Bellworth Developments Sdn Bhd v Setiakon Builders Sdn Bhd

Appellant(s): Bellworth Developments Sdn Bhd

Respondent(s): Setiakon Builders Sdn Bhd

• YA Dato' Lim Chong Fong
• YA Datuk Dr Shahnaz Binti Sulaiman
• YA Dato' Sri Latifah Binti Haji Mohd Tahar

• The developer of a mixed development project appointed the contractor to carry out superstructure works under a Letter of Award and subsequent PAM Contract, with disputes arising over extensions of time, a Certificate of Non-Completion (CNC), and liquidated and ascertained damages (LAD) of RM6,000,000 imposed on the contractor.
• The contractor referred the disputes to arbitration, and the arbitrator delivered a final award declaring the CNC invalid and awarding the contractor RM11,452,910 for unpaid work, together with interest and costs.
• Following the award, the contractor applied to enforce the award while the developer applied to set it aside; the High Court allowed enforcement and dismissed the setting-aside application, prompting the developer's appeals (heard together) and the contractor's cross-appeal.

• Whether the arbitrator's one-day delay in submitting the draft final award to the AIAC Director for technical review (allegedly breaching Rule 12(2) of the AIAC Rules) deprived him of jurisdiction to render a valid award under s.37(1)(a)(vi) of the Arbitration Act 2005.
• Whether the arbitrator's finding on the invalidity of the CNC (based on an architect's letter) constituted a "new difference" beyond the scope of submission to arbitration, amounting to excess of jurisdiction and/or breach of natural justice under s.37(1)(a)(iv), (v) and s.37(2)(b)(ii).
• Whether an application to set aside an arbitral award under s.37 permits the court to review the merits or logical soundness of the arbitrator's findings, and the extent of judicial discretion to refuse setting aside even where a technical ground is established.

• The Court of Appeal held that Rule 12(2) of the AIAC Rules is directory, not mandatory, given its administrative nature and the waiver provision in Article 32 of Part II of the AIAC Rules; in any event, no prejudice arose from the one-day delay, and the developer's challenge on this ground failed (though the cross-appeal on the correct computation date was allowed).
• The Court found that the CNC's invalidity was adequately pleaded and formed part of the issues submitted to arbitration; the arbitrator did not decide a "new difference," and even if he had drawn on his own expertise without inviting further submissions, this did not breach natural justice, applying Pancaran Prima and related authorities.
• The Court reaffirmed that a setting-aside application is not an appeal on the merits and the grounds under s.37 are narrow and exhaustive (per Jan De Nul, Master Mulia, Far East Holdings); both appeals (setting aside and enforcement) were dismissed, the High Court's decisions were affirmed, and costs of RM50,000 were awarded to the contractor.