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NULL AND VOID, INOPERATIVE OR INCAPABLE OF BEING PERFORMED
OF AN ARBITRATION AGREEMENT
GOH HWEH TZE
UNIVERSITI TEKNOLOGI MALAYSIA
NULL AND VOID, INOPERATIVE OR INCAPABLE OF BEING PERFORMED
OF AN ARBITRATION AGREEMENT
GOH HWEH TZE
A project report submitted in partial fulfillment of the
requirements for the award of the degree of
Master of Science in Construction Contract Management.
Faculty of Built Environment
Universiti Teknologi Malaysia
August 2016
iii
DEDICATION
Special thanks to my parents, my sisters and brothers, my supervisor and friends
for their endless helps, support and understandings
Thanks for Everything.
iv
ACKNOWLEDGEMENT
First of all, I would like to take this opportunity to express my deepest gratitude
to my supervisor Assoc. Prof. Sr Dr. Maizon Bte Hashim for her advice, assist and
guidance. The supervision and support that she gave truly help the progression and
smoothness of this research.
Thanks also to all the lecturers in course of Master of Science (Construction
Contract Management), Assoc. Prof. Sr Dr. Maizon Bte Hashim, En. Jamaludin
Yaakob, Dr Norazam Othman, Dr. Nur Emma Mustaffa, Dr Muzani Bin Mustapa for
their patient and kind advice during the process of completing the master project.
Furthermore, I would like to forward my appreciation to my family for their
care, moral support and understanding. Last but not least, I want to thank my friends
who direct or indirectly assist me in completing this study.
Thank you very much.
v
ABSTRACT
The parties must have a written arbitration agreement before referring their
dispute to arbitration. The party might refuse to refer their dispute to arbitration on the
ground that the arbitration agreement is “null and void, inoperative or incapable of
being performed”. This research is conducted to identify the circumstances that the
arbitration agreement is “null and void, inoperative or incapable of being performed”.
Thus, this research investigated eleven cases from Malayan Law Journal where the
courts held that the arbitration agreement is “null and void, inoperative or incapable of
being performed”. This can be a guideline for the parties who want to resolve their
dispute by arbitration. The methodology of this study is based on documentary analysis
with the assistance of Nvivo 11. From the analysis, there are five circumstances which
led to the arbitration agreement to be “null and void”. First, the agreement does not
have a clear wording to refer arbitration clause in another document. Second, there is
no acceptance by a party on the arbitration agreement. Third, the parties in dispute are
not the parties in the arbitration agreement. Fourth, the agreement does not show
intention to refer arbitration clause in another document. Fifth, the dispute does not
within the scope of the arbitration agreement. Besides, there are two circumstances
which led to the arbitration agreement to be “inoperative”. First, the party fails to
comply with the time frame stipulated in the arbitration agreement. Second, the
arbitration agreement incorporated the permissive word and there is another clause
which conflicts with the arbitration clause.
vi
ABSTRAK
Pihak-pihak mesti mempunyai perjanjian timbang tara bertulis sebelum
merujuk pertikaian mereka kepada timbangtara. Pihak itu mungkin enggan untuk
merujuk pertikaian mereka kepada timbang tara atas alasan bahawa perjanjian timbang
tara itu "batal dan tidak sah, tidak berkuat kuasa dan tidak berupaya untuk
dilaksanakan". Kajian ini dibuat untuk mengenal pasti keadaan perjanjian timbang tara
itu "batal dan tidak sah, tidak berkuat kuasa dan tidak berupaya untuk dilaksanakan".
Oleh itu, kajian ini menyiasat sebelas kes dari Malayan Law Journal yang mahkamah
memutuskan perjanjian timbang tara itu "batal dan tidak sah, tidak berkuat kuasa dan
tidak berupaya untuk dilaksanakan". Kajian ini boleh menjadi satu garis panduan bagi
pihak-pihak yang ingin menyelesaikan pertikaian mereka melalui timbang tara.
