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Malaysia to allow international ship arrests in its ports 10-Oct-2011

MALAYSIA has amended its Arbitration Act 2011 to permit international vessels to be arrested in its jurisdiction in aid of arbitration, whether or not the seat of the arbitration is in Malaysia.


The key changes, due to come into force in July 2012, state that where a maritime dispute is subject to arbitration agreement, a claimant will now be able to: arrest the respondent’s vessel when it calls in Malaysia; have the Malaysian action stayed; and have the security provided by the respondents following the arrest stand as security for any arbitration award given against the respondents.

Partner at international law firm Kennedys Karnan Thirupathy said the amendments made it clear that the Malaysian Courts were set to take a more pro-arbitration approach.

“Following the recent amendments, where a party applies to stay court proceedings before taking any other steps in the action, the Malaysian courts will have to stay the proceedings unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed,” he said.

Mr Thirupathy said the amendments should be welcome news to international claimants in shipping arbitrations as it provided them with another jurisdiction where they could consider obtaining security for their claims.

“The amendments also bring Malaysia’s position in line with neighbouring Singapore’s,” he said. Kuala Lumpur Regional Centre for Arbitration director Sundra Rajoo said he expected an increase in reference of international arbitration in Malaysia.

He said a working committee consisting of maritime law experts had been formed to work on the KLRCA maritime arbitration rules and infrastructure, such as specialised facilities, and a panel of maritime arbitrators and that the new set up should be in place by early next year.

Source: Lloyd's List, 10 October 2011


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