Gopal Sri Ram JCA:

Preliminary

[1] This appeal involves two matters. The first concerns the construction of a contract. It is a fairly straightforward question and gives rise to little or no difficulty.

[2] The second, however, is a point of some importance. It concerns the law governing arbitrations. It bears upon a party's right to challenge an arbitrator's jurisdiction. The decision of this court upon the point will, I apprehend, have considerable effect upon the conduct of arbitrations. The point has therefore given me much anxiety. We heard arguments upon it for the best part of two days and reserved judgment. Counsel were then afforded an opportunity to put in written submissions.

[3] In order to appreciate the arguments addressed to us it is necessary to hearken to the factual matrix against which this appeal rests. I might add for completeness that I will throughout this judgment refer to the Arbitration Act 1952 as "the Act".

The Background

[4] There is a large construction in progress along Jalan Pudu in Kuala Lumpur. It is the site of a project called Plaza Rakyat. It will, when completed, act as a junction within the City for all light rail traffic systems operating within Metropolitan and Greater Kuala Lumpur. It will also contain various other facilities for the benefit of the general public. Being an immense structure, it involves several different phases of construction. One of these involves the construction of a diaphragm wall and the installation of ground anchors. It is with this aspect of the project that the dispute at the core of the present appeal is concerned. I will for convenience refer to the subject matter as "the works".

[5] The respondent is the main contractor for the works. On 3 May 1994, it entered into a sub-contract with the appellant. This sub-contract is the form prescribed by the Architects Association of Malaysia and is known to members of the profession as "the PAM form of contract." The parties have throughout their dealings referred to this sub-contract as "the first work order" or "work order No 008". I shall do likewise.

[6] The first work order has an arbitration clause. It is of very wide purport and is to be found in every PAM form of contract.

[7] Following the execution of the first work order, the respondent issued 12 work orders. Eight of these are in issue in the present case. The learned judge has set them all out in his judgment. I do not propose to repeat them here. But I will refer to two sets of work orders (making up the total of the eight orders in dispute) that were drawn to our attention by counsel during argument. They are referred to as the second and third work orders.

[8] The second work order first is made up of a set of four work orders dated 13 July 1994. It is collectively referred to as "work order No 7". It is expressed to be for soil nailing work alongside Jalan Pudu and involves six types of work.

[9] On 22 April 1995, the first work order No 008 was terminated. Nevertheless, on 11 May 1995, the respondent issued to the appellant a third work order (referred to by the parties as "work order No 016"). It involved four types of additional work for which extra payment was to be made. It was also for soil nailing, but on this occasion was to be carried out along the front of a school abutting the construction site.

[10] The appellant accepts that work order No 016 which was issued after the termination of the first work order No 008 formed the basis of the contractual relationship between the parties. But the appellant says that it nevertheless formed part and parcel of the original contract.

[11] Later, the disputes consequent upon the termination of the first work were referred by the parties to an arbitrator. Pleadings were exchanged. These included the appellant's points of claim and the respondent's points of defence and counterclaim. Paragraphs 8, 9 and 10 of the points of claim are material to the present appeal. They read as follows:

8. By a letter dated 2