The court confirmed that agreements with distinct dispute resolution clauses require separate treatment, allowing arbitration for the Share Sale Agreement but maintaining jurisdiction for the Letter of Guarantee, highlighting mandatory stay provisions under the Arbitration Act.

[Stay Of Proceedings Pending Reference To Arbitration]

Introduction

[1] There are two agreements between the plaintiffs and the defendants. The first is a Share Sale Agreement whereby the plaintiffs agreed to purchase a portion of the defendants' shares in a Malaysian company for USD 1.6 million. If certain conditions are not met, the defendants promise to refund the USD 1.6 million to the plaintiffs. This agreement has an arbitration clause for arbitration in the Singapore International Arbitration Centre. [See cl 10.3 of Share Sale Agreement in encl 7 supporting affidavit of defendants at p 42].

[2] The second agreement is a Letter of Guarantee whereby the defendants agreed to refund the USD 1.6 million to the plaintiffs on demand if certain conditions are not met. In this agreement the parties agree " that the Courts of Malaysia shall have jurisdiction over all disputes arising under this Guarantee ". [See cl 8 of Letter of Guarantee in encl 7 supporting affidavit of defendants at p 58].

[3] The defendants failed to meet the conditions agreed by parties. The plaintiffs demanded for the refund of the USD 1.6 million but the defendants failed to refund. Thus, the plaintiffs commenced this suit for the defendants' breach of their obligations to refund under both the Share Sale Agreement and the Letter of Guarantee.

[4] On 6 June 2024, the defendants filed an application for a stay of all proceedings before me pending reference to arbitration on the basis that cl 10.3 of the Share Sale Agreement has an arbitration clause.

[5] The plaintiffs contend the stay application should be dismissed as the parties had agreed in the Letter of Guarantee " that the Courts of Malaysia shall have jurisdiction over all disputes arising under this Guarantee".

[6] On 22 January 2025 I had allowed the stay application only for the claim based on the Share Sale Agreement which has an arbitration clause, but not for the claim based on the Letter of Guarantee which does not have an arbitration clause. The order I made for encl 6 were:

i. in respect of the claim based on the Share Sale Agreement be stayed and referred to arbitration pursuant to s 10(1) of the Arbitration Act 2005 .

ii. Proceedings in respect of the claim based on the Letter of Guarantee to proceed before this Court.

iii. Defendants to file defence and counter claim [if any] by 12 February 2025. Plaintiffs to file reply and defence to counter claim, if any, by 26 February 2025.

iv. Costs in the cause.

[7] The plaintiffs did not lodge any appeal to the Court of Appeal against my order. However, defendants have appealed to the Court of Appeal on 10 February 2025.

[8] The Notice of Appeal [Enclosure 29] filed is incoherent and shows, with respect to learned counsel, a lack of understanding of the order I had made as the appeal is against my entire order. The Notice of Appeal reads as follows:

Sila ambil perhatian bahawa Perayu-Perayu/Defendan-Defendan yang dinamakan di atas, ... merayu kepada Mahkamah Rayuan terhadap keseluruhan keputusan interlokutori tersebut yang memutuskan bahawa permohonan Perayu-Perayu/Defendan-Defendan di bawah Notis Permohonan bertarikh 6 Jun 2024 (Kandungan 6) untuk satu Penggantung Prosiding sementara menunggu rujukan kepada Timbang Tara di bawah s 10 Akta Timbangtara 2005 dibaca bersama A 69 k 10 Kaedah-Kaedah Mahkamah 2012 dan A 12 k 10 Kaedah-Kaedah Mahkamah 2012 dibenarkan dengan kos dalam kausa.

[Emphasis Added]

[9] In my respectful opinion, the notice of appeal that was filed is not competent. This issue is, however, for the Court of Appeal to decid