Malaysia: Investment Treaty Arbitration – Country Comparative Guides

Has your home state signed and / or ratified the ICSID Convention? If so, has the state made any notifications and / or designations on signing or ratifying the treaty?

Yes. Malaysia became a signatory of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) on 22 October 1965 and the same came into force on 14 October 1966.¹ The ICSID Convention was incorporated into domestic law through the Convention on the Settlement of Investment Disputes Act 1966 (“ICSID Act”) to give the ICSID Convention domestic legal effect.

Malaysia has not made any specific reservations/declarations/notifications/designations under the ISCID Convention, particularly, Article 25(1) thereof, at the time of ratifying the same.²

Footnote(s):

¹ https://icsid.worldbank.org/about/member-states/database-of-member-states

² https://icsid.worldbank.org/about/member-states/database-of-member-states/member-state-details?state=ST86
Has your home state signed and / or ratified the New York Convention? If so, has it made any declarations and / or reservations on signing or ratifying the treaty?

Yes. Malaysia ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) on 05 November 1985. It was declared that the Government of Malaysia will apply the New York Convention on the basis of reciprocity, to the recognition and enforcement of awards made only in the territory of another Contracting State. Malaysia further declared that it would apply the New York Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under Malaysian law.³

Footnote(s):

³ https://www.newyorkconvention.org/contracting-states/contracting-states & https://treaties.un.org/pages/viewdetails.aspx?src=treaty&mtdsg_no=xxii-1&chapter=22&clang=_en#EndDec
Does your home state have a Model BIT? If yes, does the Model BIT adopt or omit any language which restricts or broadens the investor's rights?

Yes, Malaysia does have a Model Bilateral Investment Treaty (“BIT”). The Model BIT contains essential provisions, which include, inter alia, the promotion and protection of investments, and most-favoured nations (MFN).

Please list all treaties facilitating investments (e.g. BITs, FTAs, MITs) currently in force that your home state has signed and / or ratified. To what extent do such treaties adopt or omit any of the language in your state's Model BIT or otherwise restrict or broaden the investor's rights? In particular: a) Has your state exercised termination rights or indicated any intention to do so? If so, on what basis (e.g. impact of the Achmea decisions, political opposition to the Energy Charter Treaty, or other changes in policy)? b) Do any of the treaties reflect (i) changes in environmental and energy policies, (ii) the advent of emergent technology, (iii) the regulation of investment procured by corruption, and (iv) transparency of investor state proceedings (whether due to the operation of the Mauritius Convention or otherwise). c) Does your jurisdiction publish any official guidelines, notes verbales or diplomatic notes concerning the interpretation of treaty provisions and other issues arising under the treaties?

As of today, Malaysia has entered into 70 BITs.⁴

Short Title	Status	Parties	Date of Signature	Date of Entry into Force
Malaysia – San Marino BIT (2012)	In force	San Marino	27/09/2012	26/04/2013
Malaysia – Syrian Arab Republic BIT (2009)	In force	Syrian Arab Republic	07/01/2009	27/06/2009
Malaysia – Slovakia BIT (2007)	In force	Slovakia	12/07/2007	07/02/2012
Iran, Islamic Republic of – Malaysia BIT (2002)	In force	Iran, Islamic Republic of	22/07/2002	05/08/2006
Malaysia – Morocco BIT (2002)	In force	Morocco	16/04/2002	23/04/2009
Malaysia – Saudi Arabia BIT (2000)	In force	Saudi Arabia	25/10/2000	28/12/2001
Algeria – Malaysia BIT (2000)	In force	Algeria	27/01/2000	09/02/2002
Bahrain – Malaysia BIT (1999)	In force	Bahrain	15/06/1999	28/01/2011
Malaysia – Senegal BIT (1999)	In force	Senegal	10/02/1999	24/10/2008
Ethiopia – Malaysia BIT (1998)	In force	Ethiopia	22/10/1998	17/06/1999
Burkina Faso – Malaysia BIT (1998)	In force	Burkina Faso	23/04/1998	01/08/2004
Lebanon – Malaysia BIT (1998)	In force	Lebanon	26/02/1998	16/02/2002
Malaysia – Turkey BIT (1998)	In force	Turkey	25/02/1998	09/09/2000
Malaysia – Yemen BIT (1998)	In force	Yemen	11/02/1998	04/01/2002
Dem. People’s Rep. of Korea – Malaysia BIT (1998)	In force	Dem. People’s Rep. of Korea	04/02/1998	17/10/1998
Macedonia, The former Yugoslav Republic of – Malaysia BIT (1997)	In force	Macedonia, The former Yugoslav Republic of	11/11/1997	26/12/2001
Cuba – Malaysia BIT (1997)	In force	Cuba	26/09/1997	27/10/1999
Malaysia – Uzbekistan BIT (1997)	In force	Uzbekistan	06/09/1997	20/01/2000
Egypt – Malaysia BIT (1997)	In force	Egypt	14/04/1997	08/07/2000
Ghana – Malaysia BIT (1996)	In force	Ghana	08/11/1996	18/04/1997
Guinea – Malaysia BIT (1996)	In force	Guinea	07/11/1996	24/02/1997
Czech Republic – Malaysia BIT (1996)	In force	Czech Republic	09/09/1996	03/12/1998
Malaysia – Romania BIT (1996)	In force	Romania	25/06/1996	08/05/1997
Kazakhstan – Malaysia BIT (1996)	In force	Kazakhstan	27/05/1996	03/08/1997
Malaysia – Peru BIT (1995)	In force	Peru	13/10/1995	30/04/1998
Malaysia – Uruguay BIT (1995)	In force	Uruguay	09/08/1995	13/04/2002
India – Malaysia BIT (1995)	In force	India	03/08/1995	12/04/1997
Malaysia – Mongolia BIT (1995)	In force	Mongolia	27/07/1995	14/01/1996
Malaysia – Spain BIT (1995)	In force	Spain	04/04/1995	16/02/1996
Bosnia and Herzegovina – Malaysia BIT (1994)	In force	Bosnia and Herzegovina	16/12/1994	27/05/1995
Croatia – Malaysia BIT (1994)	In force	Croatia	16/12/1994	20/07/1996
Bangladesh – Malaysia BIT (1994)	In force	Bangladesh	12/10/1994	16/10/2003
Jordan – Malaysia BIT (1994)	In force	Jordan	02/10/1994	25/03/2002
Argentina – Malaysia BIT (1994)	In force	Argentina	06/09/1994	20/03/1996
Malaysia – Namibia BIT (1994)	In force	Namibia	12/08/1994	02/11/1996
Albania – Malaysia BIT (1994)	In force	Albania	24/01/1994	11/04/1994
Indonesia – Malaysia BIT (1994)	In force	Indonesia	22/01/1994	27/10/1999

