Dispositive vs Whole – The Arbitration Award Conundrum

When a party wishes to enforce an arbitration award through a court of law in Malaysia, must the party provide the court with the whole award given in the arbitration proceedings in order for the court to decide whether to allow the party to enforce the award or only a dispositive part of the award? To find out more, let us dive into the case of Jacob And Toralf Consulting Sdn Bhd & Ors v. Siemens Industry Software GmbH & Co KG (Germany); Toralf Mueller (Intervener) and see what does the court has to say on this issue. 

What is a “dispositive part” of an award?

Generally, in an arbitration award, the award (similar to a court judgment) will record the claims and defenses of the respective parties, the tribunal decision and the reasons for its decision, and the number of damages, interest, and costs awarded the respective parties in an arbitration proceeding. The last part of the record is what we called a “dispositive part” of an award.

Brief facts of the case

In 2008, the appellants, Jacob and Toralf Consulting Sdn Bhd and others (“J&T Consulting”) and the respondent, Siemens Industry Software GMBH & Co KG (“Siemens Industry”) entered into a settlement agreement to resolve their legal dispute once and for all. One of the clauses (amongst others) in the settlement agreement entails that both parties must settle any disputes or differences arising out of the settlement agreement through arbitration. 

However, in 2009, J&T Consulting commenced legal proceedings against Siemens Industry in court. In the suit, J&T Consulting claimed that they have entered into the settlement agreement by reason of fraudulent misrepresentation by Siemens Industry. Subsequently, Siemens Industry then obtained an order from the court (and was granted by the court) to enforce the arbitration clause i.e. resolve the matter by way of arbitration. 

In the arbitration proceedings in Singapore, the tribunal sided with J&T Consulting and ordered Siemens Industry to pay the cost of dragging J&T Consulting to arbitration proceedings.

To enforce the award in Malaysia, J&T Consulting filed a summons to register the final award that was granted in the arbitration proceedings in the Malaysian court. This was done by filling the entire award (together with the findings made by the tribunal) in the Malaysian court. Siemens Industry, however, opposed the application, contended that (amongst others) only the dispositive part of the award can be registered.

The High Court agreed. In coming to its decision, the court (amongst others) pointed out that the term “award” in section 2 of the Arbitration Act only refers to the dispositive part of an award and not the whole award. On appeal, the court sided with J&T Consulting and allowed J&T Consulting to register the arbitration award. 

Why

The court pointed out that the exercise of registering an arbitration award must be viewed in two parts, namely the registration itself and the enforcement of the award by a court of law. Assuming if the award is capable of being registered and challenged, it would be safe to say that the court will need to see the award in full to understand the tribunal’s reason in reaching its decision. Otherwise, the court would not be able to come to an informed decision is deciding whether to allow the award to be enforced or vice versa. 

The court also noted that nowhere in the Act states that only part of the award can be registered in a court of law. The only exception is in section 39(3) of the Act, where it clearly states that only instance a part of an award can be submitted to the court is when a decision made on matters not submitted to arbitration i.e. the Act would have stated clearly that only the dispositive part of the award is to be registered like it how it was done in section 39(3) of the Act. Since it did not, it is safe to say that the whole award granted in an arbitration proceeding must be registered in order for the court to enforce the award.

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