Metodologi kajian ini adalah berdasarkan analisis dokumentari dengan bantuan Nvivo
11. Dari analisis, terdapat lima keadaan menunjukkan bahawa perjanjian timbang tara
adalah "batal dan tidak sah". Pertama, perjanjian itu tidak mempunyai kata-kata yang
jelas merujuk fasal timbang tara dalam dokumen lain. Kedua, tidak ada penerimaan
kepada perjanjian timbang tara. Ketiga, pihak-pihak yang bersengketa bukan pihak-
pihak dalam perjanjian timbang tara. Keempat, perjanjian itu tidak menunjukkan niat
untuk merujuk fasal timbang tara dalam dokumen lain. Kelima, pertikaian itu tidak
dalam skop perjanjian timbang tara. Selain itu, terdapat dua keadaan menunjukkan
bahawa perjanjian timbang tara itu "tidak berkuat kuasa". Pertama, parti itu tidak
mematuhi tempoh masa yang ditetapkan dalam perjanjian timbang tara. Kedua,
perjanjian timbang tara itu mempunyai perkataan permisif dan ada klausa lain yang
bercanggah dengan fasal timbang tara .
vii
TABLE OF CONTENTS
CHAPTER TITLE PAGE
DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENTS iv
ABSTRACT v
ABSTRAK vi
TABLE OF CONTENTS vii
LIST OF TABLES x
LIST OF FIGURES xi
LIST OF ABBREVIATIONS xii
LIST OF CASES xiii
1 INTRODUCTION
1.1 Background of Study 1
1.2 Statement of Problem 3
1.3 Research Questions 8
1.4 Research Objective 8
1.5 Scope of Research 9
1.6 Significance of Research 9
1.7 Research Methodology 10
1.8 Chapter Organisation 14
1.9 Conclusion 16
viii
2 LITERATURE REVIEW
2.1 Introduction 17
2.2 Definition of Agreement 18
2.3 Definition of Arbitration 18
2.4 Arbitration Agreement 21
2.5 Circumstance that The Arbitration Agreement is
“Null and Void, Inoperative and Incapable of being
Performed” 23
2.6 Oral Arbitration Agreement 30
2.7 Written Arbitration Agreement 31
2.8 Importance of an Arbitration Agreement 34
2.9 Elements of an Arbitration Agreement 36
2.9.1 The Parties to the Arbitration 37
2.9.2 Clear Intention to Arbitrate 38
2.9.3 Scope of an Arbitration Agreement 40
2.9.4 Connect Arbitration to a Legal System 41
2.10 Incorporation of an Arbitration Clause by Reference 41
2.10.1 Basic Requirement for Incorporation of
An Arbitration Clause 42
2.11 Preliminary Considerations When Drafting an
Arbitration Agreement 44
2.12 Defective Arbitration Agreement 47
2.12.1 Causes and Effects of a Defective Arbitration
Agreement 51
2.13 Conclusion 58
3 RESEARCH METHODOLOGY
3.1 Introduction 60
3.2 Initial Stage – Preliminary Study 61
3.3 Second Stage – Literature Review 61
3.4 Third Stage – Data Collection 62
3.5 Fourth Stage – Data Analysis 62
ix
3.6 Fifth Stage – Writing Up 63
3.7 Conclusion 63
4 DATA ANALYSIS AND FINDINGS
4.1 Introduction 64
4.2 Circumstances that the Arbitration Agreement
is Considered “Null and Void, Inoperative and
Incapable of Being Performed” 65
4.2.1 Circumstances That the Arbitration Agreement
is “Null and Void” 65
4.2.2 Circumstances That the Arbitration Agreement
is Inoperative 85
4.3 Conclusion 95
5 CONCLUSION AND RECOMMENDATION
5.1 Introduction 106
5.2 Summary of Findings 107
5.3 Problems Encountered during Research 115
5.4 Future Research 115
5.5 Conclusion 116
REFERENCE 117
x
LIST OF TABLES
TABLE NO. TITLE PAGE
4.1 Summary of Cases 97
4.2 Summary of the Circumstances that the arbitration
Agreement Is “Null and Void, Inoperative or
Incapable of Being Performed” in Law Cases 101
xi
LIST OF FIGURES
FIGURE NO. TITLE PAGE
1.1 Research Methodology Flow Chart 13
xii
LIST OF ABBREVIATIONS
ABBREVIATIONS FULL NAME
DAB Dispute Adjudication Board
ICC International Chamber of Commerce
KBK Kejuruterean Bintai Kindenko Sdn. Bhd.
