An arbitration agreement mandates a stay of proceedings unless found null or incapable of performance; a dispute exists unless there is a clear admission of liability.

Headnote:(A) Arbitration Act 2005 - Section 10 - Application for stay of proceedings pending arbitration; Rule 14 of the Rules of Court 2012 - The defendant sought a stay of proceedings based on an existing arbitration agreement, asserting entitlement to set-off; Plaintiffs contested that there was no dispute as the accounts were acknowledged as final. (Paras 1-3, 16, 24, 27, 49, 100)

(B) Dispute definition - The court interpreted "dispute" as a claim acknowledged by one party and rejected by another; the existence of a clear admission can negate the need for arbitration. (Paras 19, 27, 83, 92)

(C) Stay of proceedings principle - The amended provision mandates a stay unless the arbitration agreement is found void or unenforceable; the court recognized a broad approach to giving effect to arbitration agreements. (Paras 25-28, 30, 92)

Facts of the case:
The plaintiffs, acting through liquidators, alleged non-payment by the defendant under two contracts, while the defendant claimed entitlement to deduct against the second contract's outstanding amount. (Paras 2-3, 10-11, 60)

Findings of Court:
The court found that the plaintiffs' claim fell squarely within the subject of the arbitration agreement and directed that the proceedings be stayed pending arbitration. (Paras 50-53, 99)

Issues: The key issues included whether a stay should be granted based on the existence of the arbitration agreement and whether the arbitration was inoperative. (Para 99)

Ratio Decidendi: The court ruled that given the existence of a valid arbitration clause, the proceedings must be stayed regardless of the merits of the plaintiffs' claims; a clear admission does not negate the existence of a dispute unless unequivocal in liability. (Paras 24, 26, 50, 92)

Result: The court granted the defendant's application for a stay.

Table of Content
1. establishment of plaintiffs' claim context (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. defendant's grounds for applying for a stay (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15)
3. plaintiffs' opposition to the stay application (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23)
4. court's agreement with defendant's stance (Para 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31)
5. understanding of mandatory nature of arbitration (Para 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39)
6. interpretation of arbitration agreements (Para 40 , 41 , 42 , 43 , 44 , 45)
7. rules surrounding admission and dispute ownership (Para 46 , 47 , 48 , 49 , 50 , 51)
8. considerations on set-off validity (Para 52 , 53 , 54 , 55 , 56 , 57 , 58)
9. exploration of exceptions under arbitration clause (Para 59 , 60 , 61 , 62 , 63 , 64)
10. legal precedents informing current disputes (Para 65 , 66 , 67 , 68)
11. clarifications on inoperability and performance incapacity (Para 69 , 70 , 71 , 72)
12. comparison with relevant case law outcomes (Para 73 , 74 , 75 , 76 , 77)
13. court's evaluation of arbitration agreement protocols (Para 78 , 79 , 80 , 81)
14. court's perspective on arbitration clarity (Para 82 , 83 , 84 , 85 , 86)
15. judgement on arbitration claims and admissions (Para 87 , 88 , 89 , 90)

[1] There are two applications before the Court: enclosure 4 is the Defendant's application for a stay of these proceedings under s 10 of the Arbitration Act 2005 [Act 646]; and enclosure 10 is the Plaintiffs' application for summary judgment under O 14 of the Rules of 2012.

[2] As described in the Statement of Claim, the two Plaintiffs here are partners of a joint venture known as "Zaq-NamFatt JV". The 1st Plaintiff gave a Power of Attorney to the 2nd Plaintiff. The 2nd Plaintiff is a company in liquidation, the Liquidators being Michael Joseph Monteiro and Heng Ji Keng. It is not immediately clear when the 2nd Plaintiff went into liquidation. It is however clear that the present action of both Plaintiffs is maintained by the Liquidators. This is gathered from the Statement of Claim [paragraph 1] and also from affidavits affirmed by one Dato' Ng Keng Keong, the previous Group Deputy President/Executive of the 2nd Plaintiff [Dato' Ng] on behalf of both the Plaintiffs [see for example paragraph 2: "I have been duly authorised by the Liquidators acting on behalf of the Plaintiffs to affirm this affidavit on behalf of the Plaintiffs"].

[3] The Defendant's application for stay is on grounds found in the affidavit affirmed by Hisham Albakri Bin Abu Bakar [Hisham] on 5 July 2013 [enclosure 5] to which the Plaintiffs have responded vide affidavit-in-reply affirmed by Dato' Ng on 19 July 2013 [enclosure 8]. The Defendant has replied to this affidavit vide affidavit-in-reply of Hisham affirmed on 2 August 2013 [enclosure 12] while Dato' Ng affirmed his second affidavit-in-reply on 22 August 2013 [enclosure 14].

[4] The Plaintiffs have filed a Notice of Intention to use all the affidavits filed in relation to its application for summary judgment. This will include the Defendant's affidavits. In particular, the Plaintiffs seek to rely on Dato' Ng's affidavit filed in support of that application to enter summary judgment which was affirmed on 18 July 2013 [enclosure 7].

[5] However, it must be pointed out at the outset that the contract documents and the Statement of Final Account referred to by Dato' Ng in his affidavit affirmed on 18 July 2013, namely exhibits "PA-1" and "PA-2" are not those referred to in the Statement of Claim. These exhibits relate to a Letter of Award dated 29 May 2002 and a contract [Contract No: 1Be/FIT/PRE/CBFO/CON/10N/1013/DA/1000] dated 22 November 2002 for "The Proposed Supply, Delivery and Installation of Fitting-Out Works for the General Office Area and Common Facilities for Government Administrative Offices of Parcel E (Sub-Package 4: E2, E3 & Auditorium) at Putrajaya" for the original contract sum of RM71,633,950.67; and the Statement of Final Account for RM1,979,406.62 appr

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2013 MarsdenLR 2604

HIGH COURT MALAYA KUALA LUMPURZAQ CONSTRUCTION SDN BHD & ANOR – AppellantVersusPUTRAJAYA HOLDINGS SDN BHD – Respondent[Civil Suit No: 22C-24-07/2013]

An arbitration agreement mandates a stay of proceedings unless found null or incapable of performance; a dispute exists unless there is a clear admission of liability.

Cases Referred (2)

HIGH COURT MALAYA KUALA LUMPUR
ZAQ CONSTRUCTION SDN BHD & ANOR – Appellant
Versus
PUTRAJAYA HOLDINGS SDN BHD – Respondent
[Civil Suit No: 22C-24-07/2013]