Appoint Director For Arbitration Centre Quickly: SLS

LETTER: The Sabah Law Society (SLS) is concerned that the Asian International Arbitration Centre (AIAC) has been without a Director since the sudden passing away of Mr Vinayak Pradhan on March 8 this year.

From the time of its inception over four decades ago, the AIAC has evolved into a multi-purpose alternative dispute resolution (ADR) hub resulting from a series of successful initiatives, such as modernising its arbitration and mediation rules, introducing its Standard Form of Building Contracts, creating a scheme for resolution of domain name disputes, etc.

Further, the AIAC significantly contributes to capacity building in Malaysia, Asia and beyond due to the Malaysian Government’s push to promote AIAC as Malaysia’s international ADR centre.

Resulting from the success of such initiatives, model arbitration clauses were adopted in many contracts whereby any dispute, controversy or claim arising out of or relating such contract, or the breach, termination or invalidity thereof shall be settled by arbitration in accordance with the AIAC Arbitration Rules.

Where parties have agreed to arbitral proceedings under the AIAC Arbitration Rules, the Director shall be the appointing authority.

Likewise, where parties in a contract fail to agree on a procedure for appointing the arbitrator, the Arbitration Act 2005 states that the Director of AIAC is the deemed appointing authority.

Further, AIAC is also the adjudication authority and provides support for the Construction Industry Payment & Adjudication Act 2012 (CIPAA) which came into effect from April 15, 2014. CIPAA procedure is a redressal mechanism to resolve construction contract payment disputes.

Due to the delay in appointing a suitable replacement Director since the untimely death of Mr Pradhan some four months ago, arbitral proceedings and CIPAA adjudication in this period have been paralysed as a result of there being no appointing authority of arbitrators and adjudicators respectively.

The absence of a provision in the AIAC structure for an Acting or Deputy Director with the same appointment powers further exasperates this state of affairs.

SLS urges the Malaysian Government to appoint a new Director for AIAC swiftly to enable arbitrations and CIPAA adjudications to proceed.

Furthermore, the Malaysian Government should reconsider the dependency on having only one appointing body dominating the alternative dispute resolution process.

In view of the current standstill in the absence of a Director it warrants a deliberation that the Arbitration Act 2005, the Construction Industry Payment & Adjudication Act 2012 and any similar legislation in the future should not confine themselves to only one appointing body.

* Roger Chin is President of the Sabah Law Society