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The Malaysian Reserve - Revised Rules to Speed Up Arbitration
13 Jun 2017

The Kuala Lumpur Regional Centre for Arbitration (KLRCA) has rolled out a revised set of arbitration rules to improve the efficiency and quality of the local arbitrations. 

The newly revised rules are effective on June 1, 2017, three years after the last revision. 

The study reveals that KLRCA emerged as one of the most effective arbitral institutions in terms of cost and duration, says Sundra

KLRCA director Datuk Prof Sundra Rajoo said the new revision was expected to help speed up the arbitration process with more cost- and time-efficient procedural mechanisms, such as expeditious appointment of emergency arbitrators. 

He said the growing global trend gave arbitral institutions the discretion to decide on consolidation of cases in the absence of party agreement. 

“In order for the parties to have faster and more cost-efficient proceedings, the new rules provide for consolidation of disputes,” he told The Malaysian Reserve in an email interview. 

Among the main amendments were the arbitration clause and sub- mission agreement models, commencement of arbitration, joinder of parties, power of the KLRCA’s director to consolidate disputes, technical review of awards, and guide of the KLRCA rules and simplified fee schedules. 

The revised rules stressed on the optimisation of the cost and duration for an arbitration to be resolved. 

KLRCA recently conducted a cost and duration study taking into account all cases registered and concluded between Oct 1, 2013, and Dec 31, 2016. 

“The study recorded the duration of the arbitration as from the date of registration until the date of final conclusion. The total costs of the arbitration (including tribunal fees and KLRCA’s administrative fees) were used to identify the average and the median,” he said. 

Sundra said the study revealed that KLRCA emerged as one of the most effective arbitral institutions in terms of cost and duration. 

“The result of our recent cost and duration study reveals that the average duration in concluding arbitration proceedings is 10.84 months. The average duration includes conclusions by a sole arbitrator and three tribunal panel members,” he said. 

“We are one of the handful arbitral institutions around. On an average, we conclude an arbitration within a year. In accordance with the Rule 12 of the 2017 Rules, the tribunal must submit the draft of the final award to the director for technical review. 

“Such submission must be made by the tribunal within three months from the date on which the proceedings are declared ‘closed’ by the tribunal. Needless to say, certain high stake or complex disputes may exceed the period of 12 months and can stretch to 18 months,” he said. 

The costs for arbitration include the KLRCA’s schedules of fees catered separately for international and domestic cases. 

The fees for international arbitrations are imposed in US dollars, while domestic arbitrations are imposed in ringgit, in addition to the non-refundable registration fee payable by the claimants. 

“The actual cost of the arbitration would be determined by the period of dispute between the parties, which is calculated on an ad valorem basis, and the cost of arbitration is also subjected to the 6% Goods and Services Tax,” he said. 

From 1978 to 2010, KLRCA has recorded 22 cases. Last year, it increased to 618 cases, a 98.4% growth since 2010. 

In its 2016 annual report, KLRCA noted that the number of cases translates to claims totalling to US$295 million (RM1.26 billion) for international cases and RM468 million for domestic cases, the highest it has ever reported.

Source: The Malaysian Reserve