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2021 MarsdenLR 2588
HIGH COURT MALAYA JOHOR BAHRU
EXTRA EXCEL (M) SDN BHD – Appellant
Versus
QUEK PECK KEOW – Respondent
[Civil Appeal No: JA-12A-10-03/2021]
The arbitration clause must be evaluated independently under the doctrine of separability, with jurisdictional questions reserved for the arbitrator, aligning with the principle favoring arbitration agreements.
Headnote:(A) Arbitration Act 2005 – Section 10 – Contracts Act 1950 – Section 29 – Appeal against dismissal of application for stay of proceedings pending arbitration – Defendant claimed arbitration agreement valid per clause 1.3 of the EEPP, while plaintiff argued clause 10.2 rendered the agreement void. Court held that clause 10.2 did not affect the validity of clause 1.3 and that any issues should be determined by the arbitrator. (Paras 5, 10, 18, 24)
(B) Doctrine of Separability – Court emphasized that arbitration clause must be regarded independently of other agreement terms – Jurisdictional questions should be resolved by the arbitrator. (Paras 13, 15, 22)
(C) Enforcement of Arbitration Agreements – Court favors upholding arbitration agreements even amid doubts regarding validity. (Para 24)
JUDGMENT
Introduction
[1] This is an appeal ("this Appeal") against the decision of the learned Sessions Court Judge ("SCJ") on 24 March 2021, dismissing the Appellant's application for stay of proceedings pending arbitration pursuant to s 10 of the Arbitration Act 2005 ("Arbitration Act"). For ease of reference, the Appellant and Respondent will be referred to respectively as the Defendant and Plaintiff.
The Factual Background
[2] The Plaintiff, an individual, had entered into a distributorship agreement ("Distributorship Agreement") with the Defendant, a multilevel marketing company, which provided the Plaintiff with the right to participate in the direct sales of the Defendant's products to consumers.
[3] The specific terms and conditions of the Distributorship Agreement were also contained in a document referred to as the E Excel Policies and Procedures ("EEPP").
[4] Disputes arose between the parties and the Plaintiff commenced an action in the Sessions Court. The Defendant applied for a stay of proceedings pending arbitration pursuant to an arbitration agreement in cl 1.3 of the EEPP. The learned SCJ dismissed the application and as a result thereof, the Defendant appealed to this Court. This Appeal was allowed for the following reasons.
The Applicable Law
[5] With regard to an application for stay of proceedings, reference was made to s 10 of the Arbitration Act, which reads:
Section 10 - Arbitration agreement and substantive claim before
(1) A Court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
[Emphasis Added]
[6] What needs to be established are that, there is in existence an arbitration agreement/ clause, that the party making the application had not taken any step in the proceedings. It must also be established that the agreement in question is not null or void, or incapable of being performed.
Contentions, Evaluation, And Findings
[7] The Defendant's contention in this Appeal was premised on cl 1.3 of the EEPP which reads:
Any and all disputes, claims and causes of action arising our of or in connection with the Agreement of the Malaysia Distributorship (including any questions regarding its existence, validity or termination) brought by a Distributor, or one other than E Excel Malaysia, shall be referred to and resolved through final and binding arbitration and not by a Court of jury. Such disputes, claims and causes of action shall proceed individually and shall not be combined or consolidated with any other person's or entity's dispute, claim, or action and, without limitation of the foregoing, shall not under any circumstances proceed as part of a class action. The arbitration shall be conducted in English and before a single arbitrator appointed by E Excel Malaysia. The arbitration shall be conducted acccording to the Arbitration Act 2005 or such statutory modification to amendment thereof for the time being in force. Subject to the final orders as to costs made by the arbitrator, the arbitrator's fees and administration costs of the arbitration shall be borne equally by the parties.
[Emphasis Added]
[8] At the outset, the Plaintiff contended that the Defendant's application for stay was premised upon an arbitration clause that was contained in the 2015 version of the EEPP that was no longer effective. However, I was of the view that the arbitration clause in question, that is, cl 1.3 in the 2015 version was exactly the same as found in the 2019 version. In the final analysis, the issue was whether there was, regardless of its date, an arbitration agreement in the EEPP that the parties were bound by.
[9] In any event, the nub of the Plaintiff's contention pivoted on cl 10.2 of the EEPP, which r
