Kompetenz – Kompetenz in Malaysia

In PT WIJAYA KARYA (PERSERO) TBK & ANOR v ZECON BHD & ANOR [2025] 8 CLJ 401, the Court of Appeal dealt with a matter involving four parties and two separate agreements. It was common cause that two of the parties which contracted with each other (one party on either side of the fence) were agents of the other parties who themselves contracted with each other as principals.

Disputes on the two contracts arose, and a single arbitration was conducted on the dispute relating to the contracts. An award was made in favour of the appellants (Wijaya Karya and its agent). The respondents challenged the award in the High Court and the challenge was successful. The High Court held, amongst other things, that:

(i) there is no single arbitration agreement made between all four parties herein, to refer their disputes under the first contract and/or the 2nd contract to the arbitral tribunal at all material times and therefore there was no valid  “arbitration agreement” for the purposes of the Arbitration Act 2005 (“the Act”); 

(ii) the dispositive portion of the award failed to identify a party to perform the award and a party to benefit from the award resulting in the award to be uncertain as to its meaning, effect, impact and/or duties imposed;

(iii) there was a breach of the rules of natural justice based on the manner the arbitration proceedings were conducted in particular, the arbitrator’s finding that the second appellant and second respondent are the agent of their principal, the first appellant and the first respondent.

The Court of Appeal reversed the High Court’s decision. In doing so, the Court of Appeal found that the arbitration was commenced as a single international arbitration. Parties had agreed to submit their pleadings as a single international arbitration and to consider these issues as they arose in the pleadings. In this case, the respondents had also consented to have their jurisdictional challenge joined and dealt with by the arbitral tribunal together with the merits of the dispute. Therefore, the doctrine of kompetenz-kompetenz  applied as stipulated under Section 18(7) of the Act.

The said Section 18(7) provides that a plea as to jurisdiction or scope of authority may be dealt with by the arbitral tribunal, either as a preliminary question or in an award on the merits.

The Court of Appeal held that the competence or authority of the arbitral tribunal came from the agreement of the parties. Not only were the contracts closely connected, the parties had given the authority to the arbitral tribunal to decide the disputes between them. As such, the tribunal’s findings cannot be revisited. Further, parties had participated fully in the arbitral proceedings, and the respondents in particular had made thorough written submissions on their position. There was no breach of natural justice.

This appeal is a welcome affirmation of the principle of kompetenz-kompetenz and a rejection of what appears to be post-award tactical challenges on matters which had either been fully addressed or ought to have been so addressed when the opportunity was given. A tribunal should also be alive to expressly providing how issues as to jurisdiction and authority should be dealt with as soon as possible at the procedural stage.

[Note: The author is grateful to Ms Sharmila Ravindran for our discussions on this issue]