Malaysia - Arbitration Law and Practice in Asia

The island of Penang was founded in 1786. Penang subsequently became part of the Straits Settlements comprising Penang, Malacca and Singapore. In 1874, the British entered into treaty arrangements with the Sultans of the Malay States, and British protection was extended to the whole of Malaya and the British legal system was introduced to Malaya. The Arbitration Ordinance XIII of 1809 of the Straits Settlements was Malaysia’s first piece of arbitration legislation. This Ordinance was then replaced in Penang and Malacca by The Arbitration Ordinance 1890. In 1950, the Arbitration Ordinance 1950 replaced the 1890 Arbitration Ordinance for all the States of the then Federation of Malaya. The 1950 Ordinance was based on the English Arbitration Act of 1889. British North Borneo and Sarawak adopted the English Arbitration Act of 1952 as their respective Ordinance in 1952. In 1963, North Borneo and Sarawak joined the Federation of Malaysia. On 1 November 1972, Malaysia adopted the arbitration laws prevailing in Sabah and Sarawak and it became known as the Arbitration Act 1952 (1952 Act), which is based on the English 1950 Act.

An amendment to the 1952 Act on 1 February 1980 gave special status to arbitrations held under the Convention on the Settlement of Investment Disputes between the States of Nationals and other States 1965 (ICSID) under the United Nations Commission of International Trade Law (UNCITRAL) and the Rules of Arbitration for the Regional Arbitration Centre for Kuala Lumpur (KLRCA) (now known as the Asian International Arbitration Centre (AIAC). There are omissions in the 2005 Act, and the arbitral community, including the Bar Council and Attorney-General’s Chambers, collaborated to ensure that these omissions were enacted by the Arbitration (Amendment) Act 2011 (2011 Act) and came into force on 1 July 2011.