Malaysian Court finds that non-payment of arbitration fees alone will not render arbitration agreement inoperable

Refusing to pay arbitration deposits is a common strategy employed by parties to delay or make proceedings difficult for the counterparty.

Previously, the Malaysian Court of Appeal in Kebabangan Petroleum [2021] 1 MLJ 693 had found an arbitration agreement to be inoperable due to the non-payment of arbitration fees, sheer unresponsiveness and complete abandonment of the arbitration agreement by one party. However, the recent case of JKP Sdn Bhd v Anas Construction Sdn Bhd [2022] MLJU 3058 clarifies that the effects of non-payment of arbitration fees are fact sensitive, and finds that non-payment alone will not always result in the arbitration agreement becoming inoperable.

In a recent post on our Malaysia Notes blog, Partners Peter Godwin and Craig Shepherd, and Associates Arnold Hoong and Charlene Kong, discuss the case in further detail. The full post can be read here.

For further information, please contact Peter Godwin, Craig Shepherd, Arnold Hoong, Charlene Kong, 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.