Introduction
The appointment of a Director of the Asian International Arbitration Centre (AIAC) is not justiciable by Malaysian courts.
On 12 October 2020, the Kuala Lumpur High Court struck out two originating summonses¹ against the former Director of the AIAC, the late Vinayak Pradhan.
The originating summonses were filed by Prestij Mega Construction Sdn Bhd (“Prestij Mega”) against the claimants in two separate adjudication proceedings. Prestij Mega sought to set aside the adjudication decisions on the grounds that the appointments of the adjudicators were invalid. In particular, Prestij Mega sought the following declarations:
- That Pradhan’s acting directorship had been revoked by the Secretary General of the Asian-African Legal Consultative Organization (“AALCO”) on 8 May 2019; and
- That Pradhan was no longer a director or acting director of the AIAC after 8 May 2019.
Pradhan was named as the first defendant. The Government of Malaysia (“Government”) was later added as the third defendant. After Pradhan’s passing on 8 March 2020, the court allowed his substitution with his personal representative.
Prestij Mega’s Arguments
Prestij Mega’s challenge relied on correspondences from the Secretary General of AALCO, disputing the Government’s appointment of Pradhan as Director on the basis that AALCO was not consulted.
Prestij Mega argued that the Host Country Agreement governs the appointment of the AIAC Director. They contended that Pradhan ceased to be Acting Director when appointed as Director, and that this appointment without prior consultation with AALCO was invalid.
Based on this, Prestij Mega claimed that Pradhan lacked the authority to appoint adjudicators in the adjudication proceedings, rendering the appointments null and void. Prestij Mega further alleged that Pradhan had usurped the office of the Director.
Pradhan’s Personal Representative’s Arguments
The Personal Representative contended that the court lacked jurisdiction for three reasons:
- The Host Country Agreement is an international treaty, and treaty rights of sovereign states are non-justiciable in domestic courts.
- The Agreement provides a dispute resolution mechanism that expressly precludes third-party intervention.
- Adjudicating Pradhan’s directorship requires joining AALCO, which has not submitted to the court’s jurisdiction.
Additionally, Pradhan enjoyed immunity from legal proceedings for acts done in his capacity as Director, derived from:
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International Organisations (Privileges and Immunities) Act 1992 (IOPIA)
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Kuala Lumpur Regional Centre for Arbitration (Privileges and Immunities) Regulations 1996
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Diplomatic Privileges (Vienna Convention) Act 1966
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Section 34 of the Construction Industry Payment and Adjudication Act 2012 (CIPAA)
The originating summonses did not disclose a reasonable cause of action, as the claims targeted the Government’s appointment of Pradhan, not Pradhan in his personal capacity.
Under section 114(e) of the Evidence Act 1950, Pradhan’s appointment by the Government must be presumed valid unless proven otherwise. Even if the appointment was flawed, his acts as Director remain valid under the de facto officer doctrine.
High Court’s Decision
Justice Datuk Wong Kian Kheong struck out both originating summonses against Pradhan and his Personal Representative on the following oral grounds:
- The dispute concerns the Host Country Agreement, which is an international treaty and non-justiciable by domestic courts.
- Pradhan enjoyed immunity while performing his official duties, including appointing adjudicators.
- Any defects in Pradhan’s appointment do not invalidate the adjudicators’ appointments.
- There is a legal presumption of regularity in government acts, with no evidence to rebut it.
- The challenges were public actions, not private, rendering the summonses an abuse of process.
- Allowing such challenges would defeat CIPAA’s purpose of ensuring speedy payments.
The written grounds of judgment were not yet issued at the time of publication.
Comments
Similar challenges were raised in Mega Sasa Sdn Bhd v Kinta Bakti Sdn Bhd & Ors².
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In Mega Sasa, the High Court initially refused to strike out the summons, citing unsettled law on immunities under CIPAA and IOPIA.
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At the conclusion, the summons was dismissed.
The Prestij Mega decision benefits from the jurisprudential development in Mega Sasa, reinforcing that municipal courts cannot adjudicate on the appointment of AIAC officers or the Host Country Agreement.
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Non-justiciability: The Host Country Agreement can only be interpreted internationally, not domestically.
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External affairs fall within Parliament and Executive powers; court intervention would constitute judicial overreach.
Both Mega Sasa and Prestij Mega suggest that similar challenges will likely fail, as they are vexatious and waste judicial resources. Costs were awarded in both cases.
This article is authored by:
Foo Joon Liang FCIArb, FSIArb, FHKIArb
Partner, Gan Partnership
E: joonliang@ganlaw.my
Carissa How
Associate, Gan Partnership
E: carissa@ganlaw.my
Kang Mei Yee FCIArb
Senior Associate, Gan Partnership
E: meiyee@ganlaw.my
Endnotes
- BA-24C-13-02/2020 and BA-24C-25-03/2020
- Mega Sasa Sdn Bhd v Kinta Bakti Sdn Bhd & Ors [2020] 4 CLJ 201; [2019] MLJU 1043
DISCLAIMER: This article is for general information only and should not be relied upon as legal advice. The position stated is as at 24 November 2020.
