Federal Court Considers Power to Review Arbitral Award; Enforcement via Reciprocal Enforcement of Judgments Act 1958 vs Arbitration Act 2005

Introduction

In ING Bank N.V. & Anor v Tumpuan Megah Development Sdn Bhd [2025] 8 CLJ 873, a recent judgment by Malaysia’s highest court, an issue arose vis-a-vis the appropriate mode of enforcement of a foreign arbitral award handed down in London, and the powers of the Malaysian courts to review that award. Unusually, the award had subsequently been registered as a judgment in the English High Court for enforcement purposes.

The Malaysian Federal Court (“Court“) had to determine two key questions: First, could the appellants enforce the award by way of registering the English High Court judgment under the Reciprocal Enforcement of Judgments Act 1958 (“REJA“), instead of enforcing it through the Arbitration Act 2005 (“AA“)? Second, could a Malaysian court order a trial of issues that have already been tried in the original arbitration?

Background

The Parties

The respondent, Tumpuan Megah Development Sdn Bhd, incorporated in Malaysia, supplied marine bunker fuel. The first appellant, ING Bank NV, incorporated in Netherlands, provided banking services to individuals and corporations globally. The second appellant, O.W. Bunker Far East (Singapore) Pte Ltd, incorporated in Singapore and a subsidiary of O.W. Bunker & Trading A/S (“OWB&T“) (which had filed for bankruptcy in the Danish courts), was involved in the sale, supply and trading of bunkers to supply fuel to ships at hubs and ports.

In conjunction with the execution of a facilities agreement, ING Bank entered into an omnibus security agreement, pursuant to which OWB&T and its subsidiaries (including the second appellant) assigned all their rights, title and interest in any amounts owed to them in respect of supply contracts to ING Bank, the first appellant, as assignee. This included two supply contracts allegedly entered between the second appellant and the respondent (although the respondent denied the existence of these supply contracts), which comprise the subject matter of this dispute.

The Dispute

The appellants claimed that monies were due to them for supply of bunkers under the two supply contracts, while the respondent took the position that these contracts did not subsist and no bunkers were ever supplied. In May 2017, the appellants commenced arbitration proceedings in London against the respondent, pursuant to the arbitration agreement incorporated into the sales contracts.

The Arbitration

Although the respondent participated in the arbitration, the respondent did so subject to a protest as to the jurisdiction of the London arbitral tribunal (“London tribunal“). This jurisdictional objection was initially based on the position that the two disputed transactions did not subsist, and that the two sales contracts (containing the arbitration agreements) thus were not genuine. Two years after the beginning of the London arbitration, the respondent sought to amend its defence to state that there was a set-off agreement between the parties, which was governed by Malaysian law and contained an arbitration clause providing for disputes to be resolved by arbitration in Kuala Lumpur, Malaysia.

While the London tribunal refused the amendment on grounds of delay, it held that in any event, the set-off agreement was meant to solve disputes on the set-off and not to the supply contracts, which were the matters before the tribunal. In February 2020, the London tribunal held in favour of the appellants on both jurisdiction and the merits of the dispute (“London Award“).

Thereafter in December 2020, the appellants obtained a confirmation judgment from the English High Court to register and enforce the London Award (“English Judgment“). The respondent chose not to challenge the London Award in England.

The appellants then obtained an ex parte order at the Malaysian High Court to register the English Judgment under the REJA. The respondent applied to set aside the order. However, before the determination of the setting aside application, the respondent filed an application for trial identifying four “potential issues” requiring a trial.

The issues comprised matters which were the subject matter of adjudication by the London tribunal, including whether:

1. There was a contract containing an arbitration agreement;
2. The first appellant was engaged in a moneylending transaction with a third party that was disguised as a contract for the supply of marine gas oils or bunkers by the second appellant to the respondent;
3. There was an actual sale or delivery of such bunkers to the respondent; and
4. The English Judgment was therefore obtained by fraud.