Malaysia – Poland BIT (1993)	In force	Poland	21/04/1993	25/03/1994
Hungary – Malaysia BIT (1993)	In force	Hungary	19/02/1993	08/07/1995
Lao People’s Democratic Republic – Malaysia BIT (1992)	In force	Lao People’s Democratic Republic	08/12/1992	25/03/1993
Chile – Malaysia BIT (1992)	In force	Chile	11/11/1992	17/05/1995
Malaysia – Vietnam BIT (1992)	In force	Vietnam	21/01/1992	02/12/1992
Denmark – Malaysia BIT (1992)	In force	Denmark	06/01/1992	18/09/1992
Malaysia – United Arab Emirates BIT (1991)	In force	United Arab Emirates	11/10/1991	30/08/1992
China – Malaysia BIT (1988)	In force	China	21/11/1988	01/04/1990
Republic of Korea – Malaysia BIT (1988)	In force	Republic of Korea	11/04/1988	31/03/1989
Italy – Malaysia BIT (1988)	In force	Italy	04/01/1988	25/10/1990
Kuwait – Malaysia BIT (1987)	In force	Kuwait	21/11/1987	19/12/1989
Finland – Malaysia BIT (1985)	In force	Finland	15/04/1985	03/01/1988
Austria – Malaysia BIT (1985)	In force	Austria	12/04/1985	01/01/1987
Malaysia – Sri Lanka BIT (1982)	In force	Sri Lanka	16/04/1982	31/10/1995
Malaysia – United Kingdom BIT (1981)	In force	United Kingdom	21/05/1981	21/10/1988
BLEU (Belgium-Luxembourg Economic Union) – Malaysia BIT (1979)	In force	Belgium-Luxembourg Economic Union (BLEU)	22/11/1979	08/02/1982
Malaysia – Sweden BIT (1979)	In force	Sweden	03/03/1979	06/07/1979
Malaysia – Switzerland BIT (1978)	In force	Switzerland	01/03/1978	14/06/1978
France – Malaysia BIT (1975)	In force	France	24/04/1975	01/08/1976
Malaysia – Netherlands BIT (1971)	In force	Netherlands	15/06/1971	13/09/1972
Germany – Malaysia BIT (1960)	In force	Germany	22/12/1960	06/07/1963
Djibouti – Malaysia BIT (1998)	Signed but not in force	Djibouti	03/08/1998	Nil
Malaysia – Sudan BIT (1998)	Signed but not in force	Sudan	14/05/1998	Nil
Botswana – Malaysia BIT (1997)	Signed but not in force	Botswana	31/07/1997	Nil
Malawi – Malaysia BIT (1996)	Signed but not in force	Malawi	05/09/1996	Nil
Kyrgyzstan – Malaysia BIT (1995)	Signed but not in force	Kyrgyzstan	20/07/1995	Nil
Cambodia – Malaysia BIT (1994)	Signed but not in force	Cambodia	17/08/1994	Nil
Malaysia – Turkmenistan BIT (1994)	Signed but not in force	Turkmenistan	30/05/1994	Nil
Malaysia – Zimbabwe BIT (1994)	Signed but not in force	Zimbabwe	28/04/1994	Nil
Malaysia – Papua New Guinea BIT (1992)	Signed but not in force	Papua New Guinea	27/10/1992	Nil

