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 Arbitration agreement is a written agreement between the parties to a dispute to
designate a particular arbitrator to resolve their disputes arising out of a particular
business relationship. It calls for a mandatory arbitration before an arbitrator. An
Arbitration agreement is usually legally binding
 Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve
disputes outside the courts. The dispute will be decided by one or more persons
(the "arbitrators", "arbiters" or "arbitral tribunal"), which renders the "arbitration
award". An arbitration award is legally binding on both sides and enforceable in
the courts.
 Arbitration is often used for the resolution of commercial disputes, particularly in
the context of international commercial transactions. In certain countries such as
the United States, arbitration is also frequently employed in consumer and
employment matters, where arbitration may be mandated by the terms of
employment or commercial contracts and may include a waiver of the right to
bring a class action claim. Mandatory consumer and employment arbitration
should be distinguished from consensual arbitration, particularly commercial
 Arbitration can be either voluntary or mandatory (although mandatory arbitration
can only come from a statute or from a contract that is voluntarily entered into, in
which the parties agree to hold all existing or future disputes to arbitration, without
necessarily knowing, specifically, what disputes will ever occur) and can be either
binding or non-binding. Non-binding arbitration is similar to mediation in that a
decision cannot be imposed on the parties.
 Alternative Dispute Resolution (ADR) is the procedure for settling disputes without
litigation, such as arbitration, mediation, or negotiation. ADR procedures are
usually less costly and more expeditious. They are increasingly being utilized in
disputes that would otherwise result in litigation, including high-profile labour
disputes, divorce actions, and personal injury claims.
 One of the primary reasons parties may prefer ADR proceedings is that, unlike
adversarial litigation, ADR procedures are often collaborative and allow the parties
to understand each other's positions. ADR also allows the parties to come up with
more creative solutions that a court may not be legally allowed to impose.
 Alternative dispute resolution includes dispute resolution processes and
techniques that act as a means for disagreeing parties to come to an agreement
short of litigation. It is a collective term for the ways that parties can settle disputes,
with the help of a third party.
 Arbitration - A process similar to an informal trial where an impartial third party
hears each side of a dispute and issues a decision; the parties may agree to have
the decision be binding or non-binding
 Binding and Non-Binding - A binding decision is a ruling that the parties must
abide be whether or not they agree with it; a non-binding decision is a ruling that
the parties may choose to ignore
 Arbitrator - An impartial person given the power to resolve a dispute by hearing
each side and coming to decision
 Hearing - A proceeding in which evidence and arguments are presented, usually
to a decision maker who will issue ruling
 Mediation - A collaborative process where a mediator works with the parties to
come to a mutually agreeable solution; mediation is usually non-bindin
 Mediation - involves the help of a go-between third party, called a "mediator,"
whose job is to help parties reach some mutual agreement. A mediator cannot
force parties to agree and is not even permitted decide the outcome of a dispute.
Therefore, while mediating, both parties retain significant control over the course
of mediation. Mediation is fully confidential and agreements are usually non-
binding, so parties may still pursue litigation following the mediation process.
 Arbitration - involves the help of a neutral third party. During arbitration, an
"arbitrator" acts a bit analogously to a trial judge by listening to the parties’
grievances. Unlike a mediator, an arbitrator is not a passive go-between facilitator.
After listening to the parties, an arbitrator (often a professional in the party’s
subject of dispute) actually pronounces a decision. Arbitration is still less formal
than a full-blown trial because many rules of evidence don’t apply to arbitration.
Arbitration can either be binding or non-binding.
 Med-Arb - mixture of arbitration and mediation that combines the benefits of these
two methods. Basically, parties commence with mediation, and if an agreement had
not been reached, they move on to arbitration. The same or different third-party
neutral may conduct the mediation and the arbitration sessions of Med-Arb.
 Mini-trial - a mechanism for the parties to test their case and shed light on
settlement discussions. In a mini-trial, each party’s attorney presents an abridged
version of the case. The information is presented to a panel of representatives
chosen by both parties. The panel representatives actually decide a mini-trial
outcome. Unlike other ADR mechanisms, mini-trial is unique in that it often occurs
after commencement of formal litigation.
 Summary Jury Trial (SJT) - essentially a mock trial with a neutral jury that
produces a verdict. It is similar to a mini-trial but is ordered by the court rather
than being stipulated by the parties. After hearing the verdict, the court usually
requires parties to attempt settling their case before litigating in court.
 Early Neutral Evaluation (ENE) - usually occurs when a case has just been filed.
The early neutral evaluation may be conducted by a judge-appointed evaluator
from whom provides parties learn insights about the case. For example, after case
examination, an evaluator may educate parties about their arguments' relative
strengths, chances of winning, and settlement options.
 Negotiation - parties negotiate with each other to achieve a compromise. Although
obvious, this form of ADR is often overlooked. Negotiation does not typically
involve any go-between neutrals and is as informal and open-ended as parties
wish to make it.