Earlier Decisions of the Courts

The Malaysian High Court dismissed the application for trial, stating that:

1. None of the issues necessitated oral evidence or a trial. Affidavit evidence would suffice.
2. The jurisdiction of the English High Court could be determined based on affidavit evidence alone.
3. The respondent had not particularised the alleged fraud on the English High Court.
4. The respondent’s application was an abuse of process in that it was attempting to prolong the setting aside application, and to procure a decision of the Malaysian court which was inconsistent with the London Award by re-litigating issues which had already been raised.

The Malaysian Court of Appeal, however, overturned the High Court’s decision and allowed the respondent’s application for a trial, stating amongst others that:

1. The registration (confirmation judgment) of an English arbitral award only allowed enforcement of the award as a judgment within the jurisdiction (i.e. the UK), and did not extend to the enforcement of an arbitral award as a judgment outside the UK.
2. On jurisdiction, the appellants could not deprive the respondent of its passive remedy by “strategically electing to enforce the arbitral award that had been enforced in the UK High Court as a judgment of the court by way of registering the foreign judgment in the High Court of Malaya under the REJA”.
3. In this regard, the Court of Appeal relied on the UK Supreme Court decision inDallah Real Estate and Tourism Holding Company v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763, which held that the person denying being party to an arbitration agreement is not obligated to participate in the arbitration or take steps in the seat country. Hence, the respondent was only required to resist enforcement of the London Award in Malaysia and not in the UK.
4. The respondent’s arguments on the formation of the arbitration agreement went to the root of the jurisdiction of the tribunal. Hence, the court had to hear the matter independently and afresh.
5. The Court of Appeal took note of a UK expert’s opinion that the Malaysian proceedings – namely the registration of the London Award in the UK, followed by registration of the English Judgment under the REJA – amounted to a “judgment on a judgment” and “judgment laundering”.
6. Here, the appellants had the upper hand in deciding which provisions of the Malaysian statute to proceed under with respect to the enforcement of a foreign judgment. The more appropriate statute to do this was under the AA However, by electing to proceed under the REJA, the respondent should not be deprived of any defences that may be available to it had the enforcement been under sections 38 and 39 of the AA (i.e. the various grounds for refusing recognition/enforcement of an award provided for under the AA).
7. The fact that the arbitral tribunal had heard and dismissed the respondent’s witnesses and evidence on the issue of fraud did not prevent the respondent from raising them in a Malaysian court. When so raised, the Malaysian court would need to hear the issue de novo (i.e. afresh) as a tribunal’s decision on its own jurisdiction is never final. In short, a new trial with witnesses could be held, and if fraud could be established, it would undo the arbitration agreement.

Decision of the Malaysian Federal Court

The appellants applied for leave to appeal against the Malaysian Court of Appeal’s decision, with leave granted on the following questions of law where (i) a country falling under the REJA list (e.g. the UK, Singapore) has issued a confirmation judgment of an arbitral award, and (ii) the creditor seeks to enforce the confirmation judgment under the REJA in Malaysia:

1. Whether a Malaysian court hearing a REJA application can invoke its powers under sections 37 and 39 of the AA to set aside or refuse enforcement of an award.
2. Whether a Malaysian court can order a trial of issues when such issues have been tried in the original arbitration.
3. If the answer to either of the above is yes,
   • what criteria/factors are to be considered by the Malaysian court before a trial of issues can be ordered; and
   • whether the Malaysian court can reopen the merits or propriety of the award, including the jurisdiction of the tribunal.

Given the full background to the proceedings, the Court then identified and addressed five key issues, summarised below.

Question 1: Whether a Malaysian court hearing an REJA application can invoke its powers under the AA

Issue 1: Can the winning party enforce an award registered in the foreign seat court under the REJA and/or the AA?

The Court held that the REJA signifies a special relationship of reciprocity which Malaysia enjoys with other specific jurisdictions (e.g. the United Kingdom or Singapore), unlike the AA which takes its origin from the UNCITRAL Model Law on International Commercial Arbitration and is connected to the New York Convention.