SIAC Singapore International Arbitration Centre
xiii
LIST OF CASES
NO. CASES PAGE
1. Anzen Limited and others v Hermes One Limited
[2016] UKPC 1 46
2 Arenson v. Arenson [1977] AC 405 20
3 Assar Senari Holdings Sdn Bhd v Teratai Sanjung
Holdings (M) Sdn Bhd [2011] MLJU 834 21
4 Aughton Ltd v MF Kent Services Ltd.
(1991)57 BLR 1 44
5 Ayer Hitam Tin Dredging Malaysia Bhd v YC Chin
Enterprises Sdn Bhd [1994] 2 MLJ 754 38
6 Best Re (L) Ltd v Ace Jerneh Insurance Bhd
[2015] 5 MLJ 513 43, 79, 111
7 Chuan Hup Agencies Pte Ltd v Global Minerals
(Sarawak) Sdn Bhd [1990] 1 MLJ 305 3
8 CLLS Power System Sdn Bhd v Sara Timur Sdn Bhd
[2015] 11 MLJ 485 82, 99, 105,
111
9 Dato' Teong Teck Kim & Ors V Dato' Teong Teck Leng
[1996] 1 MLJ 178 35
10 David Wilson Homes Ltd v Survey Services Ltd
and others [2001] 1 A11 ER 449 52
11 Doleman & Sons v Osset Corp [1912] 3 KB 257. 30
xiv
12 Duta Wajar Sdn Bhd v Pasukhas Construction Sdn Bhd
& Anor (2012) 4 CLJ 344 39, 69, 98,
104, 109
13 Ericsson AB v EADS Defence & Security Systems Ltd.
[2009] EWHC 2598 (TCC) 45, 47
14 Gatoil International Incorporated v National Iranian
Oil Company [1990] Lexis Citation 3088 4, 24, 25,
56
15 Golden Ocean Group Ltd v Humpuss Intermoda
Transportasi Tbk Ltd and another [2013] EWHC 1240 24, 85, 86
16 HKL Group Co Ltd v Rizq International Holdings Pte Ltd
[2013] SGHCR 5 48, 53
17 Insigma Technology Co. Ltd. v Alstom Technology Ltd.
(2009) SGCA 24 49
18 Indutech S.p.A. v. Algocentro Armazéns Gerais Ltda.
SEC 978 33, 69
19 Juara Serata Sdn Bhd v Alpharich Sdn Bhd
[2015] 6 MLJ 773 86, 87, 100,
105, 113
20 Kanematsu USA Inc. v. Advanced Telecommunications
Systems do Brasil Ltda. SEC 885 33, 69
21 Lembaga Pelabuhan Kelang v Kuala Dimensi Sdn Bhd
[2011] 2 MLJ 606 6, 46, 90,
98, 103, 114
22 Lucky-Goldstar International (HK) Ltd v Ng Moo
Kee Engineering Ltd [1993] 1 HKC 404 5, 6, 7
24, 25, 27
29, 55, 85
86
23 Mersing Construction and Engineering Sdn Bhd v
Kejuruteraan Bintai Kindenko Sdn Bhd & Ors
[2011] 3 MLJ 264 41, 43, 66,
97, 103, 108
xv
24 Majlis Perbandaran Alor Gajah v Sunrise
Teamtrade Sdn Bhd [2014] 7 MLJ 570 6
25 Modern Buildings v Limmer [1975] 1 WLR 1281 42
26 Paczy v Haendler & Natermann
[1981] 1 Lloyds Rep 302 25
27 Pershowa Leasing (M) Sdn Bhd v Kin Shipping
Line Sdn Bhd & Ors [1988] 1 MLJ 540 84, 97, 101
108
28 PLB-KH Bina Sdn Bhd v Hunza Trading Sdn Bhd
[2014] MLJU 1427 72, 95, 100
112
29 Plexus Cotton Ltd. v. Santana Têxtil S/A SEC 967 33, 69
30 Rightmove Sdn Bhd v YWP Construction Sdn Bhd
& Anor [2015] 7MLJ 687 5
31 Rhone Mediterranee Compagnia Francese v. Lauro
82-3523 23, 65, 107
32 Sime Engineering Sdn Bhd v Ahmad Zaki Resources
Berhad & Others [2011] MLJU 370 6, 28, 91, 93,
98, 103, 114,
115
33 Société Bomar Oil N.V. v Entreprise tunisienne
d'activités pétrolières (ETAP) 87-15.094 43, 66, 108
34 Suncast Sdn Bhd v Padang Indah Sdn Bhd
[1999] MLJU 31 72, 73, 97
101, 109
35 TNB Fuel Services Sdn Bhd v China National Coal
