Pembinaan Jaya Zira Sdn Bhd v Sungai Lui Construction & Development Sdn Bhd

Appellant(s): Pembinaan Jaya Zira Sdn Bhd

Respondent(s): Sungai Lui Construction And Development Sdn Bhd

• YA Dato' Mohd Nazlan Bin Mohd Ghazali
• YA Datuk Seri Mohd Firuz Bin Jaffril
• YA Datin Paduka Evrol Mariette Peters

• The appellant, a Bumiputera-registered main contractor, appointed the respondent as a "total subcontractor" to execute the entirety of a public works project originally awarded by the government.
• Following a dispute over payment and termination, the High Court, with the consent of the parties, referred the matter to an arbitrator pursuant to Section 24A of the Courts of Judicature Act 1964 ("CJA").
• After the arbitrator ruled in favor of the respondent, the respondent applied to enforce the award under Section 38 of the Arbitration Act 2005 ("AA"), while the appellant sought to set it aside under Section 37 of the AA.

• Whether an arbitral award arising from a court-ordered reference under Section 24A of the CJA can be recognized and enforced via the procedural framework of Section 38 of the AA.
• Whether a "total subcontract" arrangement where a Bumiputera main contractor cedes the entire scope of works to a subcontractor constitutes an "Ali Baba" scheme contrary to public policy.
• The distinction between the Court’s supervisory jurisdiction over an arbitrator acting as an officer of the Court under the CJA versus a private arbitrator appointed via a consensual arbitration agreement.

• The Court allowed the appeals, ruling that Section 24A of the CJA and the AA are distinct regimes; an award under the CJA derives authority from the Court, requires formal adoption by the Court, and cannot be enforced under Section 38 of the AA which requires a private arbitration agreement.
• The Court held that the underlying contract was void ab initio under Section 24(e) of the Contracts Act 1950 as it was an "Ali Baba" arrangement that undermined the National Economic Policy and affirmative action objectives.
• The Court emphasized that because an arbitrator under Section 24A of the CJA is a delegate and officer of the Court, the Court retains broader inherent powers to review, vary, or set aside the award compared to the restrictive grounds available under the AA.