The Malaysian Court has jurisdiction over foreign defendants for performance bond injunctions, determined under Order 11 of the Rules of the High Court, and the balance of convenience must be assessed at the inter partes stage.

[1] There are two appeals before us: Civil Appeal No 02(i)-64-09-2012 ("first appeal") and Civil Appeal No 02(i)-65-09-2012 ("second appeal"). Both appeals arose out of the High Court's decision on 30 June 2010, which was upheld unanimously by the Court of Appeal on 13 March 2012.

[2] The first appeal is an appeal by the appellant against the decision of Court of Appeal in affirming the High Court's decision in dismissing the appellant's application to set aside or alternatively discontinue the ad interim injunction granted on the 3 May 2005 in relation to a performance guarantee. The second appeal is the appellant's appeal against the decision of the Court of Appeal in affirming the decision of the High Court in dismissing the appellant's application to set aside the concurrent writ of summons, notice of concurrent writ to be served outside jurisdiction, and the order granting leave to serve the notice of the concurrent writ, or alternatively for an order staying further proceedings on the ground that Malaysia is not the forum non-conveniens.

[3] Leave to appeal was granted by this Court on 6 August 2012 on the following questions of law.

First Appeal

Whether O 11 of the Rules of the High 1980 confers jurisdiction or whether this is predicated on s 23 of the Courts of Judicature Act 1964 (given the apparent inconsistencies between the Federal Court judgments in American Express Bank Ltd v. Mohamad Toufic Al-Ozeir & Anor and R Rama Chandran v. Industrial Court Of Malaysia & Anor, [1997] 1 CLJ 147.

Second Appeal

a. Whether the balance of convenience test is applicable to performance bond injunctions at an inter partes stage or this can be decided at the earliest possible stage;

b. Whether the High Court, upon staying the suit subject to an arbitration agreement and parties having pursued arbitration proceedings, retains jurisdiction to hear the injunction application on an inter partes basis.

[4] At the High Court, the appellant in both these appeals is the 1st defendant and the 1st and 2nd respondents are the plaintiffs. The 2nd defendant (CIMB) is the issuer of the performance guarantee and not a party relevant to these appeals. In our judgment, for ease of reference, parties will be referred to their respective capacities as in the High Court.

Background Facts

[5] The background facts have been laid down adequately in the grounds of judgment of the learned Judicial Commissioner (JC) reported in Nam Fatt Corporation Berhad & Anor v. Petrodar Operating Co Ltd & Anor and in the grounds of judgment of the Court of Appeal reported in Petrodar Operating Co Ltd v. Nam Fatt Corporation Berhad & Anor, [2012] 8 CLJ 311]. Thus, we do not propose to repeat them here except to the state the salient facts which are essential in determining the issues raised in these appeals as follows:

5.1 NF Energy Sdn Bhd ("2nd plaintiff") a subsidiary of Nam Fatt Corporation Bhd ("1st plaintiff"), entered, through the vehicle of a joint venture company ("JV") into a contract with Petrodar Operation Co Ltd ("1st defendant") an offshore company, to carry out construction works on a project in Sudan. As required under the contract, the 2nd plaintiff provided a performance bond ("the guarantee") in favour of the 1st defendant, the owner of the project. The guarantee was issued by CIMB Bank (L) Limited ("CIMB") who is the 2nd defendant. The parties agreed that the contract and the guarantee would be governed by the laws of Sudan.

5.2 The project was substantially completed but dispute arose between the JV and the 1st defendant regarding claims for variation works done and charges to the JV's original works which the plaintiffs' claim that the 1st defendant had refused to certify or pay. Parties then negotiated for a settlement but while the negotiation f