A successful standard form of building contract would also lend itself to regulate the day-to-day relationship on site and provide a clear and definitive understanding to the parties, professionals and site personnel of their roles and responsibilities. Users and practitioners must be familiar with the particular standard form of building contract being used.

It would therefore be useful in expressing the obligations of the parties and setting out with reasonable clarity the scope of the project. It is based on the perceived good sense of providing for the problems which experience has taught in the course of construction contracts. Precision in the drafting of a contract is critical to the avoidance of disputes.

The statutory law on arbitration in Malaysia can be traced to the Arbitration Ordinance XIII of 1809, which governed what were then the British India-controlled Straits Settlements, comprising of Penang, Malacca and Singapore. It was in force for nearly 150 years before the Arbitration Act 1952 (Act 93) replaced it.

The payment of interest on monies paid later than it should is a normal feature of modern contractual relationships. It is highly probable that a party would suffer financial loss resulting from late payment of principal sums which could lead to a claim in arbitration either as a debt or damages. Such loss is recovered as interest.

The award of interest in arbitration has become routine. In fact, it is now rare for interest not to be awarded where an award provides for payment of monies due. The availability and rate of interest in arbitration can have substantial practical importance. Such interest can be significant where the amount in dispute is large and the time periods involved are lengthy. At times, the ultimate interest award can exceed the principal sum in dispute.

The basis upon which interest is awarded does vary. The presumption is that an arbitral tribunal has the power to award interest just like its power to make an award in respect of any other claims submitted to it. The right to interest flows from either a contractual provision for the levying of late interest payment, or by virtue of the applicable law.

The flow of goods and services in a modern economy and international trade is based on contracts agreed by the parties. Such contracts are in turn based on trust that the other party will carry out the contracts as agreed. Should a dispute arise, it is possible to take legal action against a offending party. Commercial disputes may range from small to large ones.

Although there are no statistics, it is generally accepted that a large number of disputes never get anywhere near lawyers. It is inevitable that parties will try to turn away from allowing disputes to fester until they mature into a state in which third party interventions become the only available option. It is now common in international trade for commercial entities to evaluate risks and develop mechanisms for early dispute evaluation and prevention.

The procedures available for the resolution of trade disputes extend over a wide spectrum. Either, the parties resolve the disputes promptly by reaching an agreement on an “interest basis” rather than a “rights basis” or they are nipped in the bud before they can burst into flower.

In such circumstances, the parties assess whether it would be advantageous to implement a solution reflecting elements such as fairness, maintenance of long-term relationships and which of them will feel less pain in taking a hit.

It is suggested that an interest-based approach is not confined to a resolution that is based on rights claimed by the parties and remedies offered by the legal system, the mediator and the parties can probe more deeply to meet the disputants real interest and needs.

Delivery of a construction project is a process requiring the involvement of many parties. Apart from the developer and purchasers, there are a host of contractors, consultants and regulatory authorities. There are normally matters of considerable technical difficulties generated in the course of the actual works.

The Certificate Of Fitness for occupation problem
In particular, the housing sector has been plagued by many problems. A perpetual complaint relates to the issue of the Certificate of Fitness for Occupation as issued by local authorities (See s 3, The Street, Drainage & Building Act 1974 (Act 133) and the Uniform Buildings By-Laws for definition of the Certificate of Fitness for Occupation (‘CFO’)).

It is a normal occurrence that many developers give vacant possession without the CFO being issued. This has caused considerable difficulties to house buyers for such vacant possession does not mean beneficial takeover and ability to use of the relevant building lawfully.

The situation is no better even for commercial buildings and industrial premises. Disgruntled purchasers have complained to the Ministry of Housing & Local Government (‘MOHLG’) and other governmental authorities whenever there was delay or failure to issue CFO by local authorities. Such complaints have even been directed to activist consumer and non-governmental organisations such as the Consumer Association of Penang and FOMCA.

Malaysia enacted a new Arbitration Act 2005 (Act 646) on 30 December 2005 based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. The new Act repeals and replaces the previous Arbitration Act 1952 and the New York Convention enacted by Act 320 which dealt with the recognition and enforcement of international awards. It will be applicable to all arbitrations commenced after 15 March 2006, while the old 1952 Act will continue to apply to arbitral proceedings commenced before the operative date of the new Act.

While the old 1952 Act had the merits of simplicity and clarity, it was long outmoded. With the increasing popularity of arbitrations in Malaysia, there was more and more judicial grist exposing the infirmities, shortcomings and lacunae found in the old Act. The Malaysian Arbitration Act 2005 is to be applauded as it makes the long awaited and much needed change clamoured for by the business and arbitral communities in Malaysia. Arbitration law, practice and procedure will now see a major overhaul and it would therefore be timely for practitioners in the arbitration field to take a close look at the 2005 Act.

