Non-parties to an arbitration agreement cannot compel arbitration under the Arbitration Act, and courts have the inherent power to prevent abuse of process and avoid split litigation.

Introduction

[1] There were 9 applications before the Court for stay of proceedings pending arbitration pursuant to s 10 of the Arbitration Act, 2005 (" AA 2005"):

1.1 Enclosure ("Enc.") 18: filed by 2nd Defendant (D2);

1.2 Enc.21: filed by 3rd Defendant (D3)

1.3 Enc. 24: filed by 9th Defendant (D9)

1.4 Enc.26: filed by 23rd Defendant (D23)

1.5 Enc.28: filed by 15th Defendant (D15)

1.6 Enc.37: filed by 5th, 10th and 16th Defendants (D5, D10 and D16)

1.7 Enc.50: filed by 13th Defendant (D13)

1.8 Enc.81: filed by 14th Defendant (D14); and

1.9 Enc.131: filed by 21st Defendant (D21)

[2] On 19 September 2023, I had dismissed all the applications with costs, and given broad grounds as to why. Out of the 11 applicants who applied for a stay, 5 applicants, D2, D3 D9, D15 and D23 being dissatisfied with my decision, has filed their respective appeals to the Court of Appeal. This judgment contains the reasons for my decision. As the matters were related and all heard on the same day, it is convenient to deal with all 5 applications made respectively by D2, D3 D9, D15 and D23 in one judgment.

Background

[3] The background facts are culled from the pleadings, cause papers and submissions of the parties.

[4] At all material times:

4.1 the 162 Plaintiffs, are members of the public who have respectively purchased an investment scheme for Agarwood trees and have entered into various written agreements with the 1st to 4th Defendants (the "Contracting Defendants);

4.2 D1 is a foreign company incorporated in and having its place of business in Singapore;

4.3 D2 and D3 are Malaysian companies having their place of business in Malaysia;

4.4 D4 is a foreign company registered in and has its place of business in Thailand;

4.5 The Contracting Defendants were managed by D8 and D9 who are both British nationals. D8 whom the Plaintiffs allege to be the "Ultimate Controller" of the APC Group, has his place of residence in Thailand;

4.6 The D2, D5 to D7 ("Recipients"), were appointed by the Contracting Defendants to receive the Investment Sums from the Plaintiffs on behalf of the Contracting Defendants;

4.7 D8 to D24 (collectively the "Controllers"), are alleged by the Plaintiffs to be:

(a) Directors (including shadow directors), officers and/or controllers of the Contracting Defendants and/or Recipients; and/or

(b) Organisers, promotors, orchestrators, designers and/or facilitators of the Investment Scheme.

4.8 D25 is the ultimate holding company of the Contracting Defendants.

[5] The Plaintiffs claim amongst others that:

5.1 In reliance on the Defendants' representations, they had cumulatively invested a sum of RM 24,322,763.00 in the Agarwood scheme;

5.2 Under the Agreements, the Plaintiffs were allegedly promised 'Guaranteed' or 'Investment' returns;

5.3 The Defendants had intentionally designed the Agarwood scheme to amongst others, contravene statutory provisions and ensure that the Plaintiffs' returns were channelled beyond their reach;

5.4 As at the date of commencement of this action, they have not received any of their 'Investment Returns;

5.5 The Plaintiffs discovered inter alia:

(a) that the Investment Schemes sold to the Plaintiffs were in fact unregistered and not approved by CCM;

(b) D6 has been listed on Bank Negara Malaysia's (BNM) Financial Consumer Alert List s