The court emphasized that the validity of an arbitration agreement must be established before granting a stay of proceedings, highlighting the necessity for thorough examination of evidence.

Introduction

[1] These are related appeals against the High Court's refusal to grant a stay of the proceedings and refer the parties to arbitration pursuant to s 10 of the Arbitration Act 2005 (" AA ") as well as consequential grant of an antiarbitration injunction to restrain the parties from continuing the arbitration proceedings commenced at the Hong Kong International Arbitration Centre.

[2] We heard the appeals on 15 August 2022 and thereafter dismissed them with costs of RM5,000.00 for each of the appeals subject to allocator and the proceedings be remitted back to the High Court to be heard before another Judge.

[3] The parties will hereinafter be referred by their names.

Background

[4] By various supply contracts made in 2019 and 2020 between Lysaght Corrugated Pipes Sdn Bhd ("LCP") as well as Lysaght Galvanized Steel Bhd ("LGS") and Popeye Resources Sdn Bhd ("PR"), both LCP and LGS purchased from PR imported hot rolled coils produced by Macsteel International Far East Ltd ("MIFE").

[5] In total, LCP from March 2019 to February 2020 entered into 11 duly executed written supply contracts and LGS from January 2019 to February 2020 entered into 9 duly executed written supply contracts with PR respectively. The hot rolled coils were received by LCP and LGS and both of them made payments amounting to RM14,718,510.00 and RM10,522,675.00 to PR respectively.

[6] However, both LCP and LGS in September 2020 received an email from MIFE for overdue unpaid payment for hot rolled coils supplied in respect of several supply contracts amounting to USD1,151,630.84 and amounting to USD1,555,656.12 respectively.

[7] According to MIFE, there were allegedly 5 duly executed written supply contracts entered into from October 2019 and February 2020 between LCP and MIFE and 3 duly executed written supply contracts entered into from January 2020 to February 2020 between LGS and MIFE. These supply contracts contained an arbitration clause for disputes to be resolved under the auspices of the Hong Kong International Arbitration Centre.

[8] MIFE accordingly produced copies of these supply contracts to both LCP and LGS as well as letters from them requesting for an extension of time to delay shipment of the goods and payment and authorisation letter to forward shipping documents to PR.

[9] Both LCP and LGS impugned these alleged supply contracts and claimed the documents produced by MIFE were forged because they only dealt with PR in respect of the purchase of the imported hot rolled coils. Consequently, they lodged their respective police reports in September 2020.

[10] MIFE however retorted that there were previously also 14 similar supply contracts made between LCP/LGS and MIFE which were completed and all paid on a timely manner without any incident. In those supply contracts, PR acted as the intermediary agent of LCP and LGS including arranging for the supply contracts to be executed by LCP and LGS respectively. For all these supply contracts, PR received payment from LCP and LGS in Ringgit Malaysia and remitted payment to MIFE in US Dollars.

[11] As the result, MIFE on 15 December 2020 commenced arbitration proceedings against both LCP and LGS in Hong Kong to recover the alleged unpaid payments ("Arbitration").

[12] LCP and LGS in consequence on 14 March 2021 initiated Kuala Lumpur High Court Suit No.: WA-22NCC-109-03/2021 against both PR and MIFE ("Suit"). In the Suit, LCP and LGS sought for the following reliefs:

"57.1. A declaration that the Con