Group Corp [2013] MLJU 483 35
36 Total Safe Sdn Bhd v Tenaga Nasional Berhad Anor
TNB Generation Sdn Bhd [2009] MLJU 1247 72, 75, 97
102, 109
37 Travelport Global Distribution System B.V
v Bellview Airlines Limited 2012 WL 3925856 29
xvi
38 Vitol BV v Compagnie Europeene des Petroles
[1988] 1 Lloyds’s Rep 574 39
39 Westbury Tubular (M) Sdn Bhd v Ahmad
Zaki Sdn Bhd [2001] 5 CLJ 67 46, 51
40 Y& Y Property Development Sdn Bhd v
CityLite Letrik Sdn Bhd [2015] 9 MLJ 411 74, 99, 104
109, 111
41 ZAQ Construction Sdn Bhd & Anor v Putrajaya.
Holdings Sdn Bhd [2014] 10 MLJ 633 25, 29
42 Zhejiang Province Garment Import and Export Co
v Siemssen & Co [1993] ADRLJ 183. 37
CHAPTER 1
INTRODUCTION
CHAPTER 1
INTRODUCTION
1.1 Background of Study
Disputes in business are inevitable and this situation is similarly applied in the
construction industry. Construction industry is high risk in nature. This is because
construction industry involved a lot of parties, information and monies. This situation
results in a complex and dynamic project environment. Besides, projects are usually
long-term transactions. Hence, it is impossible for the parties involved to solve every
detail and forecast every possibility or contingency at the beginning of the project.
Consequently, disputes will easily occur in the construction industry. Disputes can arise
within this sector for all sorts of reasons and it can be resolved by several possible ways.
Construction disputes are generally resolved by litigation or arbitration or
adjudication. There is some standard forms in Malaysia provide arbitration as dispute
resolution mechanisms. There are clause 47.3 for CIDB (2000), clause 34.5 form PAM
2006 and clause 66 for PWD 203(Rev.1/2010). In clause 66.1 under PWD 203A (Rev.1/
2010), once dispute occurs, the first means of resolving it is the officer named in
2
Appendix. If the dispute is not resolved by the officer named in Appendix, such dispute
shall be referred to arbitration1.
Arbitration is an alternative dispute resolution where the contractual parties
agree to find a neutral third person to listen and make a decision or award from the facts
(Sundra Rajoo, 2016)2. The common features of an arbitration are consensual process,
enforceable agreement, private and confidential, final and binding award and cross
application of laws and rules. The first arbitration act in Malaysia was Arbitration Act
1952 and later substituted by Arbitration Act 2005. This change is needed to follow the
requirements of the user and the new decade.
In certain situation, a party may not refer the dispute to arbitration, but choose
to refer to court. Based on section 10 under the Arbitration Act 2005, another party may
apply for a stay of proceedings to court. The Court is bounded by Arbitration Act 2005
to grant for the stay. “Null and void, inoperative or incapable of being performed” is
one of the conditions that the court would consider when making a decision for the stay.
