PEMBINAAN FEDERAL SDN. BHD. BIAXIS (M) SDN. BHD. (IN LIQUIDATION)

PEMBINAAN FEDERAL SDN. BHD. BIAXIS (M) SDN. BHD. (IN LIQUIDATION)

Although the contract contained a valid arbitration clause, the court found the arbitration agreement inoperative by reason of the company's winding‑up and insolvency protection; accordingly Section 10 could not be invoked to stay proceedings and the plaintiff (liquidator) was entitled to pursue court proceedings to recover certified, undisputed sums.

Citation
BA-12AC-3-07/2023 (Mahkamah Tinggi)
Parties
Defendant/appellant: Pembinaan Federal Sdn. Bhd.; Plaintiff/respondent: Biaxis (M) Sdn. Bhd. (In Liquidation)
Court
High Court
Jurisdiction
Malaysia
Judgment Date
29 December 2023
Case Number
BA-12AC-3-07/2023 (Mahkamah Tinggi)
Procedural Posture
Civil Appeal Against Refusal of Stay Under the Arbitration Act 2005 / Grounds of Judgment (high Court)
Outcome
Stay of proceedings under Section 10 Arbitration Act 2005 refused; arbitration clause held inoperative in the context of the winding‑up; plaintiff entitled to proceed in court
Legal Topics
Section 10 Arbitration Act 2005 (stay of Proceedings), Section 9 Arbitration Act 2005 (arbitration Agreement), Section 486 Companies Act 2016 (powers of Liquidator), Inoperative Arbitration Clause, Enforceability of Arbitration Clause, Existence of Dispute Vs. Enforcement of Certified Sums
Source Language
Malay/English
Arbitration Insolvency Contract Civil Procedure Section 10 Arbitration Act 2005 (stay of Proceedings) Section 9 Arbitration Act 2005 (arbitration Agreement) Section 486 Companies Act 2016 (powers of Liquidator) Inoperative Arbitration Clause +2 more

Case Brief

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Parties

Pembinaan Federal Sdn. Bhd.

Defendant/appellant

Biaxis (M) Sdn. Bhd. (In Liquidation)

Plaintiff/respondent

Procedural Posture

Civil Appeal Against Refusal of Stay Under the Arbitration Act 2005 / Grounds of Judgment (high Court)

Legal Issues

  1. 1 Whether the liquidator is a party to the arbitration agreement
  2. 2 Whether the arbitration agreement is inoperative by reason of winding-up/insolvency
  3. 3 Whether arbitral proceedings would be contrary to the purpose of insolvency law and prejudice creditors

Ratio Decidendi

Although the contract contained a valid arbitration clause, the court found the arbitration agreement inoperative by reason of the company's winding‑up and insolvency protection; accordingly Section 10 could not be invoked to stay proceedings and the plaintiff (liquidator) was entitled to pursue court proceedings to recover certified, undisputed sums.

Court Disposition

Stay of proceedings under Section 10 Arbitration Act 2005 refused; arbitration clause held inoperative in the context of the winding‑up; plaintiff entitled to proceed in court

Orders

  • Stay of proceedings refused (Section 10 Arbitration Act 2005 not available to Defendant)
  • Plaintiff permitted to continue court action to recover certified sums