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Malayan Law Journal Unreported/2010/Volume /Mersing Construction and Enginnering Sdn B d ! "e#uruteraan Bintai "inden$o Sdn B d % &rs ' (2010) MLJU 1*+1 ' 1, July 2010 (2010) MLJU 1*+1

Mersing Construction and Enginnering Sdn Bhd v Kejuruteraan Bintai Kindenko Sdn Bhd & Ors
HIGH COURT KU!"! "UM#UR$ H!S%!H MOH!MME& H!SHIM 'C SUIT %O &())(**+, O- )++. */ 'u01 )+*+ Alvin Lai (Sidek Teoh Wong & Dennis) for the plaintiff. Jeswindetjit (AJ Ariffin, eo & !arpal) for the first defendant. Hasnah Moha22ed Hashi2 'C3 - is application !ide a Summons in C am.ers in Enclosure 22 .y t e 2nd /e0endant/1pplicant 0or t e 0ollowing &rders2'

1)

1) 1)
"rief #a$ts

3rit -erpinda .ertari$ 1*454200+ didalam tinda$an disini di$etepi$an atau secara alternati0nya6 $esemua prosiding disini digantung .erturutan dengan Se$syen 76 1$ta -im.angtara 1+,0 dan/atau se$syen 106 1$ta -im.angtara 200,6 sementara pelupusan pendamaian dan/atau prosiding tim.angtara8 "os permo onan8 1pa #ua reli06 perinta atau ara an lain atau lan#ut di.eril$an se.agaimana Ma $ama menganggap wa#ar dan suaiman0aat4

- e 9lainti00/:espondent was appointed .y t e 2nd /e0endant/1pplicant as a su.'contractor !ide letters o0 award dated 274;4200; and 224,4200; to supply all mac inery6 e<uipment and manpower 0or 9ipe Jac$ing and Man oles in t e pro#ect $nown as t e construction o0 "L Sewerage -reatment 9lant 9ro#ect4 - e scope o0 wor$s under t e su.'contract co!ered pipe #ac$ing6 pits man oles and associated wor$s to all areas and p ases4 - e total &rder Value was :M116+0060004004 =n t e letter it was stated t at t e 1ppendi> to t e Main Contract s all 0orm part o0 t e &rder4 - e 9lainti00 is claiming 0rom t e 2nd /e0endant :M+1;61106,, as at *14,4200+ 0or wor$ done under t e su.'contract6 - e 2nd /e0endant a!erred t at under item * o0 t e Letter o0 1ward t e 0orm o0 t e su.'contract will em.ody terms and conditions reciprocal wit t e terms and conditions imposed under t e Main Contract .etween t e ;? /e0endant and t e 1@t /e0endant and t e Ministry o0 Aousing and Local Bo!ernment o0 Malaysia6
? - e 0orm o0 t e su.'contract will em.ody terms and conditions reciprocal wit t ose imposed on "e#uruterean Bintai "inden$o Sdn4 B d4 C"B"D under t e terms and conditions imposed under t e Main Contract .etween ECC/"B" C?t e Main ContractorD and t e Ministry o0 Aousing and Local Bo!ernment

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o0 Malaysia6 you agree to 0ully indemni0y "B" 0or all circumstances arising 0rom or attri.uta.le to t e su.'contract wor$s e>cept as speci0ically identi0ied wit in t is letter or t e su.'contract agreement?

- e 1ppendi> to t e Main Contract reads as 0ollows6

?Su.'Contractor ta$es note t e 0ollowing e>tract 0rom t e "EJU:U-E:11E B=E-1= "=E/EE"& S/E4 BA/ Main Su.'Contract wit E=SA=&M1-SU C&ES-4 C&4 L-/4?