1 PWD 203A (Revision 2010), Clause 66.3. 2 Sundra Rajoo, 2016. International Commercial Arbitration - Basic Concepts and Introduction to
Practice and Procedure, Kuala Lumpur: KLRCA.
3
1.2 Statement of Problem
Malaysian Arbitration Act 2005 was a long-awaited and would bring changes
to the arbitration practice in Malaysia. Arbitration Act 2005 come into operation on
15th March 2006. Parliament intended to encourage the parties to resolve their disputes
through arbitration as well as to control the Court’s participation in reviewing and
setting aside arbitral decisions. Until now this Act is still in its infancy as the
jurisprudence surrounding it is still developing (Ashok Kumar Mahadev Ranai, 2011)3.
As it developed, there were various explanations of the provisions and diverse
approaches taken by the courts (Ashok Kumar Mahadev Ranai, 2011)4. One of the
reasons for these different approaches is due to the courts being unfamiliar with the
arbitration process and the UNCITRAL Model Law (Ashok Kumar Mahadev Ranai,
2011).
The parties must have consent to arbitration and such consent is expressed
through an arbitration agreement. However, when a dispute arises, a contractual party
may refer the dispute to court. Another contractual party may subsequently apply for a
stay of proceedings to court in order to resolve the disputes in arbitration. In this
circumstance, the applicant who applies for the stay of proceeding is needed to find
evidence to show that the arbitration contract is valid5 while the respondent needs to
prove that the arbitration is “null and void, inoperative or incapable of being performed”.
The contractual parties cannot refer their disputes to arbitration if the arbitration
agreement is “null and void, inoperative or incapable of being performed”. This can be
shown in the Articles of New York Convention and UNCITRAL Model Law. Article
II (3) of New York Convention demonstrated that a seized court shall refer the dispute
3 Ashok Kumar Mahadev Ranai. 5 Years since the Enactment of Arbitration Act 2005 and the
Arbitration (Amendment) Bill 2011. Berita Timbangtara. 2011. PP11580/04/2010 (023947): 23-28. 4 Ibid. 5 Chuan Hup Agencies Pte Ltd v Global Minerals (Sarawak) Sdn Bhd [1990] 1 MLJ 305
4
subject to an arbitration clause to arbitration “unless it finds that the said agreement is
null and void, inoperative or incapable of being performed” and Article 8 of
UNCITRAL Model law stipulated that:
“A court before which an action is brought in a matter which is the
subject of an arbitration agreement shall, if a party so requests not later
than when submitting his first statement on the substance of the dispute,
refer the parties to arbitration unless it finds that the agreement is null
and void, inoperative or incapable of being performed.”6
However, both New York Convention Article II (3) and UNCITRAL Model
law Article 8 do not clarify how the court could find the arbitration agreement invalid
(Emmanuel Gaillard & Yas Banifatemi, 2002; Zheng, 2014).7 This is because New
York Convention and UNCITRAL Model law do not provide rules to decide the
validity of an arbitration agreement (Zheng, 2014).8 Bingham; Taylor LJJ in the case
of Gatoil International Incorporated v National Iranian Oil Company9 also agreed that
the meaning of inoperative is not clear. The learned judge said:
“…Arbitration agreements are not to be enforced if they are null and void
-- a point which may appear obvious; nor are they to be enforced if the
arbitration agreement is "inoperative". The meaning of that expression
may not be entirely clear, although Mustill & Boyd suggest some
examples on page 464 of Commercial Arbitration.”10
6 Article 8 of UNCITRAL Model Law 7 Emmanuel Gaillard & Yas Banifatemi, 2002. Negative Effect of Competence-Competence: The Rule
of Priority in Favour of the Arbitrators. Int'l Arb. Rep., 17(1), p. 27.
Zheng, S. T., 2014. Jurisdiction and Arbitration Agreement in International Commercial Law. New
York: Routledge, see also Emmanuel Gaillard & Yas Banifatemi, 2002. Negative Effect of
Competence-Competence: The Rule of Priority in Favour of the Arbitrators. Int'l Arb. Rep., 1(17),
p.27. 8 Ibid. 9 [1990] Lexis Citation 3088 10 Ibid.
