The arbitration might be held in a party’s office, a hired meeting room in a hotel, or at the Asian International Arbitration Centre (AIAC).
However, arbitration is more costly than litigation. Parties must pay arbitrator fees, arbitration institution administrative fees (if institutionalised arbitration is used), and other costs such as meeting space rental.
No Judge, Only an Arbitrator
An arbitrator is the person who conducts an arbitration (not a judge). Depending on the arbitration agreement or regulations, the arbitral tribunal can be a lone arbitrator, or an odd number such as three or five arbitrators. An arbitrator need not be a lawyer, judge, or legal expert. Parties might indicate requisite credentials and competence. If the parties cannot agree on an arbitrator, an impartial third party (e.g., the Asian International Arbitration Centre) can pick who to appointed.
There Are Numerous Arbitral Institutions
You can find an arbitration centre called the Asian International Arbitration Center (AIAC) in Malaysia. This agency used to be called the Kuala Lumpur Regional Center for Arbitration. People in Malaysia can go to AIAC, which is their own centre for alternative dispute resolution, for help. Another thing AIAC does is help with arbitrator and other ADR proceedings in both the United States and around the world. AIAC also provides hearing facilities and other administrative services to tribunals that are set up on their own or under the direction of another organisation.
You are not forced to use the AIAC as an arbitrator. There are numerous arbitral tribunals worldwide. Singapore International Arbitration Centre (SIAC), Hong Kong International Arbitration Centre (HKIAC) (HKIAC). For example, two Malaysian parties could agree to arbitrate their issues using the SIAC’s guidelines.
List of International Arbitration Centers
1. Asian International Arbitration Centre (AIAC)
The Asian International Arbitration Centre (Malaysia) (“AIAC”) sits in one of Malaysia’s most iconic buildings, Bangunan Sulaiman. Formerly known as Kuala Lumpur Regional Centre for Arbitration (“KLRCA”).
Over the last decade, major parties have made considerable attempts to promote Malaysia as a seat of arbitration. Malaysia is now well recognised as an arbitration-friendly destination as a result of these initiatives. A thorough legal framework guiding Malaysia’s arbitration regulations under the Malaysian Arbitration Act 2005 (2005 Act) and an unbiased, efficient, and pro-arbitration judiciary have aided the cause significantly.
Data from Asia International Arbitration Center, Malaysia’s most major arbitration centre (AIAC). Arbitration gained popularity in 2011. In 2019, the AIAC heard 125 arbitration disputes. The emerging coronavirus disease COVID-19 seems to have less impact on the number of new cases. In 2020, the AIAC had 100 cases. 123 were domestic and 15 were international. Only a slight drop from 2019.
2. The Chartered Institute of Arbitrators (CIArb) (Malaysia Branch)
The Chartered Institute of Arbitrators (CIArb) (Malaysia Branch) is a non-profit agency that operates for the good of the public. It promotes alternative dispute resolution (ADR) as a way to solve commercial disputes quickly. It has a local affiliation of 430 at the moment. The CIArb has a global member status of about 14,000 people who have been trained or worked in ADR.
CIArb exist to promote, facilitate, and develop all types of ADR globally. They were a centre dedicated to offering world-class quality and efficient service to ADR practitioners, policy makers, researchers, and others in the conflict resolution business.
3. The Malaysian Institute of Arbitrators (MIArb)
MIArb was founded in 1991 with the primary objective of encouraging the use of arbitration to resolve disputes. MIArb’s panel of arbitrators has grown over the years to include respected individuals with eminent qualifications and experience in a variety of professional disciplines, including building and construction, engineering, banking, finance, law, insurance, and the service and manufacturing industries, to name a few.
MIArb has developed strong collaboration partnerships with local and worldwide ADR institutes, industry organisations, and institutions of higher learning in order to increase knowledge and usage of ADR methodologies.
4. Singapore International Arbitration Centre (SIAC)
The SIAC was founded 20 years ago as a not-for-profit organisation with the mission of administering arbitrations according to its own rules. SIAC is led by a board of directors comprised of prominent arbitrators from the United States, the United Kingdom, Switzerland, India, Korea, and Singapore.
Singapore has become the hub of international arbitration. In short, Singapore is viewed as a neutral forum for international commercial arbitration that is geographically convenient and supported by a smart, professional, and high-integrity physical, legal, and political infrastructure.
5. Hong Kong International Arbitration Centre (HKIAC)
The Hong Kong International Arbitration Centre is a Hong Kong-based organisation that provides alternative conflict resolution services ranging from ad hoc and administered international arbitration to mediation, adjudication, and domain name dispute resolution. It was established in 1985.
Hong Kong is a popular arbitration venue for a variety of reasons, it is because Hong Kong’s Arbitration Ordinance establishes a user-friendly legal framework for arbitrations that, by largely adopting the UNCITRAL Model Law, solidifies Hong Kong’s position as a leading arbitration venue.