Treaties in Malaysia with investment provisions (“TIPs”)⁵ are: –

Short Title	Status	Parties	Date of Signature	Date of Entry into Force
IPEF Clean Economy Agreement (2024)	In force	Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, Republic of Korea, New Zealand, Philippines, Singapore, Thailand, United States of America, Vietnam	06/06/2024	11/10/2024
IPEF Supply Chain Agreement (2023)	In force	Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, Republic of Korea New Zealand, Philippines, Singapore, Thailand, United States of America, Vietnam	14/11/2023	24/02/2024
Regional Comprehensive Economic Partnership (2020)	In force	Australia, China, Japan, Republic of Korea, New Zealand	15/11/2020	01/01/2022
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (2018)	In force	Australia, Brunei Darussalam, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, United Kingdom, Vietnam	08/03/2018	30/12/2018
ASEAN – Hong Kong, China SAR Investment Agreement (2017)	In force	Hong Kong, China SAR	12/11/2017	17/06/2019
ASEAN – India Investment Agreement (2014)	In force	India	12/11/2014	01/07/2015
Malaysia – Turkey FTA (2014)	In force	Türkiye	17/04/2014	01/08/2015
Australia – Malaysia FTA (2012)	In force	Australia	22/05/2012	01/01/2013
India – Malaysia FTA (2011)	In force	India	18/02/2011	01/07/2011
Chile – Malaysia FTA (2010)	In force	Chile	13/11/2010	18/04/2012
Malaysia – New Zealand FTA (2009)	In force	New Zealand	26/10/2009	01/08/2010
ASEAN – China Investment Agreement (2009)	In force	China	15/08/2009	01/01/2010
ASEAN – Republic of Korea Investment Agreement (2009)	In force	Republic of Korea	02/06/2009	01/09/2009
ASEAN-Australia-New Zealand FTA (2009)	In force	Australia, New Zealand	27/02/2009	10/01/2010
ASEAN Comprehensive Investment Agreement (2009)	In force	Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam⁶	26/02/2009	24/02/2012
ASEAN – Japan EPA (2008)	In force	Japan	28/03/2008	01/12/2008
Malaysia – Pakistan CEPA (2007)	In force	Pakistan	08/11/2007	01/01/2008
ASEAN – US TIFA (2006)	In force	United States of America	25/08/2006	25/08/2006
Japan – Malaysia EPA (2005)	In force	Japan	13/12/2005	13/07/2006
ASEAN – Republic of Korea Framework Agreement (2005)	In force	Republic of Korea	13/12/2005	01/07/2006
Malaysia – US TIFA (2004)	In force	United States of America	10/05/2004	10/05/2004
ASEAN – India Framework Agreement (2003)	In force	India	08/10/2003	01/07/2004
ASEAN – China Framework Agreement (2002)	In force	China	04/11/2002	01/07/2003
ASEAN Framework Agreement on Services (1995)	In force	Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam⁷	15/12/1995	30/12/1998
OIC Investment Agreement (1981)	In force	Afghanistan, Albania, Bangladesh, Benin, Burkina Faso, Cameroon, Comoros, Côte d’Ivoire, Djibouti, Egypt, Gabon, Gambia, Guinea, Guinea-Bissau, Indonesia, Islamic Republic of Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Malaysia, Mali, Mauritania, Morocco, Niger, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Senegal, Sierra Leone, Somalia, State of Palestine, Sudan, Syrian Arab Republic, Tajikistan, Tunisia, Türkiye, Uganda, United Arab Emirates, Yemen⁹	05/06/1981	1988
ASEAN – EU Cooperation Agreement (1980)	In force	Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, European Union, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden¹⁰	07/03/1980	01/10/1980
EU-Malaysia Partnership and Cooperation Agreement (2022)	Signed but not in forced	European Union	14/12/2022	Nil
Trans-Pacific Partnership (2016)	Signed but not in forced	Australia, Brunei Darussalam, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, United States of America, Vietnam	04/02/2016	Nil

The Malaysian Model BIT contains the essential provisions for all BITs. Therefore, the provisions therein are included as part of a fundamental structure in all Malaysian BITs mutatis mutandis. However, specific BITs may incorporate other treaty provisions to account for special circumstances between the contracting parties. For example, in the Malaysian-Saudi Arab BIT (2000), there is a specific provision on exchange rates, while other BITs contain a provision that deals with the concurrent application of rules relating to investments (see Article 7 of the Malaysian-Spain BIT).

a) Has your state exercised termination rights or indicated any intention to do so? If so, on what basis (e.g. impact of the Achmea decisions, political opposition to the Energy Charter Treaty, or other changes in policy)?

Malaysia has not unilaterally denounced any bilateral investment treaties. Any termination of such treaties has occurred either through their replacement by a new treaty or by termination initiated by the other contracting party¹⁰.

b) Do any of the treaties reflect (i) changes in environmental and energy policies, (ii) the advent of emergent technology, (iii) the regulation of investment procured by corruption, and (iv) transparency of investor state proceedings (whether due to the operation of the Mauritius Convention or otherwise).

The Malaysian bilateral investment treaties usually contain standard provisions, such as those relating to expropriation, fair and equitable treatment, and security exceptions. However, Malaysia also entered into specific multilateral treaties which specifically govern areas like climate change and digital technology:

Indo-Pacific Economic Framework for Prosperity Agreement relating to a Clean Economy¹¹ which came into effect in 2024, focuses on the state parties’ transition to a “clean economy”.
The Regional Comprehensive Economic Partnership which came into effect in 2022 contains treaty provisions relating to electronic commerce.

c) Does your jurisdiction publish any official guidelines, notes verbales or diplomatic notes concerning the interpretation of treaty provisions and other issues arising under the treaties?

While Malaysia has issued notes verbales in relation to issues arising under treaties, the aforesaid issues do not arise from investment treaties but are in fact territorial disputes or disputes relating to the delimitation of maritime boundaries, among others. To illustrate, Malaysia issued notes verbale with respect to the South China Sea dispute¹² which came before the International Court of Justice and the Sulu-Sabah arbitration¹³.

Malaysia has also issued statements to contribute to works of the ILC Drafting Committee and the UN Special Rapporteur. For example, Malaysia provided its views in light of the ILC Drafting Committee’s work on the “Identification of Customary International Law” (which subsequently became a set of draft conclusions) and further contributed to works vis-à-vis the interpretation of treaties¹⁴.

