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2012 MarsdenLR 2460
HIGH COURT (SHAH ALAM)
HASHIM HAMZAH, J
Embassy Courts Sdn Bhd & Anor – Plaintiff
Versus
Bauer (M) Sdn Bhd – Defendant
ORIGINATING MOTION NO 25–73–04 OF 2012
Mohd Ashri Rais (Shahruddin Haji Osman with him) (Hanif & Co) for the applicant.
Sanjay Mohanasundram (Mohd Raihan Abdul Khalip with him) (Kadir Andri & Partners) for the respondent.
Non-parties cannot challenge arbitration awards as they lack standing; compliance with procedural requirements of the Arbitration Act 2005 is essential for setting aside awards.
Headnote:(A) Arbitration Act 2005 - Sections 37(1)(a), 50, 38 - Arbitration proceedings arising from a construction contract - Validity of supplementary agreement and compliance concerning procedural grounds for setting aside an award challenged - Court establishes existence of supplementary agreement and affirms the finality of prior awards - Non-party lacks standing to set aside the award as per defined 'party' in the Act. (Paras 17-19, 26, 32, 40, 42)
(B) Natural Justice - Principles governing the inclusion of parties and due process in arbitration - Court emphasizes importance of contesting validity of orders at proper stages - Aggrieved parties must diligently raise objections within stipulated timelines. (Paras 36, 46)
(C) Application to Strike Out - Assessment of frivolous claims - Court finds Applicants' motion unnecessary and an abuse of process based on provided standards. (Paras 47-54)
Facts of the case:
Parties engaged in arbitration due to alleged breaches in the construction contract regarding payment and proceeding terms. Respondent obtained interim and final awards confirming the validity of agreement terms which Applicants later contested citing procedural lapses.
Findings of Court:
Court upheld the enforceability of both interim and final awards despite Applicants' claims, stating such challenges must be substantiated at the appropriate junctures.
Issues: The court addressed whether a non-party can set aside an award, compliance with procedural rules, and the timeliness of applications to set aside the award.
Ratio Decidendi: The Court ruled that a non-party cannot challenge an award as they are not recognized as parties under the Act; compliance with the Act's procedural requirements is mandatory, and the challenge to the validity of the previous order must be raised promptly to be considered.
Result: The application to set aside the award was dismissed and the motion struck out with costs.
| Table of Content |
|---|
| 1. background facts of the contractual agreement (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. disputes leading to arbitration proceedings (Para 8 , 9 , 10 , 11 , 12) |
| 3. issues arising from applicants' motion and compliance with arbitration act (Para 14 , 17 , 18 , 21) |
| 4. timeliness of application to set aside the final award (Para 25 , 26 , 27 , 31) |
| 5. jurisdictional limits of a high court over perfected judgments (Para 34 , 36 , 41) |
| 6. basis for striking out the originating motion (Para 47) |
[1]This is the brief facts of this case. There was an agreement entered into between Bauer (Malaysia) Sdn. Bhd. (the Respondent) and Embassy Court Sdn. Bhd. (the 1st Applicant) on 6.10.2005 (hereinafter referred to as the “First Agreement”). The Respondent was appointed by the 1st Applicant to carry out piling and substructure works for the development of a 41 storey luxury condominium on a piece of land held under Lot 305, Section 63, Lorong Kuda, Off Jalan Tun Razak, Wilayah Persekutuan Kuala Lumpur.
[2]The Respondent commenced work in pursuant of the First Agreement. According to the terms of the First Agreement, the Respondent was to receive payment from the 1s t Applicant within 30 days from the date of each and every interim certificate issued by the architect.
[3]The 1st Applicant failed to make payments on various interim certificates. As a result, the Respondent issued notices of default and their intention to determine its employment under the First Agreement.
[4]On 12.9.2006, a meeting was held between the Respondent, the 1st Applicant and Magna Prima Berhad (the 2nd Applicant) in order to avoid the determination of the First Agreement. (hereinafter referred to as “the said meeting”)
[5]The said meeting ended with the parties agreeing to several terms and conditions which were supplemental to the First Agreement. The Respondent then issued a letter dated 12.9.2006 (hereinafter referred to as the “Second Agreement”) to the 1st Applicant to record in writing the terms agreed upon in the said meeting.
[6]However, the Respondent claimed that there was a constant breach on the part of the 1st Applicant in refusing to comply with the terms of the Second Agreement. The 1st Applicant failed to pay all due or overdue amounts to the Respondent. As a result, the Respondent determined its employment on 19.1.2007.
[7]The matter was then referred to an Arbitration Tribunal presided by Ir. P.E. Chong.
[8]The preliminary issue raised by the parties in the Arbitration Proceeding was regarding the existence and the validity of the Second Agreement. The Arbitrator made a finding that the Second Agreement was in fact in existence and thus enforceable. This finding is found in the Interim Award dated 14.1.2010 (hereinafter referred to as “the Interim Award).
[9]On 26.8.2010, the Interim Award was registered as the judgment of the High Court of Malaya at Kuala Lumpur in pursuant to Section 38Arbitration Act 2005
[10]The 1st Applicant’s appealed against this decision by the High Court dated 26.8.2010. It was dismissed with costs by the Court of Appeal on 8.2.2011.
[11]The Respondent filed a suit against the 1st Applicant at Kuala Lumpur High Court on the 4.3.2011 to enforce the awards which has been registered. The Respondent in that suit claims for specific performance against the 1st Applicant with regard to the Second Agreement. The case is still pending.
[12]After dealing with the issue on the Second Agreement, the parties proceeded with the arbitration to deal with other issues regarding the liability and quantum of damages. This led to the issuance of the Final Award (save as to costs) dated 3.2.2012 (hereinafter referred to as “the Final Award”).
[13]On 2.4.2012, the Final Award was registered as the Judgment of the High Court of Malaya in pursuant to section 38Arbitration Act 2005
[14]On 23.4.2012, the Applicants filed an Originating Motion (hereinafter referred to as Enclosure 1) to this Court and prayed as follows:-
1)To wholly set aside the Award dated 3/2/
