When drafting arbitration clauses, the selection of the seat is a crucial aspect. It establishes the applicable lex arbitri as well as the court which would have supervisory jurisdiction over an arbitration.
In Malaysia, there exists two High Courts with separate territorial jurisdictions – the High Court of Malaya (which has jurisdiction over West Malaysia) and the High Court of Sabah and Sarawak (which has jurisdiction over East Malaysia). The scenario is not dissimilar to other countries in which different states have their own courts of coordinate jurisdiction. In such countries, one question which arises is this: In an arbitration seated in the country, which court would then have exclusive jurisdiction? Would it be the court at the place specified? What if the arbitration agreement merely provides the country and not the specific state (in this context, “Malaysia” rather than the specific state in Malaysia) as the seat?
To answer this question, we explore the Malaysian Federal Court decision of Masenang Sdn Bhd v Sabanilam Enterprise Sdn Bhd [2021] 6 MLJ 255.
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