The REJA and AA are separate and distinct modes of enforcement. The REJA allows for recognition of confirmation judgments premised on an arbitral award for the specified jurisdictions, while the AA allows enforcement of foreign arbitral awards generally.

Issues 2 and 3: Does the AA prevail over or impliedly repeal the REJA for registration of confirmation judgments arising from arbitral awards?

The Court noted that the REJA has been in force since 1958. Since the enactment of the AA, no objection has been raised about using the REJA to enforce a foreign award via a confirmation judgment. Nor has there been any repeal or amendment of the REJA to prevent registration and enforcement of foreign arbitral awards through a confirmation judgment.

The REJA and the AA are also separate laws premised on their respective treaty arrangements, governing different rights. It was therefore incorrect to subject the REJA to the terms of the AA. The issue of conflict or inconsistency arising between the two statutes does not arise because they provide different modes of enforcement.

The respondent’s contention that there can only be one mode of enforcing an arbitral award was also rejected. It was not for a debtor to dictate how a creditor may enforce the award, especially where there are at least two modes of enforcement available here, namely the REJA and the AA.

The Court also rejected the argument that the appellants’ actions constituted “judgment laundering”. This would mean construing the seeking of the registration of a foreign confirmation judgment on an award under the REJA as amounting to judgment laundering, which was not the case here. The Court further stated that judgment laundering would involve a foreign judgment being “laundered” in a jurisdiction first, before being passed off at the enforcement court for recognition and enforcement. That was not the case here, as only one court and one judgment were involved.

Question 2: Whether a Malaysian court can order a trial of issues

Issue 4: The approach to be taken by the Registering Court under the REJA

The Court stated that the available approaches when considering a review of the relevant issues in this matter under the REJA were either (i) a full review with a re-hearing of evidence and witnesses, or (ii) a “limited curial review”.

The Court noted that most of the allegations related to evidential points or legal conclusions based on evidence given to the London tribunal. A de novo approach would be an attack on the principle of finality.

As to the second approach, a limited or minimal curial review allowed the respondent to present its case without the need for a full rehearing. Interestingly, the Court noted that while there was little material on this issue relating to the REJA, there were many examples of minimal curial review in respect of the foreign equivalents of the AA throughout the Commonwealth, which with some modification, could be adopted in Malaysia.

The Court considered the approach taken by the Indian Supreme Court in the case of Vijay Karia v Prysmian Cavi E Sistemi Sri AIR 2020 SC 1807 as well the Singapore Court of Appeal in AJT v AJU [2011] SGCA 41, stating that the approaches in these cases gave “primacy to the autonomy of arbitral proceedings, as well as upholding the primacy of arbitral awards”. Such an approach was consistent with the registration and enforcement of a confirmation judgment premised on an arbitral award, while maintaining finality.

Thus, the courts should be slow to encourage a full-blown rehearing which would effectively amount to a second bite of the cherry in relation to some of the issues raised. Where the issues relate to the construction of contracts, no oral evidence is warranted.

Issue 5: Is a challenge on factual findings of fraud a jurisdiction challenge?

The Court held “jurisdiction” in arbitral awards typically concerns the power of the tribunal to hear a case. Thus, where the challenge is based on allegations of fraud which impact the powers of the tribunal under the arbitration agreement, this can amount to a jurisdictional challenge.

Conclusion

The Court answered the questions of law as such:

1. A Malaysian court hearing a REJA application cannot invoke its powers under sections 37 and 39 of the AA.
2. A Malaysian court cannot order a trial of issues when such issues have been tried in the original arbitration.

The upshot was that the Court allowed the appeal and set aside the judgment of the Malaysian Court of Appeal.

Concluding Remarks

The judgment of the Court, in addition to confirming that parties have the flexibility to enforce an arbitral award via the AA, or the REJA (if a confirmation judgment has been obtained), also provides clarity on the scope of judicial scrutiny under the REJA.

The judgment further reinforces Malaysia’s commitment to reciprocity and procedural efficiency in cross-border dispute resolution, while upholding party autonomy and the autonomy of arbitration.

This article was authored by Sivaram Prasad. A PDF version is available here.