GROUNDS OF JUDGMENT

The Plaintiff is a company incorporated and registered in Korea. It is in the business of developing what are known as decoders or 'set-top boxes'. In essence these devices are boxes that translate data, for the present purposes in the form of movies or television programmes, into audio and video form to decoders used in most Malaysian households. These set-top boxes will be referred to in short as 'STBs'.

It is pertinent to note that the Plaintiff's STBs support the broadcasting of programmes via the Internet as opposed to broadcasting via satellite. This internet protocol based STBs developed by the Plaintiff can be utilised via an internet connection rather than the installation of a satellite dish.

The Defendant on the other hand is in the business of inter alia, broadcasting pay television, providing of broadband network services, multimedia interactive television broadcasts and its related services.

The dispute between the Plaintiff and the Defendant in this case arose as a consequence of an agreement between them for the provision of the Plaintiff's STBs for use in the Defendant's broadcasting business. After the requisite preliminary proposals, the parties executed a Letter of Intent dated 28 January 2006 ('LOI') whereby the Plaintiff agreed to undertake the development, supply, delivery and provision of services for basic internet protocol set top boxes ('STBs') for the Defendant. The Defendant undertook to purchase and pay for a minimum order of 100,000 units of the STBS, subject to the Plaintiff passing acceptance tests and there not being any unauthorised delay in the project. The acceptance tests would set out the functionalities that the STBs had to comply with. The salient provisions of the LOI provide as follows:-

'Clause 2:- The Purchaser undertakes to purchase and pay for 100,000 units ("Minimum Order") of the STBs at an agreed unit price of USD 98.80........................, failing which the Vendor reserves all rights to institute legal proceedings and claim for damages. The Minimum Order is subject to the fulfilment by the Vendor of their undertakings in Clause 6. Purchaser shall commence placing the orders from the date of Final Acceptance as stated in Clause 6.3.

Clause 6

6.1.......

6.2. In the event of unauthorised delay in the delivery of the Trial STBs or where the Trial STBs have failed any of the acceptance tests carried out by the Purchaser by 30 May 2006, then the Purchase shall be under no obligation whatsoever to place the Minimum Order. Criteria for the acceptance tests shall be mutually agreed by the Purchaser and the Vendor by 31 March 2006 having regards to the functionalities stated in Clause 6.3

6.3. The Trial STBs for final acceptance ("Final Acceptance") must conform to the STBs functionalities as stipulated in the Specifications for Basic STB dated 22 November 2005 by the Purchaser.

6.4, 6.5.....

6.6. In the event of failure by Vendor to comply with the above said undertakings then the Purchaser shall have the option to terminate this LOI and/or be entitled to cancel any remaining balance of the Minimum Order and the Purchaser reserves all rights to institute legal proceedings and claim damages.'

The Plaintiff proceeded with its obligations under the LOI by, inter alia, sending two software engineers from Korea to Malaysia to specifically undertake the project and work with its Malaysian agent and counterpart, one Spiral Circuit Sdn. Bhd. to ensure performance. The parties progressed with the development of the STBs. There are minutes of the progress meetings held periodically showing that there was continuous and constant monitoring and modification of the STBs. Several versions were produced and improved on the basis of feedback received from the Defendant.

There were delays incurred beyond the datelines set in the LOI. However it would appear from the exchange of correspondence between the parties as well as the minutes of the progress meetings, that notwithstanding these dela