Malaysia - A Bar To Representation In Sabah Arbitrations.

Legal News & Analysis - Asia Pacific - Malaysia - Dispute Resolution

28 October, 2017

 

Introduction
 
On 19 January 2017, the Federal Court issued its grounds of decision in the case of Samsuri Bin Baharuddin & 813 Others v Mohamed Azahari Bin Matiasin (heard together with GBB Nandy @ Gannesh v Mohamed Azahari Bin Matiasin). Through this decision, the Federal Court held that Sabah advocates have the exclusive right to represent parties in arbitration proceedings held in Sabah.

This decision is significant, as it bars non-Sabah advocates from appearing in arbitrations held in Sabah. It comes at a time where international arbitrations are increasingly common in Malaysia and where parties are represented by persons of their choice. 
 

Facts
 
The Appellants (comprising more than 800 smallholders) entered into a joint venture agreement with a company known as Borneo Samudera Sdn Bhd (“BSSB”). A dispute arose out of this agreement and this dispute was referred to arbitration. This arbitration was held in Kota Kinabalu, Sabah. For the purposes of the arbitration, the Appellants and BSSB appointed advocates entitled to practice in Sabah; however, BSSB also chose to appoint an Advocate & Solicitor of the High Court of Malaya as co-counsel.

After the appointment, the Appellants raised an issue that the co-counsel, by virtue of being an Advocate & Solicitor of the High Court of Malaya, would be required to obtain ad hoc admission to the Sabah Bar if he wished to appear at the arbitration proceedings.
 

Decision of the High Court
 
An application was made by the respondent (“Mohamed Azahari bin Matiasin”), who was practising in the firm representing BSSB, to the High Court for a declaration that foreign lawyers who are not advocates within the meaning of the Advocate Ordinance Sabah 1953 (“Ordinance”) are not prohibited by the Ordinance from representing parties to arbitration proceedings in Sabah.
 
The High Court held that foreign lawyers who are not advocates within the meaning of the Ordinance are prohibited from representing parties to arbitration proceedings in Sabah and reached this decision by observing that “…the phrase ‘exclusive right to practice in Sabah’ means that lawyers admitted to the Sabah Bar have the exclusive rights in both ‘in and outside’ courts”.


Decision of the Court of Appeal
 
Mohamed Azahari bin Matiasin appealed to the Court of Appeal against the decision of the High Court. The Court of Appeal overturned the decision of the High Court and held that there was nothing in the Ordinance that states that advocates admitted in Sabah have the exclusive right to represent parties at arbitration proceedings in the State of Sabah. Further, the Court of Appeal observed that:

 “… since barristers and solicitors in England have no exclusive right of representation before arbitration proceedings in England, it follows, therefore, that advocates of Sabah also have no exclusive right of representation at arbitration proceedings in the State of Sabah.


The Appellants appealed to the Federal Court.
 
Decision of the Federal Court
 
The Federal Court granted leave for the following question of law to be considered and decided:

Whether Section 8(1) of the Advocates Ordinance 1953 (Sabah Cap. 2) read together with Section 2(1)(a) and (b) thereof confer exclusivity of right to practice by representing and appearing for any party in arbitration proceedings in the State of Sabah to Sabah Advocates notwithstanding that Barristers and Solicitors in England do not have the exclusive right of representation in arbitration proceedings?
 
Firstly, Section 8(1) of the Ordinance provides that:

(1) Subject to subsection (2) and to section 9, advocates shall have the exclusive right to practise in Sabah and to appear and plead in the Federal Court in Sabah and in the High Court and in all courts in Sabah subordinate thereto in which advocates may appear, and as between themselves shall have the same rights and privileges without differentiation…


Section 2(1) of the Ordinance states as follows:
 
“‘to practise in Sabah’ means to perform in Sabah-

(a) any of the functions which in England may be performed by a member of the Bar as such; or
(b) any of the functions which in England may be performed by a Solicitor of the Supreme Court of Judicature as such;”
The arguments taken by the Appellants included:

 

Section 8 and section 2(1)(a) and (b) of the Ordinance have to be read together.  


The Ordinance should be read as a whole and a purposive interpretation is to be adopted to ascertain the legislature’s policy or object in enacting the Ordinance.  


Appearing in arbitration proceedings is one of the functions performed by English barristers and solicitors and therefore to appear in arbitration proceedings in Sabah is to “practice in Sabah”.

 

On the other hand, the arguments taken by Mohamed Azahari bin Matiasin, amongst others, included:

 

Effect is to be given to the special meaning of the phrase “to practise in Sabah” which refers to barristers and solicitors in England who had never enjoyed such exclusivity of practice where arbitration was concerned.  


The phrase “exclusive right to practise in Sabah” and “to appear and plead in the Federal Court…” should be read conjunctively and not disjunctively by virtue of the word “and”.  


The Ordinance was only intended to apply to representations in court and not arbitration.  


The Court should take a liberal or purposive approach in deciding the issue. This is in tandem with international practice which allows parties to be represented by non-lawyers in an arbitration.

 

After hearing the arguments by the Appellants and Mohamed Azahari bin Matiasin, the Federal Court allowed the appeals and decided that foreign lawyers who are not advocates within the meaning of the Ordinance are prohibited by the Ordinance from representing parties to arbitration proceedings in Sabah.

The rationale behind this decision was as follows:

 

Section 2(1)(a) and (b) are merely definitional provisions and do not create any substantive right.  
Section 8 and section 2(1)(a) and (b) have to be read together as the exclusive right to practice in Sabah is conferred on Sabah advocates by section 8(1).  


The statutory right given to Sabah advocates cannot be taken away by relying merely on the fact that barristers and solicitors in England have a non-exclusive right to appear for parties in arbitration proceedings.

 

The dichotomy
 

In Peninsular Malaysia, the Legal Profession Act 1976 expressly allows persons (whether local or foreign) other than Advocates and Solicitors of the High Court of Malaya to represent parties in an arbitration[1].
 
Representation of choice is a key feature in international arbitrations and the value of the right to have representation of choice in an arbitration cannot be underestimated. Foreign parties often prefer to be represented by lawyers from their own countries, whom they are more familiar with, even more so if language is a barrier.

The dichotomy of having the right to representation of choice in Peninsular Malaysia while being confined to Sabah advocates in arbitrations held in Sabah is confusing and is a disincentive to arbitration in the State of Sabah.  
 
Conclusion
 
The Federal Court decision may lead to a decrease in international parties choosing Sabah as a seat to arbitrate. They are more likely to choose to arbitrate in Peninsular Malaysia, where there is a right to choose representation.

 

[1] See section 37A of the Legal Profession Act 1976.

 

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For further information, please contact:

 

Datin Jeyanthini Kannaperan, Partner, Shearn Delamore & Co​

jeyanthini@shearndelamore.com