Although Malaysia does not issue guidelines on treaty interpretation, the Ministry of Investment, Trade and Industry, published a series of answers¹⁵ to FAQs (frequently asked questions) with respect to free trade agreements in which Malaysia is a party to.

Footnote(s):

⁴ https://investmentpolicy.unctad.org/international-investment-agreements/countries/127/malaysia?type=bits

⁵ https://investmentpolicy.unctad.org/international-investment-agreements/countries/127/malaysia?type=bits

⁶ https://investmentpolicy.unctad.org/international-investment-agreements/treaties/treaties-with-investment-provisions/3273/asean-comprehensive-investment-agreement-2009-

⁷ https://investmentpolicy.unctad.org/international-investment-agreements/treaties/treaties-with-investment-provisions/3140/asean-services-1995-

⁸ https://investmentpolicy.unctad.org/international-investment-agreements/treaties/treaties-with-investment-provisions/5079/oic-investment-agreement-1981-

⁹ https://investmentpolicy.unctad.org/international-investment-agreements/treaties/treaties-with-investment-provisions/3090/asean—eu-cooperation-agreement-1980-

¹⁰ https://ccla.smu.edu.sg/sites/ccla.smu.edu.sg/files/asean-perspective/2022-03/SMU%20ASEAN%20Perspectives%20-%20Paper%2005:2022.pdf [page 1, see footnote 6 and 7 therein]

¹¹ https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/8471/download; https://www.nst.com.my/business/corporate/2024/06/1060199/malaysia-signs-three-agreements-us-led-15-member-ipef-ministerial.

¹² Letter from the Permanent Mission of Malaysia, HA 24/09 (May 20, 2009), https://www.un.org/depts/los/clcs_new/submissions_files/mysvnm33_09/mys_re_chn_2009re_mys_vnm_e.pdf.

¹³ Letter from the Permanent Mission of Malaysia, HA 41/09 (Aug. 21, 2009), https://www.un.org/Depts/los/clcs_new/submissions_files/mysvnm33_09/mys_re_phl_2009re_mys_vnm_e.pdf.

¹⁴ Statement by Ms Edora Ahmad, Delegate of Malaysia to the United Nations on Agenda Item 83, (November 6, 2015), https://www.un.org/en/ga/sixth/70/pdfs/statements/ilc/malaysia_2.pdf.

¹⁵ https://www.miti.gov.my/index.php/pages/view/2176.

Does your home state have any legislation / instrument facilitating direct foreign investment. If so: a) Please list out any formal criteria imposed by such legislation / instrument (if any) concerning the admission and divestment of foreign investment; b) Please list out what substantive right(s) and protection(s) foreign investors enjoy under such legislation / instrument; c) Please list out what recourse (if any) a foreign investor has against the home state in respect of its rights under such legislation / instrument; and d) Does this legislation regulate the use of third-party funding and other non-conventional means of financing.
Malaysia does not have any legislation which directly promotes direct foreign investment. Instead, the regulation of foreign direct investments in Malaysia is industry specific. Nevertheless, there are other instruments which may indirectly achieve the same objective, such as:
- Investment Guarantee Agreements¹⁶;
- Double Taxation Agreements¹⁷; and
- Promotion of Investments Act 1986.
Footnote(s):

¹⁶ https://www.miti.gov.my/index.php/pages/view/content7bc1.html.

¹⁷ https://www.mida.gov.my/wp-content/uploads/2020/07/20200603104248_MIDA_Booklet_FINAL-as-at-03062020.pdf, see pages 38 and 39.
Has your home state appeared as a respondent in any investment treaty arbitrations? If so, please outline any notable practices adopted by your state in such proceedings (e.g. participation in proceedings, jurisdictional challenges, preliminary applications / objections, approach to awards rendered against it, etc.)

Yes. So far, Malaysia appeared in three (3) investment treaty related arbitrations, which are Gruslin v Malaysia (1) (in 1994) [ICSID Case No. ARB/94/1], Gruslin v Malaysia (II) (in 1999) [ICSID Case No. ARB/99/3], and Malaysia Historical Salvors Sdn Bhd v Malaysia (in 2005) [ICSID Case No. ARB/05/10] as respondents.¹⁸ Malaysia participated in those proceedings.

Malaysia Historical Salvors Sdn Bhd v Malaysia (in 2005) [ICSID Case No. ARB/05/10] concerns a claim arising out of the alleged non-payment of amounts owed to the claimant from the sale of items recovered from the cargo of a British ship that sank in Malaysian waters pursuant to a salvage contract concluded between the investor and the respondent. Malaysia raised a number of jurisdictional objections/issues in this matter, including whether there is an “investment” within the meaning of that term as found in the Malaysia-UK BIT as well as in Article 25(1) of the ICSID Convention.

