Edgar Joseph Jr SCJ:

This is an appeal from the judgment of Mr Judicial Commissioner Ee Chin Seng ("the Judge") dismissing an appeal from the decision of the Senior Assistant Registrar ("the Registrar") refusing an application for stay of an action commenced by the appellant ("the Contractor") against the respondent ("the Sub- Contractor") under s. 6 of the Arbitration Act 1952 , ("the Act"), which provides:

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 the order staying the proceedings.

The facts underlying this appeal may be shortly stated. The Contractor had been appointed by the Ministry of Defence, of the Government of Malaysia, to carry out certain development works in respect of a project known as Kerja Pembinaan Awam in Kubong, Labuan, ("the Project") and, pursuant thereto, a con- tract in writing dated 23 November 1990 was entered into by the Contractor and the Ministry of Defence ("the Main Contract").

By a contract in writing entered into by the Contractor and the Sub-contractor dated 17 January 1991 ("the Sub-contract"), the Contractor had appointed the Subcontractor to manage and complete the overall construction of the project in accordance with the stipulations, provisions and conditions set out in the Main Contract.

Pursuant to the Sub-contract, the Sub-contractor had carried out construction works and had delivered materials on site in respect of which three interim certificates had been issued by the Consultant Engineer. The Contractor paid the Sub-contractor 95% of the amounts certified under the first and the second interim certificates while monies due under the third interim certificate were paid into a joint account by the Contractor on 14 November 1991 and withdrawn some four days later.

However, as events turned out, construction was delayed and there were complaints by the Government that the works were also defective. The Sub-contractor whilst admitting that the works were delayed, denied that it was responsible for the delays or that the works were defective.

In the upshot, by a letter dated 26 October 1991, the Contractor gave the Sub-contractor formal notice that it was in default of the provisions of s. 3.01(3)(a) to (h) of Article III of the Sub-contract , made reference to s. 5.02 of Article V , and required the Sub-contractor to remedy the defaults, within seven days from date of receipt thereof, failing which, the Contractor would determine the Sub-contractor's employment. The Contractor then by a letter dated 13 November 1991 alleged non-compliance and purported to determine the Sub-contractor's employment under the Sub-contract.

Next, the Contractor had then sought to take possession of the site but this was resisted by the Subcontractor.

Then, on 21 November 1991, the Sub-contractor, without further ado, caused to be issued the writ of summons herein claiming a declaration that the notice of termination of the Sub-contract was invalid, that the Sub-contract was still subsisting and praying for specific performance and unspecified damages for breach of contract.

It was alleged by the Contractor and not challenged by the Sub-contractor, that prior to the issue of the writ of summons, no claim had been made by the Subcontractor against the Contractor.

On the same day that the writ of summons wa