5
In Malaysia, there is a similar provision as stated in Section 10 (1) of Arbitration
Act 2005, the court shall allow a stay unless the arbitration agreement is “null and void,
inoperative or incapable of being performed”. “Null and void, inoperative or incapable
of being performed” of an arbitration agreement is a condition that affects the court’s
decision regarding the stay of proceeding. If the arbitration agreement “null and void,
inoperative or incapable of being performed” the court would not grant for stay of
proceeding. As a result, the disputes needed to solve by the court rather than an
arbitrator. But the Arbitration Act 2005 also does not clarify how the court could find
the arbitration agreement “null and void, inoperative or incapable of being performed”.
However, it is difficult to identify the invalidity of the arbitration agreement.
The arbitration clause is considered as defective arbitration clause when the venue is
unclear (Surya Prakash; Albin, 2012).11 However, there is not necessary that the unclear
venue in an arbitration clause will cause the arbitration agreement to become “null and
void, inoperative or incapable to be performed”. This can be shown in the case of Lucky-
Goldstar International (HK) Ltd v Ng Moo Kee Engineering Ltd,12 although the place
of arbitration was unclear, the Court considered the arbitration clause valid since the
arbitration clause gives clear intention of the parties to arbitrate.
Besides, in the case of Rightmove Sdn Bhd v YWP Construction Sdn Bhd &
Anor,13 the defendant had fulfilled the pre-condition in Section 10(1) of Arbitration Act
2005 and apply a stay. The plaintiff could only challenge if he could show that the
arbitration agreement was “null and void, inoperative or incapable of being performed”.
However, the plaintiff failed to show that the arbitration agreement was invalid and the
Court finally granted a stay of proceeding.
11 Surya Prakash; Albin, G. T., 2012. Critical Issues In International Commercial Arbitration, Bhopal:
Centre For Business And Commercial Laws (CBCL). 12 [1993] 1 HKC 404 13 [2015] 7MLJ 687.
6
It seems that it was difficult to prove that the arbitration agreement is “null and
void, inoperative or incapable of being performed”. However, in Malaysia, there are
cases held that the arbitration agreement is “null and void, inoperative or incapable of
being performed” because the arbitration clause has used permissive word “may”. This
can be seemed in the case Lembaga Pelabuhan Kelang v Kuala Dimensi Sdn Bhd14 and
Sime Engineering Sdn Bhd v Ahmad Zaki Resources Berhad & Others.15
However, even the arbitration clause contains the permissive word “may”, the
court might decide the arbitration clause is valid. This can be shown in High Court case
of Majlis Perbandaran Alor Gajah v Sunrise Teamtrade Sdn Bhd16 had held that the
permissive word “may” in an arbitration clause have a mandatory effect and the
arbitration agreement will not become “null and void, inoperative or incapable of being
performed”.
Kaplan J in the case of Lucky-Goldstar International (HK) Ltd v Ng Moo Kee
Engineering Ltd17 stated that the disputes might happen because of the poor drafting of
the arbitration agreement. Kaplan J also highlighted that many contracts have the
difficulty in drafting an arbitration clause. Kaplan J said
“This not the first case with which I have had to deal where the arbitration
clause has left something to be desired. Many contract drafters seem to
have difficulty in the fairly simple task of drafting an arbitration clause
or even replicating a standard form clause. Arbitral institutions and
associations go to the trouble of drafting standard form arbitration clauses
14 [2011] 2 MLJ 606. 15 [2011] MLJU 370. 16 [2014] 7 MLJ 570 17 [1993] 1 HKC 404.
7
and disseminating them for the benefit of users, yet in far too high a
percentage of cases, something goes wrong.”18
This would cause both parties waste a lot of time and money. Kaplan J in the
case of Lucky-Goldstar International (HK) Ltd c Ng Moo Kee Engineering Ltd 19 also
stated that “A badly drafted clause leads to disputes and wasted costs, both of which
are anathema to the arbitral process.”20
To sum up, the arbitration agreement is important in enforcing the arbitration.
