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2025 MarsdenLR 2491
HIGH COURT MALAYA KUALA LUMPUR
SETIAKON BUILDERS SDN BHD – Appellant
Versus
MAYFAIR VENTURES SDN BHD – Respondent
[Originating Summons No: WA-24C(ARB)-63-11/2024]
The court must enforce arbitration agreements by staying proceedings unless the agreement is void; relief sought must align with interim measures to maintain the status quo during arbitration.
Headnote:(A) Arbitration Act, 2005 - Section 10(1) - Stay of proceedings - A court must stay proceedings if a valid arbitration agreement exists; Section 11 - Interim measures - The court may issue interim relief to maintain the status quo pending arbitration - The plaintiff’s relief sought in the Originating Summons is interim in nature and does not overlap with claims in arbitration - Application for stay dismissed. (Paras 9, 10, 11, 14, 31, 32)
Facts of the case:
The defendant applies to stay proceedings initiated by the plaintiff seeking mandatory injunctions regarding retention sums from a construction contract involving two phases of a project.
Findings of Court:
The court found that the relief sought is interim, thus not attracting stay under s 10(1) of the Act. The Stay Application was dismissed but did not imply an automatic allowance of the Originating Summons.
Issues: The main issue was whether the relief sought is substantive, attracting s 10(1), or interim under s 11 of the Act.
Ratio Decidendi: The court reasoned that since the relief does not include the core arbitration claims, it is interim in nature, warranting relief under s 11 instead of a stay under s 10(1).
Result: Stay Application dismissed with costs.
| Table of Content |
|---|
| 1. factual overview of the project phases. (Para 2 , 3 , 4) |
| 2. public policy rationale for arbitration agreements. (Para 8 , 9 , 10 , 11) |
| 3. court's mandatory duty to refer to arbitration under s 10. (Para 12 , 13 , 14) |
| 4. interim measures' purpose to support arbitration. (Para 16 , 17 , 18) |
| 5. court's dismissal of stay application with further proceedings needed. (Para 31 , 32) |
[Defendant's Application Under Section 10 (1) Of The Arbitration Act, 2005 ]
Introduction
[1] The Defendant ("Mayfair") is applying under s 10(1) of the Arbitration Act, 2005 ("Act") to stay the proceedings in this Originating Summons, in which relief that the Plaintiff ("Setiakon") seeks is for mandatory injunctions against Mayfair that Setiakon contends is in the exercise of its rights for interim measures/relief under s 11 of the Act.
Salient Facts
[2] In 2016 and 2017, Mayfair had appointed Setiakon as the Main Contractor for Phase 1 and Phase 2 of a development project in Persiaran Tropicana, in Mukim Damansara, District of Petaling, Selangor Darul Ehsan ("Project"). Phase 1 consisted of the construction of Blocks 1 and B1 of the Project, and Phase 2 consisted of the construction of Blocks A1 and B2 of the Project.
[3] In respect of Phase 1 of the Project:
(i) Setiakon had commenced works on 1 July 2016, and the Certificate of Practical Completion was issued on 31 January 2020;
(ii) The defects liability period had expired on 30 July 2022;
(iii) Setiakon alleges that, despite attending to all of the defects as notified to it by the architect, the architect and/or Mayfair have subsequently failed to issue the Certificate of Making Good Defects;
(iv) Setiakon alleges that Mayfair is also wrongfully withholding the 2nd moiety of the retention sum of RM4.481,155.56;
(v) That, arising from payment disputes between them in respect of unpaid certified sums, the retention sum and late payment interest, Setiakon initiated adjudication proceedings under the Construction Industry Payment and Adjudication Act, 2012 ("CIPAA"), which culminated in an Adjudication Decision dated 16 April 2024 in Setiakon's favour in the sum of RM4,131,813.45 with interest and costs ("Adjudication Decision");
(vi) On 6 December 2024, the Shah Alam High Court dismissed Mayfair's application to set the Adjudication Decision aside and allowed Setiakon's application to enforce it; and
(vii) In the meantime, by a Notice of Arbitration dated 27 November 2024 ("Mayfair's Notice of Arbitration"), Mayfair initiated an arbitration to resolve all of the disputes between the parties in relation to Phase 1 of the Project, including their disputes in regard to the retention sum.
[4] In respect of Phase 2 of the Project:
(i) Setiakon had commenced works on 15 December 2017 and the Certificate of Practical Completion was issued on 26 April 2021;
(ii) The defects liability period for Phase 2 had expired on 26 October 2023, but had by agreement of the parties been extended to 27 January 2024, which has now also expired;
(iii) Setiakon alleges that, despite attending to all of the defects as notified to it by the architect, the architect and/or Mayfair have failed to issue the Certificate of Making Good Defects;
(iv) Setiakon alleges that Mayfair is wrongfully withholding the 2nd moiety of the retention sum of RM2,324,318.43; and
(v) By a Notice of Arbitration dated 2 September 2024 ("Setiakon's Notice of Arbitration"), Setiakon initiated an arbitration to resolve all of the disputes between the parties in relation to Phase 2 of the Project, including their disputes in regard to the retention sum.
[5] Given the two separate and distinct Notices of Arbitration issued by the parties, there are now two separate arbitrations before two separate arbitrators for the resolution of the parties' disputes regarding Phase 1 and Phase 2 of the Project. As all of the claims in both arbitrations arise from and relate to the same Project, one wonders whether it would be more prudent for them to resolve