 Conciliation - the parties, with assistance from a dispute resolution practitioner
(the conciliator) discuss issues to reach an agreement. The conciliator is
responsible for managing conciliation processes. Conciliator does not recommend
 Arbitration allows the parties to choose their own tribunal. This is especially useful
when the subject matter of the dispute is highly technical: arbitrators with an
appropriate degree of expertise can be chosen.
 Arbitration is often faster than litigation in court
 Proceedings the official language of the country of the competent court will be
automatically applied.
 In most legal systems there are very limited avenues for appeal of an arbitral
award, which is sometimes an advantage because it limits the duration of the
dispute and any associated liability.
 It is private - there is no public record of any proceedings, although not necessarily
 Arbitration is usually a lot less expensive. This is because the fee paid the
arbitrator is a lot less than the expense of paying expert witnesses to come and
testify at trial.
 If arbitration is binding, there are very limited opportunities for either side to
appeal, so the arbitration will be the end of the dispute. That gives finality to the
arbitration award that is not often present with a trial decision.
 Flexible. Unlike trials, which must be worked into overcrowded court calendars,
arbitration hearings can usually be scheduled around the needs and availabilities
of those involved, including weekends and evenings.
 Simplified rules of evidence and procedure. The often convoluted rules of evidence
and procedure do not apply in arbitration proceedings -- making them less stilted
and more easily adapted to the needs of those involved
 Arbitration agreements are sometimes contained in ancillary agreements, or in
small print in other agreements, and consumers and employees often do not know
in advance that they have agreed to mandatory binding pre-dispute arbitration by
purchasing a product or taking a job.
 If arbitration is binding, both sides give up their right to an appeal. That means
there is no real opportunity to correct what one party may feel is an erroneous
arbitration decision.
 Rules of evidence may prevent some evidence from being considered by a judge
or a jury, but an arbitrator may consider that evidence. Thus, an arbitrator’s
decision may be based on information that a judge or jury would not consider at
 If certain information from a witness is presented by documents, then there is no
opportunity to cross-examine the testimony of that witness.
 Although usually thought to be speedier, when there are multiple arbitrators on the
panel, juggling their schedules for hearing dates in long cases can lead to delays.
 Lack of transparency. As mentioned, the fact that arbitration hearings are generally
held in private rather than in an open courtroom, and decisions are usually not
publicly accessible, is considered a benefit by some people in some situations.
 Parties' choice of forum
 Practical solutions
 Wider range of issues can be considered
 Shared future interests may be protected
 Confidentiality
 Risk management
 Suitable for multi-party disputes
 Lower costs
 Likelihood and speed of settlements
 Flexibility of process
 Parties' control of process
 A need for enforcement
 Power imbalance between parties
 Quasi-criminal allegations
 Complexity in the case
 A need for precedent
 A need for court orders
 A need for interim orders
 A need for evidential rules
1) Request for Arbitration – it begins with a claimant submitting a request for
arbitration to the Arbitration Centre. The request for
arbitration should contain summary details concerning
the dispute.
2) Answer to the request – within 30 days of receipt of the request for arbitration, the
respondent must file an answer to the request.
3) Establish of the Tribunal – the parties may choose the number of arbitrators that
will sit on the tribunal.
4) Statement of claim – the statement of claim must be filed within 30 days of the
constitution of the tribunal
5) Statement of defence – the statement of defence must be filed within 30 days of
the receipt of the statement of claim
6) Further written statements – the tribunal may schedule further submissions
7) Hearing – by party request or by tribunal discretion, a hearing may be held for
the presentation of evidence by witnesses and experts and for oral
8) Closure of proceeding – when the tribunal is satisfied that the parties have had
adequate opportunity to present submissions and
evidence, it will declare the proceedings close
9) Final award – the final award by the tribunal should be delivered within three
months of closure of the proceeding
 The Arbitration Act 2005 (Malay: Akta Timbang Tara 2005) is a Malaysian law which
was enacted to reform the law relating to domestic arbitration, provide for
international arbitration, the recognition and enforcement of awards, and for
related matters
 The current 2005 Act applies to both domestic and international arbitrations. The
Act itself is divided into four sections:
 Section 1 comprised the definition section, including important definitions relating
to international arbitration and domestic arbitration.
 Sections 1, 2 and 4 apply to both International and domestic arbitrations.
 Section 3 contains the provisions for appeals in respect of arbitration awards on
points of law and applies only to domestic arbitrations unless the parties to the
arbitration opt out. Equally it does not apply to international arbitrations unless the
parties opt in.
 The 2005 Act defines an arbitration agreement to mean an agreement in writing by
the parties to submit to arbitration all or certain disputes which have arisen or
which may arise between parties in respect of a defined legal relationship whether
contractual or otherwise. (Based on the Model Law) The Act again requires that an
agreement be in writing where there is an exchange of letters, telex, facsimile or
other forms of electronic communication. Alternatively an exchange of pleadings
in which the existence of an arbitration agreement is acknowledged, may be
deemed constitute an arbitration clause between the parties.
