A Shortcut Enforcement of Foreign Arbitral Award via REJA

If a foreign judgment originates from an arbitral award, can it be registered under the Reciprocal Enforcement of Judgments Act 1958 (“REJA”)? If so, can such registration be challenged, and what limits apply to that challenge?

These questions were addressed in the recent Federal Court (“FC”) case of Ing Bank N.V. & Anor v. Tumpuan Megah Development Sdn Bhd.

Background

The Appellants (“IBNV”) obtained an arbitral award in London (“the Award”) against the Respondent (“TMSB”) and subsequently registered it as a judgment in the English High Court (“the UK Judgment”) under s.66 of the UK Arbitration Act (“UK AA”).

To enforce the Award in Malaysia, instead of seeking recognition of the Award under s.38 of the Malaysian Arbitration Act 2005 (“MAA”), IBNV applied to register the UK Judgment under REJA (“REJA Registration”). In light of this, TMSB applied to challenge the REJA Registration under s.5 of REJA and also sought a trial on the issues already ventilated in the London arbitration (“Application for Trial”).

The FC Decision

Before considering the Application for Trial, the FC addressed the permissibility of the REJA Registration. It held that under s.2 of REJA, such a registration is permissible because the section defines ‘judgment’ to include a foreign judgment founded on an arbitral award (i.e., a confirmation judgment). The UK Judgment fell within this category. It also held that both REJA and MAA provided separate avenues for the registration and enforcement of foreign arbitral awards and there are no conflict of each other – REJA deals with judgments (including confirmation judgments), while the MAA deals with arbitral awards.

On whether the Application for Trial is necessary, the FC said no, because: -

(a) in challenging a confirmation judgment registered under REJA, the grounds that may be raised are limited to those under s.5 of REJA only, being the specific statute which deals with judgment.

(b) in this regard, in hearing such challenges under s.5 of REJA, the Court would adopt a limited curial review based on the specific grounds in the section (an equivalent approach taken under ss.37 and 39 of the MAA 2005 in reviewing an arbitral award) instead of a full-blown rehearing of the subject matter with evidence and witnesses.

(c) in this case, as the issues sought to be ventilated in the Application for Trial were the subject matter of the London arbitration proceeding, allowing this application would amount to a review of the decision of the London arbitral tribunal through the back door.

In short, the FC’s decision confirms that REJA can operate as a statutory shortcut for enforcing foreign arbitral awards in Malaysia. This approach is time-efficient, cost-effective, and especially beneficial for foreign companies seeking prompt extra-territorial enforcement of arbitral awards, as it avoids duplicative proceedings for the registration of arbitral awards.

See grounds of judgment here:

https://tinyurl.com/59kewsuy