News

5 January 2026

Choosing the Right Path: How Foreign Arbitration Awards Are Enforced in Malaysia.

I.    Introduction

A recent Federal Court decision in ING Bank NV and OW Bunker Far East (Singapore) Pte Ltd v Tumpuan Megah Development Sdn Bhd [2025] 8 CLJ 873 has settled a long-standing uncertainty on how foreign arbitral awards can be enforced in Malaysia. The Court held that parties may proceed under either the Arbitration Act 2005 (“AA 2005”) or the Reciprocal Enforcement of Judgments Act 1958 (“REJA”), depending on the circumstances.

But the question is, which door should you walk through – AA 2005 or REJA? Let’s explore the answers below.

II.    Background Facts

The Respondent is a supplier of marine bunker fuels. The first Appellant, ING Bank NV provides banking services to individuals and corporations globally. The second Appellant, O.W. Bunker Far East (Singapore) Pte Ltd is involved in the sale, supply and trading of bunkers to supply fuel to ships at hubs and ports.

The first Appellant was appointed on behalf of a syndicate of banks to act as a security agent between it and one O.W. Bunker & Trading A/S (second Appellant’s parent company).

The dispute stems from two alleged marine fuel supply contracts valued at approximately USD 937,353.24. The Appellants claimed that the Respondent had failed to pay for bunkers, which was allegedly delivered to two vessels, Straits 1 and Dolphin 1.

The Respondent in turn denied entering into these contracts, denied receiving any fuel deliveries, and alleged fraud against the Appellants.

The disagreement subsequently developed into multi-layered proceedings, involving both arbitration and court actions, locally and abroad.

III.    Cross-Border Enforcement: The London-to-Kuala Lumpur Pathway

(a) London Arbitration

The Appellants commenced arbitration proceedings in London against the Respondent. The matter went to London Maritime Arbitrators Association arbitration in 2017, under contracts governed by English law and seated in London.

More than two years after the commencement of the London arbitration, the Respondent amended its defence, claiming that there was another binding agreement (set-off agreement) containing an arbitration clause providing for disputes to be resolved under Malaysian law. The tribunal found that the set-off agreement was not related to supply contracts and does not override party’s standard terms or conditions of supply.

On 4 February 2020, London tribunal ruled in favour of the Appellants, finding the contracts genuine and rejecting the Respondent’s fraud and set-off claims. The Respondent did not comply with the award nor apply to set aside or challenge the London award.

(b) Malaysian Arbitration Proceedings by Respondent

On 11 June 2020, the Respondent commenced arbitration proceedings in Malaysia pursuant to the set-off agreement. Malaysian Tribunal rejected Respondent’s claim by reason of res judicata and abuse of process.

On 5 July 2023, the Respondent then filed an application to set aside this Malaysian Award to High Court, which was also dismissed.

(c) Proceedings in the English Commercial Court

After losing before the Malaysian tribunal, the Respondent attempted to challenge the London award by filing fresh proceedings in the English Commercial Court in April 2023. These efforts were struck out.

Separately, on 22 December 2020, the English High Court had already converted the London arbitral award into a judgment under Section 66 of the UK Arbitration Act 1996, specifically to facilitate enforcement abroad, including Malaysia.

(d) Enforcement in Malaysia

In March 2021, the Appellants sought to enforce the English High Court judgment in Malaysia under the REJA, rather than directly using the AA 2005.

The Respondent opposed, arguing this deprived it of defences under the AA 2005 and amounted to “judgment laundering.” The Respondent also contended that REJA was not the appropriate mechanism for enforcement since Section 38 of the AA 2005 provides the specific regime for enforcement of foreign awards.

The Respondent applied to revoke the registration and requested a trial to determine issues such as fraud and jurisdiction.

 

Court	High Court (“HC”)	Court of Appeal (“COA”)
Decision	HC allowed the enforcement under REJA.   The court held that since the award had been registered as an English judgment, it could be enforced as a judgment in Malaysia.	COA reversed the High Court decision and ruled that AA 2005 is the proper route, as it is the specific statute governing arbitration.   The Court relied on Section 8 of AA 2005, which limits court intervention in arbitration matters, and emphasized Malaysia’s commitments under the New York Convention and the UNCITRAL Model Law.

