1 of 19

Challenging Arbitral Awards: �Public Policy and Natural Justice

In the wake of Eng Han Engineering Sdn Bhd v Toshiba Elevator (M) Sdn Bhd [2025] 5 AMR 457

2 of 19

Key Statutory Basis

Arbitration Act 2005 (AA) – Section 37(1)(b)(ii) & (2)
An award may be set aside if it conflicts with the public policy of Malaysia.
Public policy conflict includes: (a) Fraud/corruption; (b) Breach of natural justice.

3 of 19

Understanding “Public Policy”

Even if no breach of natural justice, award may be set aside if it conflicts with public policy.
High threshold: Must be proven on balance of probabilities.
Jan De Nul v Vincent Tan (2019): Public policy not confined to s.37(2); includes irregularities, immorality, or illegality.

4 of 19

Judicial Approach to Public Policy

“Public policy must be read narrowly and applied sparingly.”
Only invoked for fundamental principles of law or justice.
Examples: Patent injustice, manifestly unlawful, substantial injustice, serious irregularity.

5 of 19

Elements to Establish Public Policy Breach

(Asean Bintulu Fertilizer v Wekajaya [2016])
1. Identify the public policy allegedly conflicted.
2. Show how it was conflicted.
3. Show how rights were prejudiced.

6 of 19

Breach of Natural Justice (Section 37(2))

Federal Court: Jan De Nul (2019) & Master Mulia v Sigur Ros (2020)
Court has discretion whether to set aside even if breach proven.
“May be set aside” ≠ automatic annulment.

7 of 19

Eight Guiding Principles (Master Mulia v Sigur Ros)

1. Identify which rule breached and how.
2. Assess seriousness/materiality.
3. Immaterial breaches = no setting aside.
4. Even serious breaches may not justify setting aside if no impact.
5. Significant breach → may set aside.
6. Grave breach → automatic setting aside.
7. Court exercises wide discretion.
8. Prejudice not a prerequisite.

8 of 19

Two Rules of Natural Justice (Eng Han v Toshiba, 2025)

1. 1st Rule: Freedom from actual or perceived bias.

- ‘Fair-minded and informed observer’ test.

2. 2nd Rule: Right to be heard – includes:

- Adducing evidence, examining witnesses, making submissions.

9 of 19

Glaziers Engineering Test (Singapore CA)

Three Scenarios under 2nd Rule:
1. Tribunal decides on issue neither party raised.
2. Tribunal poses new decisive issue not known to parties.
3. Tribunal decides on issue reasonably foreseeable → no breach.
Failure to give reasonable notice & hearing in (1) or (2) = breach.

10 of 19

Application in Eng Han v Toshiba

Tribunal decided on a new point without hearing submissions.
Breach of 2nd Rule of Natural Justice.
Award set aside for breach proven on balance of probabilities.

11 of 19

Malaysian Approach

Courts adopt a minimalist approach.
Reluctant to interfere with arbitral awards.
Limited, high-threshold grounds only.
Promotes finality and tribunal autonomy.

12 of 19

Key Takeaways

Section 37 AA – limited grounds for challenge.
Public policy = fundamental principles, not mere errors.
Natural justice = freedom from bias + right to be heard.
Court discretion central; high evidential threshold.
Malaysia’s stance: minimal court intervention in arbitration.

13 of 19

Challenging

Arbitral Awards

Public Policy and Natural Justice in the Wake of

Eng Han Engineering Sdn Bhd v Toshiba Elevator (M) Sdn Bhd

[2025] 5 AMR 457

2025 MALAYSIA LEGAL FORUM

PLENARY 2: ARBITRATION

14 of 19

CONTENTS

Case Discussion

Analysis of the Decision

The Current Legal Position

Q & A Session

15 of 19

Case Discussion

Background of the Dispute and Arbitration
High Court Findings
Key issues Raised on Appeal to the Court of Appeal

16 of 19

Analysis of the Decision

Judicial Intervention in Arbitration
Natural Justice: Arbitrator’s Consideration on New Matters
Arbitrator’s Reliance on Own Expertise
Lack of Reasons in Award
Arbitrator’s Omission in Setting Out All Issues and Evidence

17 of 19