An application for a stay pending arbitration does not constitute a step in the proceedings unless it indicates an unequivocal intention to proceed with court action, thereby waiving the right to arbitration.

[1] This is an appeal against the order below dated 13 October 2010, dismissing the application (encl 91) of the appellant (1st defendant below) to stay all proceedings against the appellant pending proceedings pursuant to s 10 of the Arbitration Act 2005 ( AA 2005).

[2] As far as we could gather, the pertinent background facts were as follows. Various suits, appeals and other legal proceedings between the parties were settled by a settlement agreement dated 31 July 2008 (see 221-241 of the Appeal Record), wherein the respondents (plaintiffs below) and appellant agreed to settle all ongoing legal disputes, and to the "return" of the "COMOS PT Software business in Asia" to the appellant. The respondents claim below was premised on alleged fraudulent representations by the 2nd and 5th defendants below on behalf of all defendants that allegedly induced the respondents to enter into the settlement agreement. On 30 March 2009, the respondents filed the claim below. On 13 October 2009, the appellant entered a memorandum of conditional appearance and then applied (encl 41) to set aside the writ on the ground that local courts had no jurisdiction to determine the dispute, with an alternative prayer for leave to file a statement of defence "in the event that this Honourable Court dismisses the application herein subject to the [appellant] having the liberty to apply to this Honourable Court for such orders as it considers appropriate and or necessary". That application (encl 41) was dismissed, but leave was granted to the appellant to file a statement of defence. Thereafter, the appellant filed the instant application (encl 91) to stay the proceedings pending arbitration, which, as said, was dismissed on 13 October 2010.

[3] The settlement agreement incorporated the following provision:

"This agreement shall be governed by and construed in accordance with Malaysian law. All disputes at all material times arising out of or in connection with the present agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (ICC) by three arbitrators appointed in accordance with the said Rules. Language of the said proceedings shall be in English. The seat of arbitration shall be in Singapore. "

[4] That aforesaid arbitration agreement was not disputed or denied by the respondents. That notwithstanding, the respondents contended in the Court below that the appellant, by applying for time to file a statement of defence, had taken a step in the proceedings and waived its right to refer the dispute to arbitration. Agreeing with the respondents, the Court below held that the application to set aside the writ and the grant of leave to file a statement of defence were two steps taken in the proceedings that took away the right of the appellant to refer the dispute to arbitration (see pp 5 - 6 of the Rekod Rayuan Tambahan).

[5] Section 10 (1) of the AA 2005 provides that "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". An application for stay pending arbitration is not a step in the proceedings. That does not however answer the issue, which is whether encl 41 was a step or steps in the proceedings as held by the Court below.

[6] Not much has been said by the courts on the meaning of "steps in the proceedings", since the AA 2005 only came into force on 15 March 200