The Tribunal ultimately declared and ordered that the International Centre for Settlement of Investment Disputes had no jurisdiction over the dispute submitted to it in the arbitration and the Tribunal lacked competence to consider the claims made by the Claimant, by way of an award on jurisdiction dated 17.05.2007 (“Award”).¹⁹

The Claimant then made an application for annulment of the Award. The question that arose in the annulment proceedings was whether the Award should be annulled on the sold ground invoked by the Claimant, namely, that the Tribunal manifestly exceeded its powers by failing to exercise a jurisdiction over the dispute with which it was endowed under the ICSID Convention and the terms of the agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Malaysia for the Promotion and Protection of Investments (BTI). The Award was ultimately annulled by way of a decision on the application for annulment dated 16.04.2009.²⁰

Footnote(s):

¹⁸ https://investmentpolicy.unctad.org/investment-dispute-settlement/country/127/malaysia/investor

¹⁹ https://www.italaw.com/sites/default/files/case-documents/ita0496.pdf

²⁰ https://www.italaw.com/sites/default/files/case-documents/ita0497.pdf
Has jurisdiction been used to seat non-ICSID investment treaty proceedings? If so, please provide details.

Malaysia has been involved in several investor-state disputes, but it has yet to serve as the seat for non-ICSID investment treaty proceedings. Investment disputes involving Malaysia have primarily been resolved through ICSID arbitration, as seen in cases like Gruslin v Malaysia (II) (ICSID Case No. ARB/99/3) and Malaysian Historical Salvors Sdn Bhd v Malaysia (ICSID Case No. ARB/05/10). However, Malaysia is a party to the New York Convention and the Arbitration Act 2005 (“AA 2005“), which provides a framework for international arbitrations. The application of the latter in respect of arbitrations arising under investment treaties will be further discussed in the following paragraphs.

Reference can be drawn from the legislative history of the AA 2005 in respect of its application to arbitrations arising under investment treaties. The predecessor of the AA 2005, the Arbitration Act 1952 (“AA 1952”), contained an express exclusion under Section 34, which stated: –

“(1) Notwithstanding anything to the contrary in this Act or in any other written law but subject to subsection (2) in so far as it relates to the enforcement of an award, the provisions of this Act or other written law shall not apply to any arbitration held under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965 or under the United Nations Commission on International Trade Law Arbitration Rules 1976 and the Rules of the Regional Centre for Arbitration at Kuala Lumpur.”

This provision made clear that the AA 1952 did not apply to investment arbitrations, including those conducted under the ICSID Convention. However, the removal of this exclusion in the AA 2005 does not mean that the AA 2005 now applies to ICSID arbitrations. Instead, ICSID arbitrations remain governed exclusively by the ICSID Convention, which operates as a self-contained system, excluding the supervisory role of national courts.

Article 26 of the ICSID Convention expressly states that consent to ICSID arbitration is to the exclusion of any other remedy, meaning that national arbitration laws—including the AA 2005—would not apply. This was confirmed in ETI Euro Telecom International NV v Republic of Bolivia [2008] EWCA Civ 880; [2009] 1 WLR 665, where the English Court of Appeal held that the UK Arbitration Act 1996 did not apply to ICSID arbitrations, as there had been no legislative extension of its provisions to ICSID disputes.²¹ The court would not be able to exercise its powers in ICSID arbitrations in the absence of an Order in Council permitting the application of the UK Arbitration Act 1996.²² The same reasoning applies to Malaysia, where no legislative mechanism has been enacted to extend the AA 2005 to ICSID proceedings.

By contrast, non-ICSID investment arbitrations—such as those conducted under the UNCITRAL or ICC Rules—may be subject to national arbitration laws if the seat of arbitration is in Malaysia. This was recognised in Republic of Ecuador v Occidental Exploration and Production Co [2005] EWCA Civ 1116; [2006] QB 432, where the English courts applied certain provisions of the Arbitration Act 1996 to an UNCITRAL investment treaty arbitration seated in London.²³ However, this principle does not apply to ICSID arbitrations, which remain outside the supervisory reach of national laws.

Accordingly, while the AA 2005 applies to international commercial arbitrations and potentially to non-ICSID investment arbitrations seated in Malaysia, it does not extend to ICSID arbitrations, which are governed exclusively by the ICSID framework.

Footnote(s):

²¹ ETI Euro Telecom International NV v Republic of Bolivia [2008] EWCA Civ 880; [2009] 1 WLR 665 at [35], [95] and [96].

²² Robert Merkin QC and Louis Flannery QC, Merkin and Flannery on the Arbitration Act 1996 (2019, Informa Law from Routledge 6th edition) at page 456 – 457.

²³ Republic of Ecuador v Occidental Exploration and Production Co [2005] EWCA Civ 1116; [2006] QB 432 at [55].
Please set out (i) the interim and / or preliminary measures available in your jurisdiction in support of investment treaty proceedings, and (ii) the court practice in granting such measures.
Building on the conclusion in Question 7 that the AA 2005 does not apply to ICSID arbitrations but may apply to non-ICSID investment arbitrations depending on the seat, we set out the following: –

(i)

Pursuant to Section 19(1) of AA 2005, an arbitral tribunal is permitted to grant interim measures at the request of either party to the arbitration agreement. Section 19(2)(a) to (e) of AA 2005 confer power upon the arbitral tribunal to grant the following interim reliefs:²⁴
1. To order a party to maintain or restore the status quo pending determination of the dispute;
2. To take action that would prevent current or imminent harm or prejudice to the arbitral process itself, or to refrain from taking action that is likely to cause such harm or prejudice;
3. To provide a means of preserving assets out of which a subsequent award may be satisfied;
4. To preserve evidence that may be relevant and material to the resolution of the dispute; or
5. To provide security for the costs of the dispute
(ii)

An interim measure issued by an arbitral tribunal shall be recognised as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the court, irrespective of the country in which it was issued (see: Section 19H of AA 2005).

The High Court has the power to issue interim relief before or during arbitration proceedings, irrespective of whether the seat of arbitration is in Malaysia.