Malaysia enacted a new Arbitration Act 2005 (Act 646) on 30 December 2005 based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. The new Act repeals and replaces the previous Arbitration Act 1952 and the New York Convention enacted by Act 320 which dealt with the recognition and enforcement of international awards. It will be applicable to all arbitrations commenced after 15 March 2006, while the old 1952 Act will continue to apply to arbitral proceedings commenced before the operative date of the new Act.

While the old 1952 Act had the merits of simplicity and clarity, it was long outmoded. With the increasing popularity of arbitrations in Malaysia, there was more and more judicial grist exposing the infirmities, shortcomings and lacunae found in the old Act. The Malaysian Arbitration Act 2005 is to be applauded as it makes the long awaited and much needed change clamoured for by the business and arbitral communities in Malaysia. Arbitration law, practice and procedure will now see a major overhaul and it would therefore be timely for practitioners in the arbitration field to take a close look at the 2005 Act.

Arbitration is an important part of commercial life and every legal system must
to some degree be concerned with it. The business and arbitral communities in
Malaysia had long clamoured for a total revision and updating of the Arbitration
Act 1952. Malaysia’s arbitration legislation has now seen a major overhaul with
the passing of the Arbitration Act 2005.

The Arbitration Act 2005, Act 646 (the new Act) received the Royal Assent on
December 30, 2005 and was published in the Gazette on December 31, 2005.
The Minister has fixed the commencement date as March 15, 2006 and thus, the
current 1952 Act (the old Act) will only continue to apply to arbitrations which
have already commenced, and the new Act will apply to all other arbitrations. It
is therefore timely for practitioners in the arbitration field to take a close look at
the new Act. In what material ways does the new Act depart from the old?
Following the pattern of the time, the old Act was based almost word for word
on the English Arbitration Act of 1950. While the old Act had the merits of
simplicity and clarity, it was long outdated. With the increasing emphasis on
arbitrations, there was more and more judicial grist exposing the infirmities,
shortcomings and lacunae found in the old Act. It has remained virtually
unchanged for over half a century; the major amendments made by the English
Acts of 1979 and 1996 and similar Acts in other common law countries have up
to now escaped us.

Once a decision to refer a dispute to arbitration is made, the parties have to choose and appoint the arbitrator. This selection of arbitrator represents the single most important decision that the parties make in the arbitral process. The quality of the arbitrator represents the key to an efficient arbitration. During the process of choosing a suitable arbitrator, the parties or their representatives would be in touch with each other.

As far as possible, parties should try to reach agreement on the arbitrator rather than to leave it to an appointing body. Failing which, parties should also consider carefully their choice of the appointing body. They should avoid those that have developed a reputation for appointing incompetent or inappropriate arbitrators. It is too late to reconsider the appointment of the arbitrator once it is made and accepted.

It is general practice for the arbitrator, once appointed, to notify the parties of his appointment and call for a preliminary meeting to initiate a preliminary dialogue with the parties. 1 It may be helpful to establish a framework for the arbitration proceedings and what the parties have agreed by way of procedure for the arbitration. It may also enable the arbitrator to ascertain from the terms of appointment as to whether the dispute is to be determined by documents only. It is usual for the representatives of the parties to discuss beforehand and present an agreed position to the arbitrator on the question of his fees and expenses to avoid any possible embarrassment. 2 The preliminary meeting

should not take place until the arbitrator has accepted the nomination as arbitrator. Otherwise, his appointment is not complete and he would have no jurisdiction to convene the preliminary meeting.

Arbitration is the process by which a dispute or difference between two or more parties as to their mutual legal rights and liabilities is referred to and determined judicially and with binding effect by the application of law by one or more persons (the arbitral tribunal) instead of a court of law. 1

The purpose of the parties choosing arbitration, as against litigation, is that they expect a hand-picked expert tribunal to be able to resolve their dispute more proficiently, economically and expeditiously than the court. As compared to litigation, arbitration still is more rapid and less expensive. It provides for confidentiality of arbitral proceedings and neutrality of the forum. In international commerce, arbitral awards are generally more enforceable than municipal court decisions under the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards.

The primary objective of having an arbitration clause in a contract is to ensure that when a controversy arises between parties, neither one is able to avoid arbitration. There can be no arbitration at all without an effective and valid arbitration clause. The arbitration agreement is the keystone which leads to arbitration as no dispute can be decided by arbitration without it. All too often, arbitrators, arbitral institutions and the courts are called upon to consider whether a contractual clause endows jurisdiction on arbitrators to decide the dispute between them.

In such circumstances, the key question is whether the clause is in fact and in law a valid arbitration agreement with issues like the existence, validity, effectiveness, and scope of the arbitration clause being examined in great detail. The scope of the arbitration agreement is pivotal to the success of the arbitral process as it empowers parties to agree on a number of matters which deal with future disputes.