- e 2nd /e0endant contends t at under item 1; o0 t e 1ppendi> all dispute must .e re0erred to ar.itration6 - ere0ore t is claim .e0ore t e Court must .e re0erred to ar.itration t e main reason 0or t is stay application6

Based on t ose pro!isions t e claim s ould .e re0erred to ar.itration4 - e 9lainti00 owe!er su.mitted t at t e 2nd /e0endant as 0ailed to disc arge t eir .urden to s ow t at t ere is an ar.itration clause in t e go!erning dispute .etween t e parties6 - e 2nd /e0endant ad only e> i.ited t e 1ppendi> to t e Main Contract w ic was not signed .y t e 9arties4 - e learned Counsel 0or t e 9lainti00 re0erred to t e case o0 S%n$ast Sdn. "hd v. &andan 'ndah Sdn. "hd. (*...) MLJ *1 w ere is Lords ip Justice 1.dul Mali$ .in A#4 =s a$ said6
?=n my #udgment 0or section 7 o0 t e 1ct to apply6 t ere must .e ir6 e>istence a ?written agreement? properly e>ecuted .y .ot parties w ic e>pressly agree to su.mit di00erences to ar.itration4?

=t is 0urt er su.mitted .y t e 9lainti00 e!en i0 t eF1ppendi> to t e Main Contract is re0erred to paragrap 204; pro!ides t at t e procedure 0or settlement o0 dispute is to t e /1B C/ispute 1d#udication BoardD in accordance wit Clause 20 o0 t e -I&IC Beneral Conditions Edition *...4- e term Far.itrationF is not re0erred to and t ere0ore only pro!isions relating to t e /1B in t e -I&IC Beneral Conditions are only rele!ant4 =n Daewoo (orp. v. "a%er ()) Sdn. "hd (1++G) 5 MLJ 2, it was eld t at6
?44mere re0erence to a contract containing an ar.itration clause is inade<uate to incorporate t at clause into anot er contract8 t ere must .e speci0ic re0erence to t e ar.itration clause itsel0'=t is trite law t at a dispute in relation to contracts wit out an ar.itration clause cannot .e re0erred to ar.itration44 ?

- e decision o0 t e Aig Court was up eld .y t e Court o0 1ppeal4 - e 2nd /e0endant su.mitted t at it is settled law t at i0 t e parties agreed to re0er to ar.itration as pro!ided in t e 1greement t en a stay o0 proceedings can .e granted .y t e Court pursuant to section 10 o0 t e 1r.itration 1ct or section 7 o0 t e 1+,2 1ct4 Learned Counsel cited t e case o0

; 'nnote$ Asia &a$ifi$ Sdn. "hd. v. lnnote$h *)"! C2005D G CLJ *0; w ere it was eld t at6
?- e 0acts erein were as suc t at t e precise seat o0 ar.itration could .e made certain wit reasona.le certainty4 - e de0endant ad understood FS=A"F to mean at all times as re0erring to t e Sudwest0alisc e =ndustrie ''und Aandels$ammer or t e C am.er o0 =ndustry and Commerce o0 Sout ern 3est p alia6 as t e law o0 t e agreements was Berman law6 t e ar.itration clause met t e 0ormal re<uirements o0 t e Berman Code o0 Ci!il 9rocedure6 t e manner in w ic t e parties transacted were re0lecti!e o0 Berman Law6 t e ot er localities identi0ied .y t e plainti00 in interpreting FS=A"F ad no .earing on t e relations ip .etween t e parties6 t e plainti00 ad at no point in time e!er o.#ected to t e inclusion o0 suc ar.itration clauses in t e agreements and t e agreement ad .een e>ecuted .y t e parties on t eir own 0ree will4 - ere .eing no uncertainty as to t e !enue o0 ar.itration6 t e issue in relation to t e F!enueF o0 ar.itration t ere0ore did not present a serious <uestion to .e tried4?

