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2022 MarsdenLR 1142

HIGH COURT MALAYA KUALA LUMPUR
PADDA GURTAJ SINGH & ORS – Appellant
Versus
AXIATA GROUP BERHAD & ORS – Respondent


Petitioner Advocates:K Shanmuga,Fahri Azzat ,Respondent Advocate: H R Dipendra,Gary Yap Vern Chieh,Hemashini Kurup

Judgement Key Points

Based on the provided legal document, here are the key points regarding the jurisdiction to grant interim measures against non-parties under the Arbitration Act 2005:

Jurisdiction Over Non-Parties * The High Court has the power to issue interim measures against non-parties to an arbitration agreement under Section 19J(1) of the Arbitration Act 2005 to preserve the status quo pending arbitration. (!) (!) (!) * While Section 11(1) applies only to parties to an arbitration agreement, Section 19J(1) contains no such restrictions, provided the measures are "in relation to arbitration proceedings." (!) (!) * The Court's intervention is limited to supporting the arbitral process without prejudging the outcome or determining the merits of the dispute. (!) (!) (!) * The amendment to the Act in 2018 was intended to align with the UNCITRAL Model Law, specifically to allow courts to grant interim measures against third parties where the arbitral tribunal lacks jurisdiction. (!) (!) (!) * The Court is not required to apply the strict "American Cyanamid" test (serious issue to be tried) for interim measures under the Act, as the existence of a dispute is presumed once referred to arbitration. (!) (!)

Application to the Case (Prayer A) * The Plaintiffs sought an injunction to prevent the 1st Defendant (AGB), a non-party to the Shareholders Agreement, from selling shares in a subsidiary (CMSB) included in a proposed merger with a competitor (Digi). (!) (!) (!) * The Court ruled that granting the injunction was necessary to prevent irreparable harm and ensure the arbitration proceedings would not become academic. (!) (!) (!) * The injunction was granted as it merely preserved the status quo (preventing a change in control) without usurping the arbitrator's authority to determine if a breach occurred. (!) (!) (!) * The Court rejected the argument that no cause of action existed against AGB, adopting the reasoning from TSB Private Bank International SA v. Chabra that an injunction can be granted against a non-party if it is ancillary and incidental to a cause of action against other defendants. (!) (!) (!) (!) (!) * An undertaking given by the parties (CAB and CMSB) was deemed insufficient to preserve the status quo regarding the control of the company and the risk of a competitor gaining indirect influence. (!) (!) (!)

Other Prayers * The Court declined to grant further interim measures (Prayers B and C) regarding the MVNo agreement and board voting rights, as these would alter the status quo rather than preserve it and could be addressed by the arbitral tribunal. (!) (!) (!) (!)

Group of Companies Doctrine * The Court noted the "Group of Companies" doctrine but deemed it unnecessary to address since jurisdiction to grant the injunction against the non-party was already established under Section 19J. (!) (!) (!) (!)


JUDGMENT

Ong Chee Kwan JC:

Introduction

[1] The Amended Originating Summons ('Enclosure 57') seeks interim measures under ss 11 and 19J of the Arbitration Act 2005 or under the inherent jurisdiction of this Court. The purpose is to preserve the status quo to ensure that the arbitration proceedings in relation to the shareholders agreement of the 9th Defendant company ('the Company' or 'TTSB') will not become academic.

[2] The 3rd Defendant ('CMSB') is a wholly owned subsidiary of the 2nd Defendant ('CAB'), who in turn is a wholly owned subsidiary of the 1st Defendant ('AGB'). CMSB became a registered shareholder of shares in the 9th Defendant on 18 June 2021. Prior to this date, CAB was the registered shareholder of the shares.

[3] The dispute revolves around the proposed sale by AGB of its entire shareholding in CAB. It is the plaintiffs' case that this proposed sale triggered an 'Event' and constitutes a 'Material Breach' of the shareholders agreement between the parties, resulting in CMSB being compulsorily required to sell its entire shareholding in TTSB to the remaining shareholders of the Company at par plus 10%. Both CAB and CMSB categorically deny the Plaintiffs' allegation.

[4


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