The court established that it has the discretion to grant interim injunctions regarding bank guarantees, emphasizing the need to prevent unconscionable actions while ensuring compliance with arbitration agreements.

(Court Enclosure Nos 1, 3, 28 and 35)

Wong Kian Kheong J:

A. Introduction

[1] By consent of parties, this originating summons in Court enclosure no 1 (OS) and three applications in Court enclosure nos 3, 28 and 35 ("Encl 3", "Encl 28" and "Encl 35") had been disposed of by way of "Skype". This was because one of the two bank guarantees involved in this case (2 BG's) would lapse on 31 March 2020 during the enforcement of the Prevention and Control of Infectious Diseases (Measures Within Infected Local Areas) Regulations 2020 (PCID). Enclosures 3, 28 and 35 will be collectively referred to in this judgment as "3 Encls".

[2] This OS and 3 Encls. concern the exercise of the Court's discretion to grant interim injunctions to restrain the Defendant's rights under the 2 BG's pursuant to s 11(1)(a) and/or (b) of the Arbitration Act 2005 ( AA ) pending the commencement and disposal of arbitration which had been agreed to by the parties in this case (Arbitration). The novel issue that arises is whether the Court may grant interim injunctions regarding the 2 BG's on a condition that the party who has caused the issuance of the 2 BG's shall ensure that the 2 BG's are renewed and can be enforced until the issuance of the final arbitral award in the Arbitration (Final Award). In this regard, has the Arbitration (Amendment) (No 2 Act 2018 (Act A1569) narrowed the scope of the Court's discretionary power to grant interim measures pursuant to s 11(1)(a) to (e) ?

B. Background

[3] The plaintiff company (Plaintiff) and "Hitachi Zosen Corporation of Japan" (Hitachi) have formed a consortium named "SHK Consortium" (Consortium).

[4] There is a project, "Solid Waste Modular Advanced Recovery and Treatment Systems Waste Management Solutions" at Ladang Tanah Merah, Negeri Sembilan (Project). The defendant company (Defendant) has awarded a contract to perform a portion of the Project, "Engineering, Procurement, Construction and Commissioning", to the Consortium (Contract).

[5] According to the Contract, among others:

(1) the Plaintiff is responsible for the "onshore" portion of the Contract (with a total value of RM137,013,083.50) (Onshore Portion) while Hitachi is responsible for its "offshore" part (with a value of JPY¥3,761,355,000.00) (Offshore Portion); and

(2) the Plaintiff is required to provide the following 2 BG's to the Defendant-

(a) an "Advance Payment Guarantee" in a sum of RM13,300,000.00 (APG) is provided by the Plaintiff to the Defendant because the latter has paid in advance RM13,300,000.00 to the former. The APG was first issued by Malayan Banking Bhd to the Defendant on 3 December 2015 and lapsed on 7 November 2016. A second APG was issued by BNP Paribas Malaysia Bhd (BNP) to the Defendant on 1 November 2016 and would lapse on 31 March 2020; and

(b) a performance guarantee for an amount of RM13,300,000.00 (PG) was given by Affin Bank Bhd (ABB) to the Defendant and would lapse on 30 September 2022.

[6] The Plaintiff has alleged, among others, as follows:

(1) sometime in January 2016, the Plaintiff encountered shallow hard rock on the work site (Hard Rock Problem) which prevented the Plaintiff from proceeding with piling works within the meaning of "Milestone 3" in the Contract;

(2) due to the Hard Rock Problem, the Plaintiff applied to the Defendant for an extension of time (EOT) but this was refused by the Defendant [Defendant's Refusal (EOT)]. The Defendant then imposed damages for the Plaintiff's delay in performing the Contract in a sum of RM12,150,000.00 (Delay Damages). The Plaintiff has disputed the Defendant's claim for Delay Damages;

(3) by a letter dated 6 April 2018, the Consortium decided to suspend work under the Contract (Suspension Notice). The Defendant has claimed that the Suspension Notice amounts to a breach of the Contract by the Consortium for which the Defendant has reserved its right to take action. Upon receipt of the Suspension Notice, the Defendant did not however terminate the Contract;

(4) due to the Delay Damages,