- e Learned Counsel also cited t e case o0 Scott !4 1!ery and &t ers C1G;*'1G70D 1E: w ere it was eld .y t e Aouse o0 Lords t at ?9arties cannot .y contract agree to oust t e #urisdiction o0 t e courts to deal wit t eir rig ts under t e contract6 .ut a term in a contract w ic pro!ides t at6 in t e e!ent o0 a dispute arising6 it s all .e re0erred to ar.itrators'?6? - e Counsel 0or t e 2d /e0endant su.mits t at t e 9arties ad agreed to re0er any disputes .ased on t e terms o0 -I&IC and t e 2nd /e0endant is prepared and willing to re0er t e dispute to ar.itration as indicated in letter to t e 9lainti00 dated 1,454200+4- e Counsel re0erred to C ow "o$ HongFs ?Law and 9ractice o0 Construction Contracts'*rd Edition at page G*, w ere e ad stated t at ?44t e courts a!e generally leaned in 0a!our o0 gi!ing e00ect to t e dispute resolution procedure e>pressly c osen .y t e parties4 ? - ere0ore t e 2nd /e0endant su.mits t at t e dispute in t is case must .e re0erred to t e /1B as pro!ided .y t e -I&IC terms4 CourtFs Hindings 3 et er t ere is a /ispute - e 9lainti00 su.mitted t at t ere is no dispute .ut = cannot accept t at argument4 9arties wonFt .e .e0ore t e Court i0 t ere was no dispute4 - e dispute is t e amount w ic t e 9lainti00 is claiming 0rom t e 2nd /e0endant4 3 et er t ere is an 1r.itration Clause - e 1ppendi> to t e Main Contract i4e4 =tem 1; ma$es re0erence in particular to Su.'clause 204; o0 t e Main Conditions o0 Contract as 0ollows2'
?- e procedure 0or Settlement o0 /ispute is /1B C/ispute 1d#udication Board in accordance wit Clause 20 o0 t e -I&IC Beneral Conditions Edition *...4?

- ere is no re0erence o0 ar.itration e!en t oug as pointed out .y t e 2nd /e0endant in t e -I&IC Beneral Conditions o0 Contract i0 t e /1B is una.le to resol!e t e dispute t en it will .e re0erred to ar.itration4 - is is pro!ided under Clause 2047 in t e -I&IC Beneral Conditions6
?Unless settled amica.ly6 any dispute in respect o0 w ic t e /1BFs decision Ci0 anyD as not .ecome 0inal and .inding s all .e 0inally settles .y international ar.itration4 Unless ot erwise agreed .y .ot 9arties2

1a)

- e dispute s all .e 0inally settled under t e :ules o0 1r.itration o0 t e =nternational C am.er o0 Commerce6

1b)

- e dispute s all .e settled .y t ree ar.itrators in accordance wit t ese :ules6 and t e ar.itration s all .e conducted in t e language 0or communications de0ined in Su.' Clause16;4?

Section + o0 t e 1r.itration 1ct 200, pro!ides6

?C1D =n t is 1ct6 ?ar.itration agreement? means an agreement .y t e parties to su.mit to ar.itration all or certain disputes w ic a!e arisen or w ic may arise .etween t em in respect o0 a de0ined legal relations ip6 w et er contractual or not4 C2D 1n ar.itration agreement may .e in t e 0orm o0 an ar.itration clause in an agreement or in t e 0orm o0 a separate agreement4 C*D 1n ar.itration agreement s all .e in writing4 C;D 1n ar.itration agreement is in writing w ere it is contained in2'

1a) 1b) 1c)

a document signed .y t e parties an e>c ange o0 letters6 tele>6 0acsimile or ot er means o0 communication w ic pro!ide a record o0 t e agreement8 or an e>c ange o0 statement o0 claim and de0ence in w ic t e e>istence o0 an agreement is alleged .y one party and not denied .y t e ot er4

C,D 1 re0erence in an agreement to a document containing an ar.itration clause s all constitute an ar.itration agreement6 pro!ided t at t e agreement is in writing and t e re0erence is suc as to ma$e t at clause part o0 t e agreement4?

