By an earthworks contract (the contract) dated 30 October 1996 between the first defendant and the plaintiff, the first defendant engaged the plaintiff to carry out earthworks for a theme park in Johor known as the Agarta Theme Park. The total contract sum was in the region of RM24.1m. As a collateral for the payment of the works done in pursuance of the contract, the second defendant granted an irrevocable guarantee in favour of the plaintiff up to an aggregate sum of RM15.5m (the guaranteed sum). The contract contained an arbitration clause which required that any dispute or difference between the plaintiff and the first defendant arising in connection with the contract be referred to and determined by an arbitrator. The plaintiff commenced work. It was, inter alia, a term of the contract that if the cost of the earthworks exceeded the guaranteed sum and the excess amount was not secured by any additional guarantee the plaintiff was entitled to stop the earthworks.

On 3 June 1997, the plaintiff informed the first defendant that the cost of the earthworks done had reached the guaranteed sum and sought approval to perform works exceeding the guaranteed sum. The plaintiff al