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FEDERAL COURT PUTRAJAYA
PRESS METAL SARAWAK SDN BHD – Appellant
Versus
ETIQA TAKAFUL BERHAD – Respondent
[Civil Appeal No: 02(i)-27-04-2015(W)]
Key Points: - The court must grant a stay of proceedings under Section 10(1) of the Arbitration Act 2005 if a valid arbitration agreement exists, leaving only the issue of whether the agreement is null or incapable of performance (!) (!) . - Disputes concerning the amount or quantum of indemnity fall within the scope of arbitration clauses even when liability is admitted, as the clauses cover all differences regarding the amount to be paid (!) (!) (!) . - The interpretation of arbitration clauses depends on their wording and the parties’ intention, and courts should construe them broadly to achieve the commercial purpose of arbitration (!) (!) (!) . - Ancillary matters such as fraud, damages, and declaratory relief can be determined by the arbitral tribunal and are not sufficient grounds to deny a stay (!) (!) (!) . - A court cannot consider cost or time savings as a reason to refuse a stay, and the expense of arbitration is not a sufficient ground to justify denying a mandatory stay (!) (!) .
| Table of Content |
|---|
| 1. overview of the case background and parties' involvement. (Para 1 , 2 , 3 , 5 , 6 , 7 , 8) |
| 2. arguments regarding the applicability of the arbitration clauses. (Para 14 , 15 , 18 , 20 , 22 , 24) |
| 3. interpretation of s 10(1) of the arbitration act. (Para 27 , 28 , 32) |
| 4. final court conclusion affirming arbitration and dismissing appeal. (Para 112 , 114) |
The Appeal
[1] The appellant in the present appeal before us was the plaintiff at the High Court, while the respondent was the defendant. This appeal is against the decision of the Court of Appeal made on 30 October 2014, dismissing the plaintiffs appeal relating to the decision of the High Court made on 12 June 2014, whereby the learned High Court Judge granted a stay of proceedings pending referral of the dispute to arbitration, based on an application made by the defendant pursuant to s 10 of the Arbitration Act 2005 (the 2005 Act). In this judgment, the parties will be referred to as they were in the High Court.
The Parties
[2] At all material times, the plaintiff, Press Metal Sarawak Sdn Bhd, was a company incorporated in Malaysia with a registered address at Lots 15 and 37, Block 20, Kemena Land District, Tanjung Kidurong, 97000 Bintulu, Sarawak and a business address at Lots 211 and 212, Block 293 Mukah Land District, KM 38, Jalan Mukah-Balingian, 96400, Mukah, Sarawak. The plaintiff owned and operated an aluminium smelting plant at the business address (the Mukah Plant). It is a process of extracting aluminium from its oxide, namely alumina, by the process of electrolysis. The plant which began operation on or about August 2009, was the first aluminium plant set up in Malaysia.
[3] The defendant, Etiqa Takaful Berhad, at all material times, was a company incorporated in Malaysia with a registered and business address at Level 19, Tower C, Dataran Maybank No 1, Jalan Maarof, 59000 Kuala Lumpur and was in the business of providing insurance and takaful products.
Factual Background
[4] With the foregoing brief introduction, we will now address the salient facts of the case.
[5] By a contract of insurance, which was evidenced by a placement slip numbered D12EE0852324 dated 24 October 2012 (placement slip), and a policy certificate, the defendant, as the lead Takaful operator, agreed with the plaintiff, in consideration for the payment of a premium of RM300,000.00 among others, to insure all critical plants and machineries including pots and furnaces, parts, accessories, tool systems and installation ("machinery breakdown") and loss of profits ("loss of profits") against sudden and unforeseen damage from any cause not excluded, occurring after successful completion of acceptance tests while working or at rest and during overhaul cleaning or movement in the premises for such purposes. The sum insured for machinery breakdown was RM200 million and for the loss of profits was RM100 million.
[6] On 27 June 2013, the State of Sarawak was affected by a wide power outage which resulted in disruption of the plaintiffs smelting operation and forced a temporary shutdown of the Mukah Plant. As a result, the plaintiff suffered substantial losses and damage.
[7] On the next day (28 June 2013), the plaintiff notified the defendant of the incident. In October 2013, the plaintiff indicated to the defendants appointed loss adjusters, Cunningham Lindsey Adjusters Malaysia (Cunningham Adjusters) that its estimated indemnifiable losses were in the region of RM125 million. In the meantime, while adjustment was taking place on 24 September 2013, the plaintiff applied for an interim payment of RM15 million for machinery breakdown.
[8] Vide letter dated 15 November 2013, the defendant indicated to the plaintiff that "... it is clear from the investigation carried out by Cunningham Lindsay Adjusters (M) Sdn Bhd (CLAM) on our behalf that the Certificate is engaged by the loss and that there will be some indemnity to PMS (the plaintiff). The question that we have been analyzing ...
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