E!en t oug =tem 1; re0ers to t e Main Contract Clause 20 o0 t e Contract was not e> i.ited4 - e Court cannot ma$e a decision .ased on con#ecture w et er it was t e intention o0 t e 9arties t at t e w ole pro!ision on resol!ing dispute would .e .ased on t e -I&IC Beneral Conditions o0 Contract4 - e document e> i.ited .y t e 2nd /e0endant in its 100ida!it in Support is t e 1ppendi> to t e Main Contract4 =n t e 1ppendi> re0erence is made to re0erring dispute to /1B and t ere is clearly no mention o0 ar.itration4 - ere is no e>press pro!ision in t e 1ppendi> t at states t at t e w ole o0 Clause 20 o0 t e -I&IC Beneral Conditions Edition *... s all apply4 Eeit er is t ere any e>press pro!ision t at parties su.mit to ar.itration disputes w ic may arise .etween t em4 =n t e instant case parties a!e agreed t at t e procedure 0or /1B s all .e in accordance wit -I&IC4 =n t e a.sence o0 any contemporaneous documents pro!iding ot erwise and .ased on t e 1ppendi> any dispute under t is contract will not .e re0erred to ar.itration4 - e dispute will a!e to .e re0erred to t e /1B4 - ere is no document signed .y t e 9arties neit er was t ere e!idence produced to s ow o0 any e>c ange o0 letters6 tele>6 0acsimile or ot er means o0 communication w ic pro!ide a record o0 t e agreement as re<uired under Section +C;D o0 t e a0orementioned 1ct4 - e 2nd /e0endant 0ailed to s ow to t is court t at t ere was an ar.itration agreement t at was signed .etween t e 9lainti00 and t e 2 nd /e0endant4 = t ere0ore agree wit t e su.mission o0 t e 9lainti00Fs Counsel t at t e 9lainti00s Claim is not su.#ected to any ar.itration agreement4 Since t ere is no 1r.itration Clause in t e 1ppendi> to t e Main Contract can t e Court allow a stay under t e 1r.itration 1ct 200,4 Section 10 o0 t e 1ct pro!ides as 0ollows6
?C1D 1 court .e0ore w ic proceedings are .roug t in respect o0 a matter w ic is t e su.#ect o0 an ar.itration agreement s all6 w ere a party ma$es an application .e0ore ta$ing any ot er steps in t e proceedings6 stay t ose proceedings and re0er t e parties to ar.itration unless it 0inds''

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CaD t at t e agreement is null and !oid6 inoperati!e or incapa.le o0 .eing per0ormed8 or C.D t at t ere is in 0act no dispute .etween t e parties wit regard to t e matters to .e re0erred4 C2D - e court6 in granting a stay o0 proceedings pursuant to su.section C1D6 may impose any conditions as it deems 0it4 C*D 3 ere t e proceedings re0erred to in su.section C1D a!e .een .roug t6 ar.itral proceedings may .e commenced or continued6 and an award may .e made6 w ile t e issue is pending .e0ore t e court4?

Section 10C1D o0 t e a.o!ementioned 1ct clearly pro!ides t at t e matter must .e t e su.#ect o0 an ar.itration agreement .e0ore t e Court can consider an application 0or a stay o0 proceedings4 Under t e said 1ct ar.itration agreement means ?4444 an agreement .y t e parties to su.mit to ar.itration all or certain disputes w ic a!e arisen or w ic may arise .etween t em in respect o0 a de0ined legal relations ip6 w et er contractual or not4? - e ar.itration agreement may .e in t e 0orm o0 an ar.itration clause in an agreement or in t e 0orm o0 a separate agreement6 =n t e instant case t e 1ppendi> to t e Main Contract only ma$es re0erence to a /ispute 1d#udication Board 0or settlement o0 dispute4 - ere is no speci0ic or e>press pro!ision t at t e dispute will .e re0erred to ar.itration4 Since t ere are no e>press pro!isions in t e 1ppendi> to t e Main Contract re0erring any disputes to ar.itration t ere0ore t is Court cannot4consider an application 0or stay under section 10 o0 t e 1r.itration 1ct 200,4 Based on t e a.o!e reasons t e application o0 t e 2nd /e0endant in Enclosure 22 is dismissed wit cost Since t ere is no pro!ision to re0er to 1r.itration t ere0ore t e Court cannot consider an application 0or stay4 Based on t e a.o!e reasons t e application o0 t e 2nd /e0endant in Enclosure 22 is dismissed wit cost6