Dissatisfied, the Appellants appealed to the Federal Court.

IV.    The Federal Court’s Decision

(a) Two valid pathways to enforce foreign arbitration awards

The Federal Court confirmed that a successful party may enforce a foreign arbitral award in Malaysia using either of two routes:

• directly under the AA 2005, or
• through REJA, if the award has been converted into a judgment in a reciprocating country (such as the UK).

Section 8 of the AA 2005 does not exclude the operation of REJA. An arbitral award that has been converted into a foreign judgment meets the definition of “judgment” under Section 2 of REJA and can be enforced in Malaysia through that regime. If the award remains unregistered abroad, enforcement must instead proceed under Section 38 of the AA 2005.

Importantly, the Court stressed that an award debtor cannot dictate which enforcement route the award creditor must use. If multiple lawful enforcement mechanisms exist, the creditor is free to choose among them.

(b) REJA’s Reciprocity Framework Remains Intact

The Court emphasised that REJA retains its special status, particularly with respect to reciprocal enforcement arrangements with Commonwealth nations like amongst others, the UK, Singapore and Hong Kong. This regime operates alongside, not subordinate to the AA 2005. The AA 2005 does not override or diminish the statutory reciprocity framework created by REJA.

(c) Rejection of Full Re-Hearing. If any, only extrinsic fraud is allowed

The Federal Court rejected attempts to reopen the entire merits of the London arbitration. Malaysian courts cannot conduct a full re-hearing of matters already determined abroad. Only jurisdictional (extrinsic fraud) challenges may be raised.

(d) Adoption of the “Limited-Scope Merger” Doctrine

The Court adopted the principle that while an arbitral award may merge into a judgment within the enforcing country (here, the UK), that merger does not extend internationally.

This means the award and judgment remain distinct instruments outside the UK, allowing the creditor to rely on either the London award (via AA 2005) or the English judgment (via REJA) when enforcing in Malaysia. Reference may be made to Schedule 1 of REJA, which lists the Commonwealth countries recognised as “reciprocating countries.”

(e) No “Judgment Laundering”

The Court rejected the argument that the Appellants were “laundering” the arbitral award by converting it into a UK judgment before enforcing it in Malaysia.
This was not an abuse of process because the enforcement pathway flowed directly from the seat of arbitration (London) to a reciprocal enforcement jurisdiction (Malaysia) under REJA.

The procedure was legitimate, expressly provided for by statute, and did not involve using an unrelated third country to obscure the true nature of the award.

V.    Key Takeaways

Flexibility for Award Creditors	The decision confirms that parties holding foreign arbitral awards have genuine flexibility in choosing how to enforce them in Malaysia. Both the Arbitration Act 2005 and REJA are valid, independent pathways, and creditors are entitled to select the route that best serves their enforcement strategy.
Non-Intrusive Judicial Review	Malaysian courts will not re-examine matters already decided by the foreign arbitral tribunal. Under REJA, the court’s role is narrow and supervisory, confined to ensuring that the foreign judgment satisfies the statutory criteria for registration. This prevents any re-litigation of factual findings or legal conclusions made in the arbitration.
Strengthening Malaysia’s Status in International Commercial Arbitration	The ruling reinforces Malaysia’s commitment to recognising and enforcing foreign awards and judgments efficiently. By respecting finality and reciprocity, the decision promotes certainty for commercial parties and aligns Malaysia with international enforcement standards.

VI.    Conclusion

The Federal Court’s decision marks an important development in Malaysian arbitration law. Ultimately, the bottom line is simple:

Same Destination, Different Doorways

AA 2005	→ Enforce the award directly in Malaysia.
REJA	→ Enforce the award after it becomes a foreign judgment.
Both routes end with: A Malaysian judgment you can execute.

Therefore, in answering the earlier question on which door to walk through, the Federal Court has made it clear that either path works, depending on the circumstances and both lead to the same enforceable result in Malaysia.

This article is intended for general information. It should not be regarded as legal professional advice.

 

Lam Ko Luen Partner Tel: +603-20311788 (Ext. 243) [email protected]

Nur Atiqah Azrein Associate Tel: +603-20311788 (Ext. 232) [email protected]