CAN THE PARTIES REINITIATE PROCEEDINGS AFTER AN ARBITRAL AWARD IS SET ASIDE?

During the resolution of a dispute through arbitration, the court may issue a decision setting aside an arbitral award in accordance with the Law on Commercial Arbitration 2010 ("LCA"). In such circumstances, one of the key concerns for the parties is whether the dispute may be submitted for resolution again.

So, after an arbitral award has been set aside, do the parties still have the right to recommence legal proceedings?

Legal Basis

Clause 8, Article 71 of the Law on Commercial Arbitration 2010 provides:

"Where the Council considering the application issues a decision to set aside the arbitral award, the parties may reach a new agreement to resubmit the dispute to arbitration, or either party may initiate legal proceedings before a competent court. Where the Council decides not to set aside the arbitral award, the arbitral award shall be enforced."

Accordingly, when a court sets aside an arbitral award, the parties do not lose their right to seek resolution of the dispute. The law allows them to either:

• Reach a new agreement to resolve the dispute through arbitration; or
• Have either party initiate legal proceedings before a competent court.

If the parties mutually agree to submit the dispute to arbitration again, the dispute will be treated as a new arbitration proceeding. The Arbitral Tribunal will examine the dispute afresh based on the evidence and arguments presented by the parties, rather than continuing from the stage at which the previous arbitration ended.

What Should Businesses Keep in Mind?

Businesses should clearly distinguish between setting aside an arbitral award and resolving the merits of the dispute.

When reviewing an application to set aside an arbitral award, the court only considers the statutory grounds set out in Clause 2, Article 68 of the LCA. It does not rehear the case or determine which party is substantively right or wrong.

Therefore, after an arbitral award has been set aside, businesses should:

• Review the arbitration agreement between the parties;
• Identify the grounds on which the award was set aside;
• Consider whether to recommence arbitration or pursue litigation before the court; and
• Prepare the necessary case file and supporting evidence for the subsequent proceedings.

In many cases, arbitration may remain the most efficient dispute resolution mechanism if the parties are able to agree on submitting the dispute to arbitration again.

Conclusion

The setting aside of an arbitral award does not extinguish the parties' right to seek resolution of their dispute. Under the law, once an arbitral award has been set aside, the parties may:

• Agree to resubmit the dispute to arbitration; or
• Commence legal proceedings before the competent court if they choose not to continue with arbitration.

Accordingly, upon receiving a court decision setting aside an arbitral award, businesses should not assume that the dispute has come to an end. The key is to understand their legal rights and choose the most appropriate dispute resolution mechanism to continue protecting their lawful rights and interests.

 

The article above has analyzed in detail is "Can the Parties reinitiate after an arbitral award is set aside". For more detailed information or legal assistance, please contact the MCAC Secretariat:

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• Read more:DOES AN ASSIGNMENT OF A RIGHT TO CLAIM ALSO TRANSFER THE ARBITRATION AGREEMENT?