 The Malaysian Courts follow the common law principle that the termination of an
agreement or contract does not by itself put an end to any arbitration clause
contained in the agreement or contract. The position it takes is that the arbitration
clause is separable from the agreement or contract and it is not affected by
termination. However, if the agreement or contract is void then the arbitration
clause will not survive
 The 2005 Act adopts a two level approach to grant the parties autonomy in
determining the procedure for appointment of arbitrators followed by a default
mechanism if none has been agreed. The Act does not impose limits on who may
be appointed as arbitrator. The parties are free to choose their arbitral tribunal.
 The 2005 Act states that in the case of international arbitrations three arbitrators
shall be appointed and in the case of domestic arbitration a single arbitrator, in the
event the parties fail to determine the number of arbitrators. In general, parties
normally designate an uneven number of arbitrators. Under the Act parties are free
to agree on a procedure for appointing the presiding arbitrator and the parties are
also generally given a free hand to agree on the procedure for the appointment of
an arbitrator or arbitrators. If the parties fail to make provision for the appointment
of an arbitrator or arbitrators in the arbitration agreement or if there is
disagreement or if they refuse to exercise their right to appoint a member of the
arbitral tribunal, then the Director of the KLRCA is given the power to appoint the
arbitrator or arbitrators and the Director has to do so within 30 days, failing which
the parties can apply to court for the appointment. There is guidance as to how the
Director should exercise his discretion in making any appointment and there is no
right of appeal from the decision of the Director in respect of the appointments
 The 2005 Act provides that an arbitrator must be independent and impartial.
Circumstances which will raise issues as to impartiality and independence include
a personal, business or professional relationship with one party to a dispute or an
interest in the outcome of the dispute. The Act further requires that an arbitrator is
to disclose any circumstances which may give rise to justifiable doubts as to his
impartiality. This is a continuing duty from the time of appointment to the rendering
of the award
 The 2005 Act provides that the arbitrator can determine his own jurisdiction and
his decision on the issue of jurisdiction can be challenged by way of an appeal to
the High Court but such challenge shall not delay the arbitration proceedings.
 The 2005 Act defines an award as a decision of the arbitral tribunal on the
substance of the dispute and includes interim, additional, agreed and final award.
The reference to interlocutory awards in the definition must necessarily mean that
it includes interlocutory awards, which protect the interest of the parties or
regulate the proper conduct of the arbitration prior to the determination of the
merits in respect of the dispute. Therefore, interlocutory orders which do not
include the merits such as security for costs and discovery made by the tribunal in
the course of arbitration can be enforced with leave of the Court
 The 2005 Act, requires that the any award should be in writing and it should be
signed by the arbitrator. If there were three arbitrators, the signature of
the majority of the members of the arbitral tribunal would be sufficient provided
the reason for the omitted signature is stated in the award. All awards should state
the reasons for the award unless the parties have stated otherwise or if the award is
made on agreed terms. The award should also be dated and state the place of
 The 2005 Act, states that a party may request that the arbitrator correct any errors
in computation, clerical or typographical errors or any errors of a similar nature
provided such request is made within thirty days of the award date. The arbitrator
may also correct errors on his own initiative. Under the 1952 Act, the arbitrator only
has the power to correct clerical mistakes and errors arising from an accidental
slip or omission
 The 2005 Act generally provides for non-interference by the court, unless there are
express provisions for allowing it to do so. The High Court does have the power to
grant interim measures in respect of security for costs, discovery of documents and
interrogatories, giving of evidence by affidavit, securing the amount in dispute,
preservation, interim custody and sale of any property which is the subject matter
of a dispute and ensuring that any award which may be made in the arbitral
proceedings is not rendered ineffectual by the dissipation of assets and interim
injunctions. The arbitral tribunal is also given almost similar powers, except that
there is no power to grant an injunction or appoint receivers. The reason for this
could be that with regard to the granting of injunctions and in particular Mareva
injunctions, the power of the court is required for purposes of enforcement. The
rationale for this appears to be to provide the parties with a choice in view of the
concurrent nature of the powers set 2005 Act.
 Arbitration is a good way for people who want to settle their problems at the
outside of the court. Plus, this method would save cost and time rather than settle
the problems in the courts.
 Although this method have many advantages, this method also have many flaws.
The lack of uniform rules is an indications of the different perspective and
approaches taken.
 The critical question is whether the non-uniformity of the rules will inhibit the
enforcement of arbitral awards in jurisdictions practicing different approaches.
 Alternative Dispute Resolution techniques are well established and frequently
used. Thedefinition of alternative dispute resolution is constantly expanding to
include new techniques.The term alternative dispute resolution has become such
well-accepted shorthand for the vastarray of non litigation processes that its
continued use seems assured. But the process ofdeveloping the current system in
order to meet the unique needs of legal disputes shouldcome from all the
institutions of the society
 Encouraging the professional who are in the arbitrations fields to sharpens and
improve their arbitration skills in order to make their judgement is precise and
make them trustworthy.
 In order to make many of the people recognize the importance of arbitration, this
arbitrations course are in need to offer in higher institutions to make more people
involved with arbitrations and make arbitrations more important in the future.
 Must make people to use arbitration method as this method is saving their money
and time.
 It is also very flexible and the parties can choose their own arbitrator, so this
method must be used in order to make the people more recognize this method and
they will use this method in the future