Pursuant to Section 11 of AA 2005, the High Court may make the following orders: –
1. To maintain or restore status quo pending the determination of the dispute;
2. To take action that would prevent current or imminent harm or prejudice to the arbitral process, or to refrain from taking action that is likely to cause such harm or prejudice;
3. To provide a means of preserving assets out of which a subsequent award may be satisfied, whether by way of arrest of property or bail or other security, pursuant to the admiralty jurisdiction of the High Court;
4. To preserve evidence that may be relevant and material to the resolution of the dispute; or
5. To provide security for the costs of the dispute.
It must be highlighted that the powers of the court to grant interim relief are slightly wider than the powers of an arbitral tribunal. In considering an order to provide a means of preserving assets out of which a subsequent award may be satisfied, the High Court has the power to order an arrest of property or bail or other security, pursuant to the admiralty jurisdiction of the High Court.

Malaysian courts generally adopt a pro-arbitration approach and will enforce interim relief granted by an arbitral tribunal unless it contravenes public policy or the principles of natural justice. The case of CTI Group Inc v International Bulk Carriers SpA [2017] 5 MLJ 314 confirms that Malaysian courts respect and enforce arbitral measures where appropriate.²⁵

Footnote(s):

²⁴ https://lom.agc.gov.my/act-detail.php?act=646&lang=BI&date=01-11-2018#timeline

²⁵ CTI Group Inc v International Bulk Carriers SpA [2017] 5 MLJ 314, at [54].
Please set out any default procedures applicable to appointment of arbitrators and also the Court's practice of invoking such procedures particularly in the context of investment treaty arbitrations seated in your home state.
The AA 2005 provides a default mechanism for the appointment of arbitrators where parties fail to agree: –
1. If the tribunal consists of a sole arbitrator, the Director of the Asian International Arbitration Centre (“AIAC”) appoints the arbitrator (Section 13(5), AA 2005).
2. If the tribunal consists of three arbitrators, each party appoints one arbitrator, and the two appointed arbitrators select the third. If any appointment fails, the Director of the AIAC steps in (Section 13(6), AA 2005).
3. If the Director of the AIAC fails to act, the Malaysian High Court can intervene and make an appointment (Section 13(7), AA 2005).
In the context of awards issued in non-ICSID investment treaty arbitrations seated in your jurisdiction, please set out (i) the grounds available in your jurisdiction on which such awards can be annulled or set aside, and (ii) the court practice in applying these grounds.
(i)

An arbitral award made by an arbitral tribunal pursuant to an arbitration agreement is final, binding and conclusive, and is not appealable based on questions of fact or law. This is because the arbitrator is master of the facts, and the courts should not review the arbitral award on its merits (see the Court of Appeal decision in Asean Bintulu Fertilizer Sdn Bhd v Wekajaya Sdn Bhd and another appeal [2018] 4 MLJ 799).²⁶

The limited circumstances in which an arbitral award may be set aside, or its recognition and enforcement may be opposed, are on the following grounds: –
1. A party to the arbitration agreement was under any incapacity;
2. The arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the laws of Malaysia;
3. The party making the application was not given proper notice of the appointment of an arbitrator or the arbitral proceedings, or was otherwise unable to present their case;
4. The award deals with a dispute that is not contemplated by or does not fall within the terms of the submission to arbitration;
5. The award contains decisions on matters that are beyond the scope of the submission to arbitration;
6. The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
7. The subject matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or
8. The award is in conflict with the public policy of Malaysia.
(See sections 37 and 39 of AA 2005)

(ii)

The case of Ken Grouting Sdn Bhd v RKT Nusantara Sdn Bhd and another [2021] 4 MLJ 622 illustrates an instance where an arbitral award was set aside by the court. This case was an appeal to the Court of Appeal against the High Court’s decision to set aside an arbitral award under section 37(1)(a)(vi) of the AA 2005 (i.e. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties). The Court of Appeal dismissed the appeal. The Court of Appeal affirmed the High Court’s finding that the arbitrator’s failure to deliver the arbitral award by the deadline stipulated in the rules of arbitration resulted in the cessation of the arbitrator’s mandate and/or jurisdiction. The Court of Appeal highlighted at [128] that once the mandate ceases, then the jurisdiction also ceased.²⁷

Further, in the case of Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198, the Federal Court at [53] outlined the guiding principles on the exercise of residual discretion when an application for setting aside an award is grounded on breach of natural justice and therefore is in conflict with the public policy of Malaysia.²⁸ The principles are:
1. First, the court must consider which rule of natural justice was breached, how it was breached, and in what way the breach was connected to the making of the award;
2. Second, the court must consider the seriousness of the breach (that is, whether the breach was material to the outcome of the arbitral proceeding;
3. Third, if the breach is relatively immaterial or was not likely to have affected the outcome, discretion will be refused;
4. Fourth, even if the court finds that there is a serious breach, if the fact of the breach would not have any real impact on the result and that the arbitral tribunal would not have reached a different conclusion, the court can refuse to set aside the award;
5. Fifth, where the breach is significant and might have affected the outcome, the award can be set aside;
6. Sixth, in some instances, the significance of the breach may be so great that the setting aside of the award is practically automatic, regardless of the effect on the outcome of the award;
7. Seventh, the court has wide discretion dependent on the nature of the breach and its impact. Therefore, the materiality of the breach and the possible effect on the outcome are relevant factors for consideration by the court; and
8. Eighth, while materiality and causative factors must be established, prejudice is not a prerequisite or requirement to set aside an award for breach of the rules of natural justice.
The above guiding principles are in line with the Federal Court’s judgment in the case of Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd and another appeal [2021] 1 MLJ 1.²⁹

Further, the recognition and enforcement of the arbitration award may be refused where the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made (see Section 39 of AA 2005 and Malaysian Bio-XCell Sdn Bhd v. Lebas Technologies Sdn Bhd & Another Appeal [2020] 3 CLJ 534 (Court of Appeal)).³⁰

Generally, parties intending to set aside an arbitral award or oppose recognition and enforcement of an arbitral award, shall make an application by way of originating summons to the High Court.