Basically, arbitration not enforceable unless the parties have an arbitration agreement
(Stephenson, Arbitration For Contractors, 1987).21 Therefore, an arbitration agreement
is vital since there cannot be a valid arbitral process without an arbitration agreement
(Seriki, 2015). 22
18 Ibid., at page 408. 19 Ibid. 20 Ibid., at page 409. 21 Stephenson, D. A., 1987. Arbitration For Contractors. 2nd ed. London: International Thompson
Organisation. 22 Seriki, H., 2015. Injunction Relief And International Arbitration. New York: Informa Law. ,pp. 1.
8
1.3 Research Questions
From the problem statement, some questions can be found. Those questions are
listed as follows:
(a) What are the circumstances that the arbitration agreement is “null and void,
inoperative or incapable of being performed”?
(b) What is defective arbitration clause?
(c) In what situation an arbitration clause will become defective?
There are some other questions that can be asked related to the issue, but for the
purpose of this study, the main focus is only on question no.1 i.e. What are the
circumstances that the arbitration agreement is “null and void, inoperative or incapable
of being performed”?
1.4 Research Objective
From the problem statement, the research objective of this research is to identify
the circumstances that the arbitration agreement is “null and void, inoperative or
incapable of being performed”.
9
1.5 Scope of Research
This research is limited to the cases related to the discussion of “null and void,
inoperative or incapable of being performed” of arbitration agreement recorded in
Malaysian Law Journal. Significant cases that the court held the arbitration agreement
is “null and void, inoperative or incapable of being performed” would be collected for
the purpose of case analysis. There is no time frame limitation as to the data collection.
This is because the issue of “null and void, inoperative or incapable of being performed”
of arbitration agreement can be raised from both Arbitration Act 1952 and Arbitration
Act 2005.
1.6 Significance of the Research
Arbitration is one of the preferred dispute resolutions in the construction
industry. There are standard forms of contract that are adopted in Malaysia for example,
the PAM 2006 Form and PWD 203A (Rev. 2010) provide the provision for arbitration
as dispute resolution.
Understanding which conditions that an arbitration agreement is classified as
“null and void, inoperative or incapable of being performed” is important when both
parties having different opinions on the method to resolve the dispute. Both the
contracting parties would want to know the circumstances that the arbitration agreement
is “null and void, inoperative or incapable of being performed”. Whether the application
is granted or refused is important for the parties to know which kind of step amount to
“null and void, inoperative or incapable of being performed” of arbitration agreement
as per Arbitration Act 2005 section 10(1).
10
Furthermore, it can be a guideline for the court to identify the circumstances
that the arbitration agreement is “null and void, inoperative or incapable of being
performed”.
Finally, this research can use as a reference for students which study on the
subject of arbitration. This research will increase the knowledge of students in the
arbitration.
1.7 Research Methodology
Research Methodology is essential to attain objective of study. It is vital to
ensure work schedule is followed closely throughout this study. According to Naoum
(2007), research design and methodology explain about how the problem addressed in
the study will be investigated and the tools applied in studying the problem. Figure 1.1
shows the stages that had been used by the researcher to complete this study.
Stage 1: Development of Research Proposal
The main purposes for this stage is to determine the research area, issues, scope
and significance of the study. Besides, the from the reading of literature materials such
as articles, reports and books, discussing with supervisor and friends and referring other
current dissertations and journal, the researcher can also determine the topic and
subsequently write up a research proposal.
11
Stage 2: Development of Theory Framework (Literature Review)
Literature review is an importance process to develop theory for this research.
At this stage, the researcher has read various types of materials to appraise and analyse
the knowledge, suggestions and theories that had been developed by other researchers.
These materials are including books from library of UTM (Perpustakaan Sultanah
Zanariah Universiti Teknologi Malaysia), online articles and law cases from database
provided by UTM, articles from others website and previous dissertations.
