AIAC Arbitration Rules 2026 – What’s new?

The AIAC launched its Suite of Rules 2026 on 9 October 2025. The update is substantial — not a cosmetic refresh. Parties, counsel, and in-house teams who default to prior practice without reading the new rules will find themselves procedurally behind before a single hearing is convened.

Here is what has changed, and what it means in practice.

The UNCITRAL Part Is Gone. The Substance Stays.

The 2023 Rules carried a separate Part II importing the UNCITRAL Arbitration Rules wholesale. That chapter no longer exists. The UNCITRAL principles — competence-competence, tribunal jurisdiction, interim measures, award correction and interpretation — are now absorbed directly into the AIAC framework itself.

This is a structural consolidation, not a substantive retreat. The 2026 Rules remain consistent with international arbitration norms. But practitioners who relied on the UNCITRAL Part as a separate reference will need to reorient. The applicable rules are now one document, not two in conversation with each other.

Parties Must Frontload. There Is No Longer Room to Defer.

The 2026 Rules increase procedural obligations from the moment proceedings commence. Both parties must now propose governing law and applicable procedure in their Notice of Arbitration and Response respectively (R. 5.1(h), R. 6.1(e)). What was previously left to later stages — often resolved only at the first procedural meeting, sometimes litigated separately — must now be addressed at the outset.

The counterclaim rule is equally significant. Under the 2023 Rules, a respondent may include a counterclaim in its Response. Under R. 6.1(c) of the 2026 Rules, a respondent shall. The word change is deliberate. Respondents who wait to introduce counterclaims at a later stage will face a harder procedural road. The time to identify and articulate all cross-claims is before the Response is filed, not after.

The combined effect is clear: the 2026 Rules are designed to force comprehensive case preparation earlier. Counsel and clients need to be aligned — on law, procedure, and all claims — before the Notice goes out, not after.

Third-Party Funding Disclosure Is Now Mandatory.

The 2023 Rules touched on third-party funding (TPF) disclosure. The 2026 Rules formalise and expand it. Disclosure of funding arrangements is now mandatory in both the Notice of Arbitration and the Response, with detailed guidelines under R. 5.1(f), R. 6.1(d), and R. 31.

This aligns AIAC with the direction of travel in international arbitration and with Malaysia’s own Arbitration (Amendment) Act 2024, which formally recognises third-party funding in the domestic statutory framework. The rationale is straightforward: an arbitrator cannot assess conflicts of interest without knowing who has a financial stake in the outcome. Undisclosed funding arrangements are now a procedural risk, not just an ethical one.

The Tribunal Has More Power. Expect Them to Use It.

Tribunal powers have been significantly expanded under R. 28. Among the additions: express power to limit or exclude irrelevant testimony, evidence, or materials. For practitioners who have sat through arbitrations weighed down by voluminous document bundles and witness statements that go to issues no longer in dispute, this is a meaningful change.

Emergency arbitration is now formalised in three dedicated rules (R. 12–14), moving it out of a Schedule and into the main body of the Rules. Summary determination — the ability to dispose of clearly unmeritorious claims or defences early — is expanded and now includes a time limit for the tribunal to deliver its decision (R. 9). Fast-track procedures are similarly expanded beyond their previous brief treatment (R. 7).

The message to parties and counsel is direct: arbitral tribunals under the 2026 Rules have both the authority and the procedural tools to run efficient proceedings. Tactics premised on procedural attrition — burying the other side in paper, running satellite jurisdictional arguments, waiting to introduce claims — are harder to sustain.

Challenge and Removal of Arbitrators: Wider Grounds, Clearer Process.

The grounds for challenging an arbitrator have been expanded. Under the 2023 Rules, challenge was available on the basis of justifiable doubts as to impartiality or independence, or lack of qualifications. Under R. 23 of the 2026 Rules, the grounds now include failure to perform duties and impossibility to act. There is also a new requirement: a challenge based on circumstances of which a party became aware only after appointment must be raised promptly upon that awareness — it cannot be held in reserve.

More significantly, AIAC now has express authority to remove an arbitrator under exceptional circumstances after consulting the parties (R. 24). No such express rule existed under the 2023 regime. This reinforces the institution’s oversight role and provides a mechanism for addressing situations — arbitrator non-performance, incapacity, persistent delay — that the challenge process alone may not resolve.

Replacement provisions have also been extended (R. 25), reducing the uncertainty that previously attended the question of costs and procedure when an arbitrator departs mid-proceedings.

Waiver Is Now Codified. Object Promptly or Lose the Right.

Rule 53 introduces a formal implied waiver provision. A party that fails to raise a procedural objection promptly will be treated as having waived its right to do so. This is consistent with the approach under the UNCITRAL Model Law and reflects sound procedural discipline — but it is a change from the 2023 position, where no specific waiver rule existed.

The practical implication is straightforward. If something is wrong with the procedure, or if a party believes the other side has not complied with the arbitration agreement or the Rules, the objection must be raised at the earliest opportunity. Waiting to see how the proceedings develop, and raising the objection only when the outcome is unfavourable, is no longer a viable approach.

Amicable Settlement Is Now Formally Recognised.

The 2026 Rules introduce Arb-Med, Arb-Med-Arb, and Med-Arb processes under R. 49. The previous rules said nothing on this. The recognition of these hybrid mechanisms is not merely symbolic — it creates a formal procedural pathway for parties who wish to attempt mediation at any stage of an arbitration without abandoning the proceedings entirely. For disputes where the commercial relationship is ongoing and a negotiated resolution is preferable, this flexibility is valuable.

The Institutional Role Is Clarified. AIAC Decisions Are Binding.

Under R. 55, AIAC decisions made in the course of administering an arbitration are expressly binding. The institution is not required to give reasons for those decisions unless ordered by a court or required by the Rules themselves. This provision settles what was previously ambiguous: AIAC’s administrative authority is substantive, and challenges to procedural decisions on process grounds face a higher bar.

The technical review of awards is also tightened. The 2023 Rules allowed the AIAC Director to waive technical review. That provision has been removed. The quality control function is now mandatory, ensuring consistency in the awards that emerge from AIAC-administered proceedings.

What This Means for Parties in Construction and Commercial Disputes

The 2026 Rules are built for speed, discipline, and transparency. The institutions and tribunals that operate under them have clearer authority and better tools. The parties who use them effectively will be the ones who prepare early, disclose completely, and litigate efficiently.

For construction disputes in particular — where delay claims, CIPAA adjudication, and concurrent proceedings are common — the expanded summary determination and fast-track procedures offer genuine alternatives to full arbitration for matters that do not warrant the full weight of a multi-month proceeding. Emergency arbitration, now formalised in the main Rules, provides the mechanism for urgent interim relief at the outset of a dispute where time is critical.

The cases that will struggle under the 2026 Rules are the ones that come in without full case preparation, without funding arrangements disclosed, and without a clear position on governing law. Front-loading is no longer best practice. It is the rule.