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2010 MarsdenLR 3118
HIGH COURT MALAYA, KUALA LUMPUR
GADANG ENGINEERING (M) SDN BHD – Appellant
Versus
BLUWATER DEVELOPMENTS BHD – Respondent
[Suit No: S-22-615-2009]
The Arbitration Act mandates that courts stay proceedings in favor of arbitration unless a party demonstrates there is no dispute to be referred, emphasizing the primacy of arbitration agreements.
Headnote:(A) Arbitration Act 2005 - Section 10 - Enclosure for stay of proceedings pending arbitration versus application for summary judgment - Clear preference for arbitration in disputes, requiring a stay unless no dispute exists regarding matters to be referred (Paras 2, 5, 10).
(B) Summary Judgment - The concept should not undermine the parties' agreed arbitration process, particularly when a dispute exists and the claimant is obliged to refer the matter to arbitration before seeking judgment (Paras 5, 8, 9).
Facts of the case:
The plaintiff seeks RM33.9 million from the defendant, having completed two building contracts. The defendant disputes this claim, citing defective works and lack of authority in final account agreements (Paras 1, 4, 6).
Findings of Court:
The application for stay was allowed, pending arbitration, and no order was made on the summary judgment application, affirming the requirement that arbitration proceedings complete within a year (Paras 11, 13).
Issues: The primary issues included whether the summary judgment could proceed given the defendant's noted disputes and the implications of the arbitration clause in the agreements.
Ratio Decidendi: The court emphasized that the Arbitration Act mandates a stay unless the plaintiff can demonstrate there is in fact no dispute, reaffirming the primacy of arbitration agreements and the limited discretion of courts to interfere therein (Paras 5, 10).
Result: Enclosure 17 allowed; no order on enclosure 18.
[1] Enclosure 17, was the application of the defendant for a stay of proceedings pending reference to arbitration under s. 10 of the Arbitration Act 2005 (the new Arbitration Act) . Enclosure 18 was the application of the plaintiff for summary judgment under O. 14 of the Rules of the High 1980 for RM33.9 million pursuant to the final accounts statements and final certificates for work done under building contracts. I heard the matter and there after allowed encl. 17 on terms but made no order on encl. 18 and I append below my reasons for so doing.
[2] The question that first arose as a preliminary issue is whether encl. 18 should be heard first ie, the plaintiff's application for summary judgment or encl. 17, the defendant's application for a stay, and the position appears to be under the old Arbitration Act, that the application for stay should be considered first and only if a stay is not granted, then only should it proceed to hear the application for summary judgment but both applications should not be heard together (Trans Resources Corp Sdn Bhd v. Sanwell Corp. & Anor, ).
[3] To appreciate the impact of the change of the law, I have reproduced s. 6 of the old Arbitration Act .
If any party to an arbitration agreement or any person claiming through or under him commences any legal proceedings against any other party to the arbitration, or any person claiming through or under him, in respect of any matter agreed to be referred to arbitration, any party to the legal proceedings may, before taking any other steps in the proceedings, apply to the Court to stay the proceedings and the Court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement ,and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings.
[4] The new Arbitration Act is based on Unicitral's Model Law on International Commercial Arbitration. I set out s. 10 of the Arbitration Act 2005 and the differences between the old and new Arbitration Act will become immediately glaring.
10 (1) 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:
(a) that the agreement is null and void, inoperative or incapable of being performed; or
(b) that there is in fact no dispute between the parties with regard to the matters to be referred.
(2) The Court, in granting a stay of proceedings pursuant to subsection (1), may impose any conditions as it deems fit.
(3) Where the proceedings referred to in subsection (1) have been brought, arbitral proceedings may be commenced or continued, and an award may be made, while the issue is pending before the Court.
[5] Under the new Arbitration Act, the Court has no discretion but to grant a stay unless as the plaintiff sought to argue in the present case that it comes under s. 10(1)(b) of the new Arbitration Act . Looking at s. 10 of the new Arbitration Act as a whole in my judgment, s. 10 requires a stay of proceedings to be made unless s. 10(1)(b) applies to show that a stay should not be granted under the new Arbitration Act. The Court must find that there is in fact no dispute between the parties on matters to be referred. This must be shown in answer to the application for stay itself, and not by way of a separate application for summary judgment. The wording of s. 10 of the new Arbitration Act is similar in wording to s. 256(3) of the National Land Code which is set out below:
(3) On any such application, the Court shall order the sale of the land or lease to which the charge relates unless it is satisfied of the existence of cause to the contrary.
[6] In ligh