Footnote(s):

²⁶ Asean Bintulu Fertilizer Sdn Bhd v Wekajaya Sdn Bhd and another appeal [2018] 4 MLJ 799, at [19] – [23].

²⁷ Ken Grouting Sdn Bhd v RKT Nusantara Sdn Bhd and another [2021] 4 MLJ 622.

²⁸ Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198.

²⁹ Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd and another appeal [2021] 1 MLJ 1, at [137] – [143].

³⁰ Malaysian Bio-XCell Sdn Bhd v. Lebas Technologies Sdn Bhd & Another Appeal [2020] 3 CLJ 534 (Court of Appeal)), at [48] – [59].
In the context of ICSID awards, please set out: (i) the grounds available in your jurisdiction on which such awards can be challenged and (ii) the court practice in applying these grounds.
Under Section 3 of the Convention on the Settlement of Investment Disputes Act 1966 (Act 392), ICSID awards are binding and enforced as if they were judgments of the High Court of Malaysia. Grounds for challenging an ICSID award are limited to annulment procedures under Article 52 of the ICSID Convention, which include:³¹ –
1. that the Tribunal was not properly constituted;
2. that the Tribunal has manifestly exceeded its powers;
3. that there was corruption on the part of a member of the Tribunal;
4. that there has been a serious departure from a fundamental rule of procedure; or
5. that the award has failed to state the reasons on which it is based.
Malaysian courts generally do not interfere with ICSID awards. In Elizabeth Regina Maria Gabriele Von Pezold & Ors v Republic of Zimbabwe [2023] MLJU 2657, the High Court upheld the enforceability of an ICSID award and rejected sovereign immunity as a defense to recognition, consistent with the pro-arbitration stance of Malaysian courts.³²

Footnote(s):

³¹ Convention on the Settlement of Investment Disputes Act 1966, Section 3.

³² Elisabeth Regina Maria Gabriele Von Pezold & Ors v Republic of Zimbabwe [2023] MLJU 2657 at [32] – [52].
To what extent can sovereign immunity (from suit and/or execution) be invoked in your jurisdiction in the context of enforcement of investment treaty awards.

The Malaysian High Court held that sovereign immunity applies “when concrete measures of execution are taken to enforce the award’s pecuniary obligation”³³.

Pursuant to the Jurisdictional Immunities of Foreign States Act 2024³⁴, a few provisions may be relevant to the enforcement of investment treaty awards, i.e. waiver of immunity in arbitration agreement³⁵, restriction of immunity³⁶ and restrictions on enforcement against state assets³⁷.

Footnote(s):

³³ Elisabeth Regina Maria Gabriele Von Pezold & Ors v Republic of Zimbabwe [2023] MLJU 2657 at [41].

³⁴ Jurisdictional Immunities of Foreign States Act 2024.

³⁵ Jurisdictional Immunities of Foreign States Act 2024, Part II, Section 7.

³⁶ Jurisdictional Immunities of Foreign States Act 2024, Part II, Chapter III. Particularly, Section 16 regarding restriction of immunity if there is an agreement on arbitration.

³⁷ Jurisdictional Immunities of Foreign States Act 2024, Part III.
Please outline the grounds on which recognition and enforcement of ICSID awards can be resisted under any relevant legislation or case law. Please also set out any notable examples of how such grounds have been applied in practice.

The ICSID Convention has been ratified in Malaysia and the Convention on the Settlement of Investment Disputes Act 1966 was enacted, where Section 3 of the Act stipulates that “an award made by an arbitrator under the Convention shall be binding and may be enforced in the same manner as if it is a decree judgment or order of the Court”³⁸.

The only reported case in relation to ICSID arbitration in Malaysia is Elisabeth Regina Maria Gabriele Von Pezold & Ors v Republic of Zimbabwe [2023] MLJU 2657. In this case, the Court allowed the Plaintiff’s application to enforce the ICSID award and dismissed the Defendant’s application to set aside the award³⁹.

Footnote(s):

³⁸ Convention on the Settlement of Investment Disputes Act 1966, Section 3.

³⁹ Elisabeth Regina Maria Gabriele Von Pezold & Ors v Republic of Zimbabwe [2023] MLJU 2657 at [143].
Please outline the practice in your jurisdiction, as requested in the above question, but in relation to non-ICSID investment treaty awards.

In relation to non-ICSID arbitral awards, the Arbitration Act 2005 applies. Pursuant to the Act, arbitral awards are allowed to be enforced unless they violate Section 39 of the Act (which includes public policy)⁴⁰.

The Malaysian Federal Court described the enforcement proceedings of an arbitral award as a “two-stage process”, where an application to set aside the arbitral award “under s 38 upon any one or more of the grounds set out in s 39”⁴¹. The Court of Appeal illustrated the purposes of the “two-stage process” is to “simplify the application for recognition or enforcement of an award and the process of dealing with exercise of discretion to refuse that application”⁴².

