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2021 MarsdenLR 2251
HIGH COURT MALAYA SHAH ALAM
VIRIDIS ENGINEERING SDN BHD – Appellant
Versus
RP CHEMICALS (MALAYSIA) SDN BHD – Respondent
[Suit No: BA-22NCVC-57-02/2021]
The court ruled that an arbitration agreement was not valid between the parties as the General Conditions of Purchase were under negotiation and not mutually accepted.
Headnote:(A) Arbitration Act 2005 [Act 646] – Section 10 – Stay of proceedings – Defendant sought to stay proceedings pending arbitration based on an alleged arbitration agreement – Court found no valid arbitration agreement exists as the General Conditions of Purchase (GCP) were not accepted by both parties – The LOI was concluded before the GCP, which was still under negotiation – Plaintiff's claim for damages stemming from breach of contract was allowed to proceed. (Paras 14, 16, 31, 38)
(B) Jurisdiction – Court's role in determining the existence of an arbitration agreement in stay applications is not ousted by the arbitration clause – Court retains jurisdiction to hear claims and refer disputes to arbitration as contractually agreed. (Paras 35, 36)
JUDGMENT
Introduction
[1] By way of a Notice of Application in encl 6, the Defendant seeks for a stay of the present proceedings pending arbitration. The specific prayers applied for, inter alia, are as follows:
(i) The entire proceedings in the High Court of Malaya Civil Suit No: BA-22NCVC-57-02/2021 be stayed pursuant to s 10 Arbitration Act 2005 [Act 646] and be referred to, and dealt with, in arbitration; and
(ii) All steps in this action including the filing of a Defence to the Writ of Summons and Statement of Claim dated 10 February 2021 be temporarily stayed pending disposal of this application.
[2] The orders sought for in the application are premised on s 10 of the Arbitration Act 2005 [Act 646], O 69 r 10 of the Rules of 2012, and/or the inherent jurisdiction of this Court.
Salient Facts
[3] The application of the Defendant stems from the following facts.
[4] The Plaintiff and the Defendant are companies incorporated in Malaysia. On 10 February 2021, the Plaintiff filed this action by way of a Writ of Summons and Statement of Claim. The claim of the Plaintiff is premised on a breach of contract entered into between the parties wherein at the Plaintiff was to construct a cooling tower basin and also for the supply, installation and commissioning of a cooling tower at Lot 116, Gebeng Industrial Estate, Balok, 26080 Kuantan, Pahang. The contract sum for the works was RM 3,660,000.00.
[5] In furtherance of the contract entered into, the Plaintiff claimed that it had duly carried out preliminary works and other works in accordance with the milestone stipulated under the contract. The Plaintiff then issued three invoices on 10 July 2020, 3 August 2020 and 4 August 2020 for the amounts of RM 366,000.00, RM 549,000.00 and RM 146,400.00 respectively. The invoices also stipulate the dates in which the amounts stated therein had to be paid.
[6] The Defendant however, failed to make payments towards the invoices. Instead, the Defendant terminated the contract causing the Plaintiff to incur losses amounting to RM 961,874.05. The Plaintiff's claim in the instant suit is for the amounts outstanding and damages.
[7] After entering an appearance to the action, the Defendant then applied for a stay of the present proceedings.
Grounds In Support Of The Stay Application
[8] The grounds for the Defendant's application can be summarised thus. The Plaintiff was engaged based on a letter from the Defendant dated 26 June 2020 and titled LETTER OF INTENT (LOI)- SUPPLY OF COOLING TOWER EPCC PACKAGE ("LOI") which is to be read together with a document dated 21 June 2020, titled GENERAL CONDITIONS OF PURCHASE FOR REVAMP PROJECT KUANTAN PLANT, MALAYSIA ("GCPF).
[9] Clause 29.2 of the GCP which contains the General Terms and Conditions governing the relations between parties, provide inter alia, that any dispute and/or disagreements attributable to the construction, interpretation or performance with the terms of the contract entered into is to be referred to arbitration. In view of this, there exists a valid arbitration agreement between the Plaintiff and the Defendant.
[10] The Plaintiff's claim in this action is based on breach of the LOI and unlawful termination of the contract entered into between the Plaintiff and the Defendant. The reliefs sought by the Plaintiff thus falls squarely within the arbitration agreement and the jurisdiction of an arbitral tribunal constituted pursuant to the arbitration agreement.
[11] Consequently, the Plaintiff's action in commencing the present suit was in breach of the arbitration agreement. The present proceedings ought to be stayed and the claim of the Plaintiff referred to arbitration for determination.
The Plaintiff's Grounds To Oppose The Application
[12] The Plaintiff disputes the existence of an arbitration agreement between the parties. The alleged arbitration agreement housed in the GCP, had not been agreed to by the parties. Both the LOI and GCP are not to be read together.
[13] The GCP was fo
