Arbitration Agreement Malaysia – Understanding the Requirements

Arbitration is a widely used method of dispute resolution in Malaysia. It is the preferred method by most businesses, especially those that involve international parties. An arbitration agreement is a legally binding document that defines the terms and conditions of an arbitration process.

In Malaysia, arbitration agreements are governed by the Malaysian Arbitration Act 2005 (MAA). An arbitration agreement must meet certain requirements to be enforceable under Malaysian law. Here are the key requirements you need to know:

1. The agreement must be in writing

Under the MAA, an arbitration agreement must be in writing. This means that it can be in the form of an email, letter, contract, or any other written document. The agreement must clearly state that the parties have agreed to resolve their disputes through arbitration.

2. The agreement must be signed by the parties

The arbitration agreement must be signed by both parties or their authorized representatives. This is to ensure that both parties have agreed to be bound by the terms and conditions of the arbitration process.

3. The agreement must specify the arbitration rules

The parties must agree on the rules that will govern the arbitration process. This can be done by specifying the rules in the arbitration agreement or by indicating that the arbitration will be conducted under the rules of a particular institution, such as the Kuala Lumpur Regional Centre for Arbitration (KLRCA).

4. The agreement must specify the place of arbitration

The parties must agree on the place where the arbitration will be conducted. This can be in Malaysia or any other country. The place of arbitration will determine the procedural rules that will apply to the arbitration process.

5. The agreement must specify the language of arbitration

The parties must also agree on the language that will be used in the arbitration process. This can be done by specifying the language in the arbitration agreement or by indicating that the arbitration will be conducted in a particular language.

6. The agreement must be legally binding

Finally, the arbitration agreement must be legally binding. This means that both parties must agree to be bound by the terms and conditions of the arbitration process. A legally binding agreement can be enforced by the courts if one of the parties fails to comply with the terms of the agreement.

Conclusion

The requirements for an arbitration agreement in Malaysia are straightforward. It is essential that parties ensure they meet these requirements to ensure the validity of the agreement. Ultimately, having a well-drafted arbitration agreement can greatly assist in the resolution of disputes and can avoid unnecessary litigation costs.