Pre-condition requirement of arbitrations

• Every party has right to resort litigation 
• Matter can disputes if 
• It is a "genuine" dispute between parties 
• Exist a valid arbitration agreement between parties refer dispute to arbitration 
• Arbitration clause in agreement ( Clause 34 PAM 2006) 
• Arbitration clause must spell number of arbitration , rule governing the arbitration 

Advantage of arbitration 

• Cheap,fast,privacy
• Parties free to decide arbitrator 
• Avoid technicalty litigation 
• Parties free to set the rule to solve the problem 
• Disputes can solve by self regulated system 
• Governed by Arbitration Act 2005 
• Award set aside by court 

Disadvantage 

Over years have became form of private litigation as involve lawyer in arbitration 

Delay due to non legal arbitrator handle legal issue such as economic loss 

If lawyer involve in arbitration , it turn into pribate litigation that require evidence and procedure . 

Completexity of dispute as construction dispute involve fact or law or both 

Sometimes more costly than litigatian due to party have to paid both the arbitrator and lawyer whereas litigation olny need to pay the lawyer . 

Award subject to set aside by court , thus the arbitration is not really a private dispute resolution . 

Discuss the Malaysia legal position of the law of LAD with reference to 2 decision of federal court . 

- Liquidated Damages - genuine  pre-estimate loss that cause one party contract broken 

Penalty clause - Payment of money stimulated of offending party to force him to perform the contract 

Section 75 of Contract act 1950 states : 

" When a contract has broken , amount LAD in the contract to be paid in case of breach , or if contract contains other stimulation by the way of penalty " 

Above statement show that there is interchangeable of in term of "Penalty" and " LAD" 

The Federal court decision in Selva Kumar V Thiagarajah " If a sum named in the contract to be paid in case of breach , it is to be treat as penalty .." 

The Federal Court decision further reaffirmed by Johor Coastal v Constrajaya 

In Malaysia , it is appear that there is no different between liquidated damaged and penalty . Selva Kumar v Thiagarajah and Johor Coastal v Constrajaya 

. 

The word in section 75 Contract act 1950 didnt state no need to prove actual damage when a party claim the damages . 

Based on the case selva Kumar v Thiagarajah 

The Federal Court establish the principle that need to prove actual damage in accordance to Hadley v Barendale 

If the plaintif fail to prove his damages will result in court refusal to award damages . 

4)) Discuss the reason in support ADR . 

1. Privacy 

  ADR such as arbitration is not open to public like disputes litigation in court 

- Hearing and award kept private and confidential , which maintain positive working relationship 

2) Time Savings 

* ADR can help to resolve conflict less than time required for litigation . 

* Most court case take years to trial and appeal need to extend of time to get final result 

3) Cost savings 

* ADR is faster and more informal than litigation 

* The savings comes from reduce legal bills and hiered of lawyers 

4) Technical Expertise In Decision Making 

* ADR such as arbitration avoid randomly of selection of judges with litle expertise in field 

* Parties in ADR can agree to have experienced neutral with targeted industry experience 

* 

5) Finality 

*At the end of ADR , such as arbitration , disputes is finally and formally settled 

* Certain ADR such as arbitration is enforceable at law . Adjudication decision will have a temporary finality .