(Oral)

Gopal Sri Ram JCA delivering judgment of the court:

This is the judgment of the court.

There is only one issue in this appeal. It is whether the learned judge was right in refusing to stay the action pending reference to arbitration. The factual matrix relevant to this appeal may be shortly stated.

The parties (whom we shall refer to as the plaintiff and the defendant respectively) entered into a joint venture agreement dated 5 May 1994. The purpose of the agreement was to set up a limited company which was to operate as a vehicle to carry out the business operation which the plaintiff and the defendant proposed to carry on in the state of Sarawak. That agreement contains an arbitration clause. It is cl. 18. It reads:

If any dispute or difference shall arise between the parties hereto touching any Clauses, matter or thing whatsoever herein contained or the operation or construction thereof or any matter or thing in any way connected with this Agreement or the rights, duties or liabilities of either party under or in connection with this Agreement, then and in every such case the dispute or difference shall first be resolved between the Parties for an amicable settlement failing which shall be referred to a single arbitrator in case the parties agree upon one or otherwise to two arbitrators one to be appointed by each party or to the Kuala Lumpur Regional Centre for Arbitration at No. 12, Jalan Conlay, 50450 Kuala Lumpur and shall be held in accordance with the provisions of the Arbitration Act 1952 (Revised 1972) or any statutory modification or re-enactment thereof for the time being in force. The award of the arbitrators shall be final and binding.

One of the points on which the parties had agreed under the joint venture agreement was that if either of them enter into a composition or arrangement with creditors, that would amount to an act of termination (Clause 15.2(a) (iii)).

The plaintiff later alleged that the defendant had in fact entered into such an arrangement with its creditors. It said that cl. 15.2(a) (iii) has been activated. The consequence is that the defendant became immediately obliged to sell and transfer its shares to the plaintiff. That is to be found in cl. 15.3.

By a letter dated 24 November 2000, the defendant invoked the arbitration clause and proposed to appoint an arbitrator nominated by it.

That was followed by some silence and inactivity on both sides. The plaintiff did not take any step to prosecute the action further. On its part, the defendant did not take any action to appoint an arbitrator. So the dispute lay dormant.

Then, on 3 August 2001, the plaintiff issued its writ. The defendant applied to stay those proceedings under s. 6 of Arbitration Act 1952. The plaintiff opposed the application and, as we said, when we opened this judgment, the learned judge refused the application. The question is whether there is any dispute to go to arbitration.

So far as the law is concerned, there is no controversy. The essential principles are to be found in the judgment of Edgar Joseph Jr, SCJ in Seloga Jaya Sdn. Bhd. v. Pembenaan Keng Ting (Sabah) Sdn. Bhd.[1994] 2 CLJ 716at pp. 724-725:

It is clear law, scarcely needing any express authority, that for the grant of a stay, the applicant must demonstrate to the court by affidavit evidence (Piercy v. Young[1880] 14 Ch D 200 at p. 209) that both at the time when proceedings were commenced and to the time when the exercise of the court's discretion is sought for the grant of a stay, that he is ready and willing to do all things necessary to the proper conduct of the arbitration. The onus on the plaintiff is to satisfy the court, not so much that he has a right to continue, but that he ought to be allowed to continue the action. It goes without saying that the discretion reposed in the court is a judicial one to be exercised having regard to the particular circumstances of each case. (See Phoenix v. Pope[1974] 1 All ER 512)

In the present case,