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2022 MarsdenLR 1262
COURT OF APPEAL PUTRAJAYA
COCKETT MARINE OIL (ASIA) PTE LTD – Appellant
Versus
MISC BERHAD & ANOTHER APPEAL – Respondent
[Civil Appeal Nos: W-02(IM)(ADM)-251-02-2021 & W-02(IM)(ADM)-252-02-2021]
A court's jurisdiction in arbitration disputes is limited to ascertaining the prima facie existence of an arbitration agreement, deferring substantive issues to arbitration tribunals.
Headnote:(A) Arbitration Act 2005 – Sections 9, 10, 18 – Appeals concerning anti-arbitration injunction and stay of proceedings – The court determined there was no arbitration agreement enforceable between the parties, leading to the dismissal of the defendant's application for a stay and the allowance of the plaintiff's anti-arbitration injunction. The appellant's conduct indicated abandonment of rights to refer to arbitration and the existing contract was subject to Malaysian law with a valid entire agreement clause. (Paras 1, 14, 44)
(B) Jurisdiction of Courts – The court’s role is limited to identifying whether a prima facie arbitration agreement exists and should not determine substantive issues, which must be left to the arbitral tribunal. A conclusion contrary to this principle would indicate an overreach of judicial powers. (Paras 42, 44)
Facts of the case: The appellant, a bunker fuel supplier, was contracted to supply fuel to the respondent's vessel but faced an anti-arbitration injunction after arbitration proceedings were initiated amidst a breach claim. (Paras 2, 8, 12)
Findings of Court: The LJC's findings were incorrect; there existed a prima facie arbitration agreement which warranted a stay of proceedings for arbitration. (Paras 41, 44)
Issues: The main questions involved whether a binding arbitration agreement existed and if the court had jurisdiction to resolve that issue. (Paras 16, 37)
Ratio Decidendi: The court held that the judicial determination of arbitration agreements should be limited to prima facie evidence, and substantive matters should be deferred to arbitration tribunals, reaffirming the significance of unequivocal contract terms. (Paras 16, 42)
Result: Appeals allowed, decision of High Court set aside.
JUDGMENT
Introduction
[1] These are appeals by the appellant/defendant in the High Court ('Cockett Marine') against two decisions by the Learned Judicial Commissioner ('LJC'): to dismiss the defendant's application for a stay of proceedings in favour of arbitration [Enclosure 16] and to allow the plaintiffs ('MISC's] application [Enclosure 22] for an anti-arbitration injunction to restrain Cockett Marine from taking any further steps in the said arbitration proceedings. Encl 16 was made pursuant to s 10 of the Arbitration Act, 2005 (' AA 2005') whereas Encl 22 was pursuant to O 29, r 1 of the Rules of , 2012. ('O 29, r 1, ROC').
Brief Facts
[2] The appellant is a Singaporean company which supplies bunker fuel for shipping vessels. The respondent is a bunker supplier and is the owner of a vessel, Seri Amanah ("the Vessel").
[3] On 28 August 2018 the plaintiff invited the defendant and a number of other bunker suppliers to tender for the supply of bunkers for delivery by barge to the Vessel on 10 September 2018. A series of emails were exchanged between the plaintiff and defendant's officers on 28 August 2018 leading to the Tender being awarded to the defendant.
[4] The appellant and respondent entered into a contract for the supply of bunker fuel in which the appellant was to supply fuel for the Vessel ("the Supply Contract").
[5] On 12 September 2018, the appellant made arrangements for supply of the first parcel of bunker fuel. This was to be done via a transfer from the appellant's barge, MV RAHMAT to the Vessel.
[6] However, on the same day, the Vessel and the appellant's barge, MV RAHMAT were detained by the Malaysian Maritime Enforcement Agency ("MMEA") for potential offences under the Malaysian Customs Act 1967. The Vessel's tank was sealed and the appellant was ordered not to use the bunkers pending the completion of an investigation.
[7] On 12 October 2018, the respondent terminated the Supply Contract on the ground that the appellant was in breach of its obligation to deliver the bunkers free of claims and encumbrances under cl 9.1 and 11.1 of the respondent's Terms.
[8] On 28 May 2020, the respondent filed an action in the High Court for breach of the Supply Contract by the appellant.
[9] After obtaining leave to serve out of jurisdiction, the writ and statement of claim were then served on the appellant's solicitors on 8 July 2020.
[10] The appellant then commenced arbitration proceedings in London on 14 August 2020. A Notice of Commencement of Arbitration was issued by the appellant's solicitors in London, Messrs Preston Turnbull LLP, to the respondent citing cls 21.1 and 21.2 of the appellant's Terms.
[11] On 17 August 2020, the appellant filed encl 16 for a stay of proceedings in the pending reference to arbitration under s 10 of the AA 2005.
[12] On 25 August 2022, the respondent filed encl 22 seeking for an anti-arbitration injunction against the appellant under O 29 r 1 of the Rules of 2012 ("ROC 2012").
[13] On 7 January 2021, the LJC dismissed encl 16 and allowed encl 22.
[14] The LJC's grounds of decision can be summarised as follows:
(a) That the appellant has failed to demonstrate the existence of an arbitration agreement between the parties and therefore cannot rely on s 10 of the AA 2005.
(b) That in any event, the appellants are not entitled to a stay under s 10 of the AA as they had taken steps in the proceedings which indicates an abandonment of their rights to refer the matter to arbitration.
(c) That encl 22 ought to be granted as there are serious issues to be tried at the trial of this action.
Our Decision
[15] In support of the LJC's decisions as above in respect of Encls 16 and 22, the thrust of the respondent's submission is as follows:
i) The LJC properly appreciated the facts leading up to the genesis of the contractual relationship between the parties.
ii) The LJC properly exercised his duty to examine the contract to ascertain if there was an arbitration agreement between the parties. In doi
