Have you read the Malaysia Arbitration Act 2005 to see how it can assist in resolving breach of agreements? Do you subscribe to Astro, TM, Digi, Maxis or any other subscription service?

If you signed a contract form with these organizations you probably have already signed to an arbitration agreement even if you did not read the whole document before signing to it. Of course, the contract with your educational institution is one contract that surely would contain an arbitration agreement.

This discussion of the Malaysia Arbitration Act 2005 will focus on its benefits to tertiary students in Malaysia. So what is Arbitration and how does the Malaysia Arbitration Act 2005 relate to tertiary students in Malaysia?

Definition of Arbitration

Arbitration is a process of conflict resolution outside the formal court system to resolve issues with conflicting parties using an arbitrator. An arbitrator is a person chosen by conflicting parties to preside over and resolve a conflict that have arisen between the parties (Malaysia Arbitration Act 2005).


Reasons for Arbitration

  • Low cost -  involves less money compared to the cost of litigation
  • Confidentiality – arbitration hearings are usually carried out where the public and media are not privy to the hearings
  • Time investment – arbitration hearings and arrangements are usually faster and sooner compared to court hearings and proceedings. Documentations are usually shorter and less time demanding to complete.
  • Choice – provides the liberty for the parties to choose their judges called arbitrators.

(Kuala Lumpur Regional Center for Arbitration, 2012).

Conditions for arbitration

The Kuala Lumpur Center for Arbitration (KLRCA) (2012) highlights the following conditions that must be satisfied for arbitration to occur:

  • The parties to the disagreement/misunderstanding/ conflict consent to the arbitration process
  • The matter under controversy and venue of the incident should be capable of arbitration within the existing arbitration laws

(KLRCA, 2012).

The Malaysian Arbitration Act 2005 specifies that parties are in agreement to an arbitration when:

1. There is a document that contains an arbitration agreement clause, in writing and signed by the parties.

2. There is an exchange of fax, mail and other communications providing a record of the agreement.

3. There is a claim and defense among conflicting parties where one party makes reference to an agreement that is not denied by the other party

(Chapter 2- section 9).

Provisions of the Malaysia Arbitration Act 2005

The following provisions are included in the Arbitration Act 2005:

  • Arbitration may be domestic or international. Domestic arbitration involves businesses that are primarily operating and conducting business in Malaysia. This is more relevant to tertiary students in Malaysia (Part 1-section 2).
  • Any matter is subject to arbitration where the parties consent to an arbitration agreement unless contrary to public policy (Part 1-section 4).
  • The fact that written laws confer jurisdiction to a matter by a court of law and does not refer to arbitration does not mean that a matter cannot be determined by arbitration (Part 1-section 4).
  • The arbitral tribunal has powers to determine the relevance, admissibility and weight of evidence, give security for cost, order evidence to be given under oath and make other orders as may be appropriate (Part 2- chapter 5- section 21).
  • The arbitral proceedings may be carried out using the language agreed upon by the parties. Where there is disagreement between the conflicting parties the arbitral tribunal will decide on the language to be used (Part 2- chapter 5- section 24).
  • All awards arising from domestic arbitration will be carried out with regard to the substantive laws of Malaysia (Part 2, chapter 6 section 30).
  • An award by an arbitral tribunal is final and binding pursuant to the arbitral agreement and may be used for any other proceedings in any court (Part 2, chapter 6- section 36).
  • An allowance of thirty days (30) is provided after an award for any party to seek correction and/or interpretation of any part of the award (Part 2, chapter 6- section 35).


Implications for tertiary students in Malaysia

  • Tertiary students in Malaysia should be aware and careful when signing contracts and should ensure that if there are conflicts the arbitration clause they are signing to affords them arbitration where they can easily seek redress.
  • If and when conflicts occur with any organization or business in Malaysia, an arbitral tribunal offers a less expensive resolution process than a formal court system.

  • Whenever you can, when entering into agreements with others include an arbitration clause specifying whose country’s laws will be used in resolving the conflict in addition to the penalties for breach of the agreement. A simple inclusion of a domestic arbitration agreement clause can be written as follows:

  “Any dispute, controversy or misunderstanding, breach or termination of this agreement shall be settled by arbitration in accordance with the applicable laws in force in Malaysia”.

  • Wherever possible employ the services of an attorney (lawyer) to represent you in an arbitration process.


How to proceed with a breach of agreement

  • Notify the other party (individual or organization) of the perceived breach with reference to the agreement in writing or through any communication means that can be recorded and retrieved.
  • Allow time for the other party to respond and effect correction if possible.
  • Where the other party responds too slowly, responds irresponsibly or refuses to respond, consult an attorney (lawyer) for advice.
  • If possible and as a first alternative file a case against the other party in an arbitral tribunal. The Kuala Lumpur Regional Centre for Arbitration (KLRCA) is one authority that can preside over arbitration requests in Malaysia especially if no arbitration authority was mentioned in your agreement.



The Malaysia Arbitration Act 2005 is a provision by the Malaysian government to resolve disputes in a less costly, convenient and confidential manner. SO USE IT. We encourage you to exhaust other options at resolving your conflict personally but when such attempts fail or is heading nowhere, don’t be the victim. Go ahead and file a complaint to the tribunal and seek redress.


Malaysia Arbitration Act 2005

Kuala Lumpur Regional Center for Arbitration

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