Stage 3: Data Collection
For data collection, law cases are collected as primary data. The primary data
are the cases laws which the arbitration agreement had been held as “null and void,
inoperative or incapable of being performed”. The main sources for the primary data of
the research were abstracted from the Malayan Law Journal (MLJ) via the Lexis-
Malaysia website through the Perpustakaan Sultanah Zanariah, Universiti Teknologi
Malaysia subscriber. The primary data were based on the court cases that had been
decided in the Malaysian Court judicial throughout the year. There is no timeframe
limitation for the court case selection. The law cases would be collected for the purpose
of case analysis on the next stage.
Stage 4 Data Analysis
Documentary analysis of the relevant case law was the main activity to be
completed in the data analysis stage. The case law had been carefully reviewed, with
special attention paid to the facts of the case, the issues and the judicial interpretation
by the courts through their judgements.
12
Stage 5: Writing Up
At this stage, all the results of analysis are write up in the report in the structure
and format in accordance to the manual provided by UTM (UTM Thesis Manual 2015).
13
Figure 1.1 Research Methodology Flow Chart
z
l
A
A
_
_ _ _ _ _a
PROCESS METHOD
Stage 1:
Develop
Research
Proposal
- Determine Issues and Problem
- Determine Research Topic
- Determine Research Question
- Determine Research objective
Literature Review
- Reading books, journals
dand reports
- Discuss with supervisor and
acolleagues
- Looking at other examples
dof recent research projects.
Stage 2:
Develop
Theory
-Literature review
Literature Review
-Reading books, journals,
thesis, report and
newspapers, internet
resources
Stage 3:
Data
Collection
- Determine the key word to search for the
cases:
-“void or null or inoperative or incapable of
being performed and arbitration agreement”
-Cases law is collect by using
the key word
Stage 4:
Data
Analysis
- The collected data will be analysed to achieve
objective of the study
- The cases related to
discussion of null and void,
inoperative or incapable of
being performed of
arbitration agreement would
be analysed and interpret
Stage 5:
Writing Up
- Structure and writing up the research
- Identify the format for thesis
- Check the references
- UTM Thesis Manual 2015
14
1.8 Chapter Organisation
This research involves 5 chapters as follow:
Chapter 1: Introduction
Chapter 1 provides an overview of the background of the study, problem
statement, research question, research objective, scope and significance of the research.
Chapter 2: Literature Review
This chapter provides comprehensive background information about the
research to the readers. Chapter 2 contains theories and definitions for arbitration,
arbitration agreement and “null and void, inoperative or incapable of being performed.
The circumstances that the arbitration agreement is “null and void, inoperative or
incapable of being performed” are discussed in this section. Besides, this chapter also
explains about the elements of arbitration agreement, the importance of arbitration
agreement, incorporation arbitration clause by reference and defective arbitration
agreement.
Chapter 3 Research Methodology
Chapter 3 provides an overview of how the research is planned to be conducted.
This chapter explains in details regarding the research methodology used and the
methods used to collect data. Method used to analyse data are described in this section.
15
Chapter 4 Data Analysis
This chapter shows the findings and discussion in accordance with the data
collected. All the data collected are analysed by using Nvivo 11.
Chapter 5 Conclusion and Recommendation
Chapter 4 involves the summary outcome of the study, limitations of the study
and recommendation for future research.
16
1.9 Conclusion
In conclusion, if an arbitration agreement is “null and void, inoperative or
incapable of being performed”, the court will not grant a stay of proceeding. However,
there are some cases as discussed in problem statement shown that there are people still
confused with which circumstances that an arbitration agreement can be considered
“null and void, inoperative or incapable of being performed”. Hence, it is important to
identify in which circumstance that the arbitration agreement can be considered as “null
and void, inoperative and incapable to be performed”.
There are five stages in order to achieve the objective which including the
development of research proposal, development of theory framework, data collection,
data analysis and writing up.
The following chapter will discuss the development of theory framework
(literature review) which comprising the definition, and concept or theory about the
“null and void, inoperative or incapable of being performed” of an arbitration
agreement.
CHAPTER 2
LITERATURE REVIEW
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