Back
2021 MarsdenLR 3745
COURT OF APPEAL PUTRAJAYA
SSANGYONG ENGINEERING & CONSTRUCTION CO LTD – Appellant
Versus
JALEX SDN BHD – Respondent
[Civil Appeal No: W-02(IM)(NCVC)-1767-09/2019]
A court must grant a stay of proceedings in favor of arbitration unless the arbitration agreement is found to be null, void, or incapable of being performed according to Section 10(1) of the Arbitration Act 2005.
Headnote:(A) Arbitration Act 2005 – Section 10(1) – Appeal against dismissal of application to stay proceedings and refer to arbitration – High Court found no dispute warranting arbitration – Court reviewed requirements of section regarding existence of an arbitration agreement – Parties involved included a defendant seeking stay of proceedings and a plaintiff alleging breach of contract. (Paragraphs 1, 13, 18, 20, 66)
(B) Jurisdiction – The power of the court to refer matters to arbitration under section 10(1) of the Arbitration Act 2005 mandated unless arbitration agreement is invalid. (Paragraphs 40, 10)
(C) Finding of the Court – Appeal allowed, High Court’s decision set aside, matter stayed for arbitration with awarded costs. (Paragraph 67)
(D) Dissenting Opinion – High Court misapplied principles of section 10(1); must respect arbitration agreement’s scope and existence. (Paragraphs 52-64)
JUDGMENT
Introduction
[1] This appeal is against the decision of the learned High Court Judge dated 10 September 2019, dismissing the application of the appellant (defendant) for a stay pursuant to s 10(1) of the Arbitration Act 2005 (Act 2005) of the proceedings brought against them by the respondent (plaintiff).
[2] The learned High Court Judge dismissed the application on the basis that based on the pleaded case of the plaintiff, there was no dispute between the parties that warrant the proceeding to be stayed and referred to arbitration.
[3] In this judgment, parties will be referred to as they were in the High Court.
The Background Facts
[4] The main facts are clear. The background to the case is that the defendant was engaged by Integrated Nautical Resort Sdn Bhd ("Employer") as the Main Contractor for the interior design works for the guest room and corridor, level 1 and ground floor ballroom in a Project known as "The Proposed St. Regis Langkawi, Pulau Langkawi, Kedah, Malaysia (SRL)" ("interior design works").
[5] Pursuant to the defendant's intention to engage the plaintiff as a subcontractor for the interior design works in the Project, the defendant had offered a subcontract sum of RM12,000,000.00 in a letter dated 11 July 2014 ("Letter of Award") to the plaintiff. The terms and conditions of the Letter of Award were agreed by the plaintiff on 20 August 2014.
[6] On 1 February 2016, the plaintiff and the defendant agreed and signed a subcontract for the aforementioned engagement of the defendant. The subcontract consists of and is read together with the following documents:
(a) The Letter of Award;
(b) The Sub-Contract Conditions and the Appendix;
(c) The Sub-Contract Specification;
(d) The Sub-Contract Drawings;
(e) The Schedule of Sub-Contract Works and/or Sub-Contract Bill of Quantities (whichever is applicable); and
(f) Other Documents, forming part of the Sub-Contract. (hereinafter collectively referred to as the "sub-contract")
[7] The plaintiff pleaded that they had duly performed the interior design works for the guest room and corridor, Level 1 and Ground Floor Ballroom at St. Regis, Langkawi, Kedah Darul Aman as per the sub-contract. The total value of works that were performed and executed by the plaintiff for the defendant as a sub-contractor was RM14,121,158.43 inclusive of variation orders and others.
[8] The nominated sub-contract sum was initially RM12,000,000.00. However, the total value of works performed and executed by the plaintiff was RM14,121,158.43 according to the statement of Final Account prepared by an independent Quantity Surveyor. According to the plaintiff, the defendant had paid a sum of RM12,990,375.08 to the plaintiff, leaving a balance outstanding of RM1,130,783.35, which is still due and owing from the defendant to the plaintiff under the sub-contract.
[9] Consequently, on 27 March 2019, the plaintiff's solicitors sent a letter of demand to the defendant demanding payment of the outstanding balance sum inclusive of interest to the plaintiff or the plaintiff's solicitors. The payment was supposed to be made within fourteen (14) days from the date of the said letter.
[10] The plaintiff seeks, inter alia, against the defendant in the High Court for damages for breach of contract in respect of the outstanding payment of RM1,130,783.35 that arises out of the sub-contract.
[11] The defendant objected to the jurisdiction of this Court to hear and determine the claims Thus, the defendant seeks a stay of the proceeding under s 10(1) of Act 2005 and an order referring the plaintiff's claim to arbitration. The defendant applied for a stay of proceeding on the ground that cl 14 of Letter of Award and cl 19 of the Conditions of Nominated Subcontract are valid and binding arbitration agreements.
[12] On the contrary, the plaintiff opposed the defendant's application for a stay of proceeding and referral to arbitration on the basis that there are no disputes between the parties that warrant