Footnote(s):

⁴⁰ Arbitration Act 2005, Sections 38 – 39.

⁴¹ CTI Group Inc v International Bulk Carriers SPA [2017] 5 MLJ 314 at [105] – [106].

⁴² Agrovenus LLP v Pacific Inter-Link Sdn Bhd and another appeal [2014] 3 MLJ 648 at [15].
To what extent does your jurisdiction permit awards against states to be enforced against state-owned assets or the assets of state-owned or state-linked entities?

In relation to the assets of a State, Part III of the Jurisdictional Immunities of Foreign States Act 2024 contains protections for state-owned assets, restricting pre-trial actions⁴³, enforcement and execution⁴⁴ against foreign state assets unless consent given or commercial use exceptions apply on enforcement against foreign.

In relation to the assets of state-owned or state-linked entities, it is to be noted that the state -owned or state-linked entities are usually incorporated as separate legal entities, meaning they are distinct from the state itself. The Malaysian Court of Appeal has ruled on this principle and determined that “the property owned by a company belongs to it and not to its shareholders”⁴⁵, where “the principle that shareholders have no legal interest in the assets of the company, is trite”⁴⁶.

Footnote(s):

⁴³ Jurisdictional Immunities of Foreign States Act 2024, Section 17.

⁴⁴ Jurisdictional Immunities of Foreign States Act 2024, Section 18.

⁴⁵ Law Kam Loy and Anor v Boltex Sdn Bhd and Others [2005] MLJU 225.

⁴⁶ Mega Forest Plantation Management Sdn Bhd v Pengarah Perhutanan Negeri Selangor & Ors [2021] 4 MLJ 323 at [83].
Please highlight any recent trends, legal, political or otherwise, that might affect your jurisdiction's use of arbitration generally or ISDS specifically.

Arbitration (Amendment) Act 2024⁴⁷: The amendment of Section 38 of the Arbitration Act 2005 intended to harmonize the provision with the UNCITRAL Model Law, in which “the award made in respect of the arbitration shall be recognized as binding at the first instance without requiring an application to be made to the High Court for its recognition”⁴⁸. This amendment would strengthen the jurisdiction of the arbitral tribunal and the effect of its awards.

Recognition of ICSID award, as mentioned above, the Malaysian High Court recently in 2023 recognised the enforcement of ICSID award in Malaysia. This recognition would set as a precedent in Malaysia for enforcement of ICSID awards in the State.

Footnote(s):

⁴⁷ Arbitration (Amendment) Act 2024, Section 9.

⁴⁸ Arbitration (Amendment) Bill 2024, Explanatory Statement No. 10.
Please highlight any other investment treaty related developments in your jurisdiction to the extent not covered above (for e.g., impact of the Achmea decisions, decisions concerning treaty interpretation, appointment of and challenges to arbitrators, immunity of arbitrators, third-party funding and other non-conventional means of financing such proceedings).

Introduction of third party funding. Pursuant to Section 10 of the Arbitration (Amendment) Act 2024, there is a new chapter (Chapter II of Part III) to accommodate the introduction of provisions of third party funding of arbitration into the Arbitration Act 2005. This amendment allows third-party funding in arbitration and related court proceedings, which brings Malaysia in line with other arbitration-friendly jurisdictions and could lead to an increase in ISDS or arbitration in general.

Arbitrator immunity: Section 47 of the Arbitration Act 2005 grants arbitrators’ immunity from liability for acts performed in their capacity, except in cases of bad faith⁴⁹.

Footnote(s):

⁴⁹ Arbitration Act 2005, Section 47.

Has your home state signed and / or ratified the ICSID Convention? If so, has the state made any notifications and / or designations on signing or ratifying the treaty?

Has your home state signed and / or ratified the New York Convention? If so, has it made any declarations and / or reservations on signing or ratifying the treaty?

Does your home state have a Model BIT? If yes, does the Model BIT adopt or omit any language which restricts or broadens the investor's rights?

Has jurisdiction been used to seat non-ICSID investment treaty proceedings? If so, please provide details.

Please set out (i) the interim and / or preliminary measures available in your jurisdiction in support of investment treaty proceedings, and (ii) the court practice in granting such measures.

Please set out any default procedures applicable to appointment of arbitrators and also the Court's practice of invoking such procedures particularly in the context of investment treaty arbitrations seated in your home state.

In the context of awards issued in non-ICSID investment treaty arbitrations seated in your jurisdiction, please set out (i) the grounds available in your jurisdiction on which such awards can be annulled or set aside, and (ii) the court practice in applying these grounds.

In the context of ICSID awards, please set out: (i) the grounds available in your jurisdiction on which such awards can be challenged and (ii) the court practice in applying these grounds.

To what extent can sovereign immunity (from suit and/or execution) be invoked in your jurisdiction in the context of enforcement of investment treaty awards.

Please outline the grounds on which recognition and enforcement of ICSID awards can be resisted under any relevant legislation or case law. Please also set out any notable examples of how such grounds have been applied in practice.

Please outline the practice in your jurisdiction, as requested in the above question, but in relation to non-ICSID investment treaty awards.

To what extent does your jurisdiction permit awards against states to be enforced against state-owned assets or the assets of state-owned or state-linked entities?

Please highlight any recent trends, legal, political or otherwise, that might affect your jurisdiction's use of arbitration generally or ISDS specifically.

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