JUDGMENT

Nik Hashim J:

Introduction

By a written sub-contract, the first, second and third defendants together in a joint venture, were the main contractor for the then "proposed formula one racing circuit facility and associated works at Kuala Lumpur International Airport, Sepang, Selangor Darul Ehsan" (hereinafter referred to as "F1 project"). The plaintiff was the nominated sub-contractor engaged by the employer to implement the works for the roof system of the said F1 project. The plaintiff's claim against the defendants is for the remaining contract sum of RM3,090,204.11 alleged to be owed by the defendants. The defendants have denied all along that they are indebted to the plaintiff for the sum for the reason that the plaintiff had failed to fulfil their obligations under the subcontract and to complete the sub-contract works. As a result of the plaintiff's breach of contract, the defendants had no choice but to engage third party to finish the works.

The plaintiff sued the defendants for the remaining contract sum. On 26 April 2000, the defendants entered a conditional appearance and took out a summons-in-chambers, and relying on an arbitration clause in the sub-contract, applied for an order of stay pursuant to s. 6 of the Arbitration Act 1952 (the Act),failing which the defendants applied that they be allowed to file their defence within 14 days from the date of the order.

After having carefully perused the record, 1, on 17 October 2000, exercised my discretion to dismiss the application for stay with costs, but allowed the defendants' application to file their defence as prayed.

I now give my reasons for so doing.

The Reasons

Clause 35 of the conditions of sub-contract, inter alia, provides that:

35.1: If any dispute or difference shall arise between the contractor and the sub-contractor either during the period of the sub-contract or after the expiry thereof or after the determination of the sub-contractor's employment under the sub-contract or breach of the sub-contract, as to:

(a) the interpretation of the sub-contract; or

(b) any matter or thing of whatsoever nature arising under the subcontract; or

(c) the withholding by the contractor of any payment to which the sub-contractor may claim to be entitled,

then such dispute shall be settled amicably between the parties. Any such dispute or difference which cannot be settled amicably may be referred to arbitrationand final decision of a person to be agreed between the parties to act as arbitrator, or failing agreement, of a person nominated on the application of either party by the Director for the time being of the Regional Centre for Arbitration in Kuala Lumpur.

35.2: Before commencing arbitration the party wishing to have recourse to arbitration shall serve a notice to that effect upon the other party. Such notice shall establish the entitlement of the party giving the same to commence an arbitration but no arbitration proceedings shall be commenced unless amicable settlement cannot be reached.

(Emphasis added)

Section 6 of the Act reads:

If any party to an arbitration agreement or any person claiming through or under him commences any legal proceedings against any other party to the arbitration, or any person claiming through or under him, in respect of any matter agreed to be referred to arbitration, any party to the legal proceedings may, before taking any other steps in the proceedings, apply to the court to stay the proceedings, and the court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement, and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings.

In D&C Finance Bhd v. The Overseas Assurance Corpn Ltd[1989] 2 CLJ 598; [1989] 1 CLJ 447 (Rep), Zakaria Yatim J (as he then was) at p. 241 said:

In considering whether t