CASELOAD STATISTICS SHOW INCREASING DEMAND FOR ARBITRATION BY MALAYSIAN PARTIES

On 22 October 2019, the Asian International Arbitration Centre ("AIAC") published its 2018 statistics, showing a steady maintenance of its arbitration caseload. Throughout the years, there has been sustained efforts by the Malaysian government and legal community to promote arbitration as a dispute resolution process of choice for Malaysian parties, with the AIAC largely at the forefront of this endeavour.

In this post, we navigate the trend of Malaysian participation and usage of institutional arbitration based on published statistics of leading arbitral institutions across the world.

Asian International Arbitration Centre

Notwithstanding a steeply increasing caseload of Malaysian construction adjudication registered year-on-year, the AIAC (formerly the Kuala Lumpur Regional Centre for Arbitration) continues to maintain a steady yearly arbitration caseload, from 62 cases (55 domestic and 7 international) registered in 2016 to approximately 100 cases (approximately 86 domestic and 14 international) in 2017. In 2018, the AIAC registered 90 cases (80 domestic, 10 international).

Hong Kong International Arbitration Centre

Historically, the Hong Kong International Arbitration Centre ("HKIAC") does not detail the number of parties involved in arbitration by nationality, but instead ranks the top 10 nationalities of users most frequently involved in arbitrations it administers. In 2018, Malaysia was listed in the top 10 bracket for the first time, ranking as the ninth nationality most frequently involved in HKIAC arbitration (out of 40 participating jurisdictions that year). This is a significant number of Malaysian participants in the HKIAC, given that it administered 265 arbitrations that year.

Notably, Malaysian law was also the fourth most frequently applicable governing law for disputes registered with the HKIAC.

Singapore International Arbitration Centre

Malaysian participation in the Singapore International Arbitration Centre ("SIAC") continues to grow from strength to strength. Beginning with a recorded 12 Malaysian parties in 2010, the SIAC's statistics historically showed a modest increase in Malaysian usage year-on-year, with the exception of 2015 (15 parties) and 2017 (25 parties). However, its 2018 statistics show Malaysian usage more than tripled; there were 82 Malaysian parties, ranking ahead of China to be the third nationality most frequently involved in SIAC arbitration that year.

International Chamber of Commerce

The number of Malaysian users of arbitration in the International Court of Arbitration of the International Chamber of Commerce ("ICC") is comparatively modest, ranging from 17 users in 2016, dropping to 10 users in 2017, and rising slightly to 12 users in 2018. It remains to be seen whether the enhanced cooperation between the AIAC and the ICC through a Memorandum of Understanding signed in November 2017 will translate to increased ICC usage.

Other institutions

The past three years have also seen usage of other Asia-based arbitral institutions by Malaysian parties. In 2016 and 2017, the Korean Commercial Arbitration Board ("KCAB") recorded  7 and 3 Malaysian parties to KCAB arbitrations respectively.

The Arbitration Institute of the Stockholm Chamber of Commerce ("SCC") also registered two cases involving Malaysian parties in 2018 – following from its last reported registration of a single Malaysian party in 2008.

This, of course, is not an indication that other leading arbitral institutions, such as the London Court of International Arbitration ("LCIA") and China International Economic and Trade Arbitration Commission ("CIETAC") have not seen any patronage by Malaysian parties from 2016 to 2018; rather that the recorded number of Malaysian parties in their respective caseload reports were not numerically reflected. Though at a relatively smaller amount, Malaysian usage of LCIA and CIETAC arbitration is well known.

Comment

While each institution presents the details of its caseload differently, it is evident from recent years' statistics that Malaysian parties increasingly find themselves parties to arbitration, either as claimant or respondent. This interesting trend indicates that efforts to promote arbitration amongst Malaysian parties are steadily yielding results.

Having had an office in Kuala Lumpur since May 2017, HSF has seen first-hand the efforts being made to promote arbitration and the quality of the AIAC's facilities and the practitioners appearing.

The AIAC's Annual Report 2018 is available in English here.

For further information, please contact Peter Godwin, Regional Head of Practice – Dispute Resolution, Asia and Managing Partner, Kuala Lumpur, Nicholas Hoh, Senior Associate, Daniel Chua, Associate, Lim Tse Wei, Associate, Rebecca Pang, Associate or your usual Herbert Smith Freehills contact.

Disclaimer

Herbert Smith Freehills LLP is licensed to operate as a Qualified Foreign Law Firm in Malaysia. Where advice on Malaysian law is required, we will refer the matter to and work with licensed Malaysian law practices where necessary.