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2015 MarsdenLR 966
HIGH COURT MALAYA KUALA LUMPUR
FOSTER WHEELER E & C (MALAYSIA) SDN BHD AND ANOTHER APPEAL – Appellant
Versus
ARKEMA THIOCHEMICALS SDN BHD AND ANOTH.... – Respondent
[Originating Summon Nos: 24C-10-04/2015 & 24C-12-05/2015]
A stay of enforcement under subsection 16(1) of CIPAA 2012 requires pending arbitration or court proceedings related to the adjudication decision.
Headnote:Under the Construction Industry Payment and Adjudication Act 2012, Foster Wheeler E&C initiated adjudication proceedings for payment disputes totaling USD 7,629,529.65 and RM 3,792,556.52. The adjudicator ruled in favor of Foster Wheeler, leading Arkema to seek a stay on enforcement. The court found that Arkema did not meet the necessary conditions for a stay under section 16 as there was no pending arbitration. Ultimately, Foster Wheeler's application for enforcement was granted.
| Table of Content |
|---|
| 1. facts of the adjudication and contract obligations. (Para 1 , 2 , 3 , 4 , 5) |
| 2. arkema's arguments for stay of enforcement. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 3. foster wheeler's rebuttal to stay application. (Para 13 , 14 , 15) |
| 4. court's interpretation of section 16 for stay application. (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28) |
| 5. discussion on alternative dispute resolution routing. (Para 29 , 30 , 31 , 32 , 33 , 34) |
| 6. clarification on the limit of stay applications under cipaa. (Para 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45) |
| 7. legislative intent for adjudication provisions and enforcement. (Para 46 , 47 , 48) |
| 8. final ruling on the applications presented. (Para 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56) |
Mary Lim Thiam Suan J:
Introduction
[1] Foster Wheeler E&C (Malaysia) Sdn Bhd [Foster Wheeler] entered into a contract with Arkema Thiochemicals Sdn Bhd [Arkema] for the engineering, procurement and construction management services and equipment and material and supply related to the Lychee Project in Kertih, Terengganu, Malaysia [the said contract]. Under the said contract, Foster Wheeler is responsible for the engineering and procurement services, construction management services and the supply of equipment and materials for the Lychee Project. Arkema appointed separate construction contractors for the physical construction of the plant but Foster Wheeler was required to manage them under the construction management obligations under the said contract.
[2] Foster Wheeler initiated adjudication proceedings under the Construction Industry Payment and Adjudication Act 2012 [Act 746] [CIPAA 2012] in relation to payment disputes over two claims: for the sum of USD 7,629,529.65 being payment for the supply of equipment and bulk material; and the sum of RM 3,792,556.52 being payment for reimbursable construction management services. The adjudication proceeded uneventfully with the adjudicator allowing Foster Wheelers claim together with interest and costs on 10 April 2015. Two supplementary decisions were subsequently delivered: on 16 April 2015 and 24 April 2015, both to correct computation and/or typographical errors in the adjudication decision.
[3] Meanwhile, Arkema triggered Article 53 of the said contract vide letter dated 26 March 2015. Under Article 53.1, the parties are required to enter negotiations. If there is no meeting or no settlement within 60 days, the parties may proceed to mediation. The parties met on 6 May 2015, well within the 60 day period. Those meetings are still ongoing.
[4] Following Foster Wheelers solicitors letter of demand on 15 April 2015, Arkema made several payments. The payments effectively settled the claim for the sum of USD 7,629,529.65 being payment for the supply of equipment and bulk material leaving the sum of RM 3,792,556.52 being payment for reimbursable construction management services outstanding.
[5] There is a second adjudication pending. Arkema has made partial payment of USD 161,350.80 to Foster Wheeler in respect of equipment and material supply, a claim that is raised in the second adjudication proceedings.
Applications Before The Court
[6] Arkema is before this Court seeking to stay the enforcement of the adjudication decision. The application is made under para 16(1)(b) of CIPAA 2012 . At the same time, Foster Wheeler has filed an application for the enforcement of the adjudication decision under s 28 of CIPAA 2012. Both applications are taken together; and the parties have agreed that in the event the stay is refused, the adjudication decision will be enforced by consent.
[7] In its supporting affidavit, Arkema lists the following reasons why stay should be granted.
[8] First, it contends that there are merits in its bona fides claims in the arbitration which it believes have a real chance of succeeding. Details on its claims against Foster Wheeler are set out. These details include claims arising or relating to wh
