Shaik Daud Ismail JCA:

The 1st respondent engaged the appellant to carry out earthworks upon the terms and conditions of a contract dated 30 October 1966 (the said contract) between them. Clause 41 of the said contract provides for the arbitration of disputes and/or differences arising between the parties to the contract. The said clause provides:

... If the parties do not reach such amicable solution within 14 days from the request sent by any party to the other party to start the above negotiations, then the disputes shall be finally settled by arbitration, pursuant to section 41 below.

Arbitration

(a) If any dispute or differences shall arise between the client and the Earthworks Contractor, either during the progress or after completion of the Works, or after the termination of the Earthworks Contractor's employment, or breach of this Contract, as to:

(i) the construction of this Contract, or

(ii) any matter or thing of whatsoever nature arising under this Contract, or then such dispute or differences shall be referred to the Regional Centre for Arbitration at Kuala Lumpur (the "Arbitrator") for a decision ...

The appellant claimed against the 1st respondent a sum of RM17,459,445.69 allegedly owed by the 1st respondent to the appellant for earthworks performed under the said contract. The 1st respondent disputed the claim. The 1st respondent applied to the High Court for a stay of the proceedings pursuant to s. 6 of the Arbitration Act 1952 (the Act). The High Court rightly held that there are four requirements to be satisfied before a stay could be granted under s. 6 of the Act, and the requirements are:

(a) That legal proceedings must have been commenced against the applicant in respect of a matter which has been agreed should be referred to arbitration.

(b) That no other steps in the proceedings be taken before the making of the application for stay.

(c) That there is no sufficient reason why the matter ought not to be referred to arbitration as agreed between the parties.

(d) That the applicant was at the time of the application, and remains ready and willing to do all things necessary for the proper conduct of the arbitration.

In opposing the application for a stay, the appellant raised four issues namely that:

(a) there is no dispute as the 1st respondent had acknowledged that there is a debt due and owing by the 1st respondent to the appellant,

(b) that the disputed relief sought is not within the terms and scope of the arbitration clause, (c) there would be multiplicity of proceedings, and

(d) that the 1st respondent appellant had taken steps in the proceedings by filing an unconditional appearance.

This appeal, in fact, centres on issue (d) above. As can be seen from s. 6 of the Actabove, one of the conditions for a stay of proceeding, is that the party seeking a stay must not have taken "any other steps in the proceedings" before it applied for the stay. In the present case an unconditional appearance was entered. The sole issue is whether the filing of an unconditional appearance is a step in the proceedings, and if so the stay ought not to have been allowed. There are several cases which held that the entering of an unconditional appearance, is not a step in the proceedings. In Usahabina v. Anuar Yahya[1998] 2 CLJ Supp 131, after reviewing all such cases the High Court came to the conclusion that the entry of an unconditional appearance is a step in the proceedings. In the present case, the High Court found no favour in the decision in Usahabinabut held that "the entering of an unconditional appearance cannot amount to a waiver of the defendant's right to proceed to arbitration ..." When the decision in the present case was arrived at, the High Court had only the benefit of the Usahabina's decision at first instance. Since then the Court of Appeal, had concluded that Usahabinawas rightly decided. In Interscope Versicherung Sdn Bhd v. Sime Axa Assurance Bhd[1999] 2 CLJ 843 the Court of Appeal states thu