JUDGMENT

Low Hop Bing JCA:

Appeal

[1] On 22 February 2005, the Kuala Lumpur High Court dismissed with costs the appellant's ("the plaintiff's") originating summons which sought an order under s. 12 of the Arbitration Act 1952 ("s. 12") to appoint an arbitrator to hear and determine the dispute between the plaintiff and the respondent ("the defendant"). This appeal is brought by the plaintiff against that decision.

Factual Background

[2] On or about February 2001, the plaintiff purchased from the defendant two insurance policies, the first being Money Insurance Policy with a coverage of RM5 million; while the second is Burglary Insurance Policy with a coverage of RM1 million (collectively, "the policies").

[3] On or about 4 February 2001 and during the currency of the policies, the plaintiff's premises at Wisma Dancom, Lot 5, Jalan 51a/227b, 46100 Petaling Jaya, Selangor Darul Ehsan was robbed, and the goods covered under the policies were stolen.

[4] The defendant then appointed loss adjuster GAB Robins (Malaysia) Sdn. Bhd ("GAB Robins") to investigate the claim. Subsequently, the defendant appointed a new loss adjuster, Afil Adjuster, in place of GAB Robins to proceed with investigation.

[5] On 3 October 2001, the defendant wrote to the plaintiff, offering to settle the plaintiff's claim ("defendant's offer").

[6] However, on 25 October 2001, the defendant appointed solicitors Messrs. Murali B. Pillai & Associates ("defendant's solicitors") to look further into the plaintiff's claim.

[7] On 9 November 2001, defendant's solicitors withdrew the defendant's offer, thereby disclaiming liability ("the disclaimer").

[8] Between November 2001 and April 2003, the plaintiff provided various documents in order to enable the loss adjuster to investigate the claim, and requested meetings with the defendant to discuss the claim under the policies.

[9] On 3 April 2003, defendant's solicitors wrote to the plaintiff stating, inter alia, that:

(1) The defendant maintained the disclaimer;

(2) The plaintiff had breached the terms and conditions of the policies by failing and/or neglecting:

(a) to exercise reasonable skill and care; and

(b) to produce sufficient documentation to substantiate the claim under the policies.

[10] On 1 July 2003, plaintiff's solicitors Messrs Satha & Co. ("plaintiff's solicitors") wrote to defendant's solicitors stating that the plaintiff was invoking cl. 14 in both the policies which were identically worded ("cl. 14") in order to refer the dispute to arbitration.

[11] On 11 July 2003, defendants' solicitors replied, stating that the plaintiff was precluded from referring the dispute to arbitration as the 12 month time frame for such reference under cl. 14 had lapsed and the plaintiff was deemed to have abandoned the claim thereunder.

[12] Clause 14 reads:

All differences arising out of this policy shall be referred to the arbitration of some person to be appointed by both parties, or, if they cannot agree upon a single Arbitrator, to the decision of two Arbitrators, one to be appointed in writing by each party, and in case of disagreement between the Arbitrators to the decision of an Umpire who shall have been appointed in writing by the Arbitrators before entering on the reference and an Award shall be a condition precedent to any liability of the company or any right of action against the company. If the company shall disclaim liability to the Insured for any claim hereunder and such claim shall not within 12 calendar months from the date of such disclaimer have been referred to arbitration under the provisions herein contained then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.

[13] On 15 July 2003, plaintiff's solicitors informed defendant's solicitors that the plaintiff was entitled to refer the dispute to arbitration, because the 12 month time frame contained in cl. 14 was void and unenforceable, being contrary to s. 29 of the Contracts Act