CYPARK SDN BHD KNM PROCESS SYSTEMS SDN BHD

CYPARK SDN BHD KNM PROCESS SYSTEMS SDN BHD

The Court of Appeal held that the High Court acted within its discretion under s.11 Arbitration Act 2005 to grant interim injunctions restraining the defendant from calling or receiving proceeds of the two on‑demand bank guarantees pending arbitration, subject to just conditions (including extension of BG validity); final relief such as declarations or damages lay exclusively to the arbitral tribunal and were set aside where issued; injunctions require a seriously arguable case of unconscionability or fraud, inadequacy of damages, and favorable balance of convenience, all of which the High Court correctly found on the facts, so the appeals were dismissed and the High Court orders...

Citation
B-02(C)(A)-551-03/2020 (Mahkamah Rayuan)
Parties
Plaintiff / Appellant: KNM Process Systems Sdn. Bhd.; Defendant / Respondent: Cypark Sdn. Bhd.; Non Joined Consortium Member (mentioned): Hitachi Zosen Corporation
Court
C
Jurisdiction
Malaysia
Judgment Date
15 October 2021
Case Number
B-02(C)(A)-551-03/2020 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal (court of Appeal) Arising From High Court Originating Summons / Arbitration Related Interlocutory Applications / Determination of Appeals Against High Court Orders Granting Interim Injunctions and Conditions Pending Arbitration
Outcome
All four appeals dismissed; High Court orders granting interim injunctions and conditions upheld; parties to bear their own costs
Legal Topics
Interim Measures Under Arbitration Act S.11, Injunctions Against On‑demand Bank Guarantees, Unconscionability and Fraud Exceptions, Non‑joinder of Parties, Functus Officio and Variation of Interlocutory Orders, Conditions Attached to Interim Reliefs
Source Language
Malay/English
Arbitration Civil Procedure Contract Law Banking Law (bank Guarantees) Interim Measures Under Arbitration Act S.11 Injunctions Against On‑demand Bank Guarantees Unconscionability and Fraud Exceptions Non‑joinder of Parties +2 more

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Parties

KNM Process Systems Sdn. Bhd.

Plaintiff / Appellant

Cypark Sdn. Bhd.

Defendant / Respondent

Hitachi Zosen Corporation

Non Joined Consortium Member (mentioned)

Procedural Posture

Civil Appeal (court of Appeal) Arising From High Court Originating Summons / Arbitration Related Interlocutory Applications / Determination of Appeals Against High Court Orders Granting Interim Injunctions and Conditions Pending Arbitration

Legal Issues

  1. 1 Whether High Court can award declarations and damages under s.11 Arbitration Act 2005
  2. 2 Whether plaintiff could commence proceedings without joinder of consortium co‑member Hitachi
  3. 3 Whether the Court can grant injunctions restraining beneficiary from calling/receiving proceeds of on‑demand bank guarantees pending arbitration

Ratio Decidendi

The Court of Appeal held that the High Court acted within its discretion under s.11 Arbitration Act 2005 to grant interim injunctions restraining the defendant from calling or receiving proceeds of the two on‑demand bank guarantees pending arbitration, subject to just conditions (including extension of BG validity); final relief such as declarations or damages lay exclusively to the arbitral tribunal and were set aside where issued; injunctions require a seriously arguable case of unconscionability or fraud, inadequacy of damages, and favorable balance of convenience, all of which the High Court correctly found on the facts, so the appeals were dismissed and the High Court orders...

Court Disposition

All four appeals dismissed; High Court orders granting interim injunctions and conditions upheld; parties to bear their own costs

Orders

  • All four appeals dismissed
  • Orders of the Shah Alam High Court dated 23.03.2020 and varied 28.03.2020 upheld insofar as they grant interim injunctions and conditions under s.11 Arbitration Act 2005