HITTI ALUMINIUM SDN BHD T.K.H. CONSTRUCTION SDN BHD

HITTI ALUMINIUM SDN BHD T.K.H. CONSTRUCTION SDN BHD

Clause 26.1 does not constitute an arbitration agreement because it lacks an intention to produce a binding enforceable decision and the proposed panel (two party CEOs and an expert) cannot be impartial; the specific dispute resolution mechanism in clause 26 overrides the general PAM arbitration clause incorporated by clause 2, rendering any incorporated arbitration agreement inoperative under s.10; therefore no mandatory stay to arbitrate arises and the sessions court order must be set aside.

Citation
WA-12AC-4-05/2019 (Mahkamah Tinggi)
Parties
Appellant/plaintiff: Hitti Aluminium Sdn Bhd; Respondent/defendant: T.K.H. Construction Sdn Bhd
Court
High Court
Jurisdiction
Malaysia
Judgment Date
3 February 2020
Case Number
WA-12AC-4-05/2019 (Mahkamah Tinggi)
Procedural Posture
Civil Appeal From Sessions Court / Appeal Against Order to Stay Proceedings and Refer to Arbitration Under S.10 Arbitration Act 2005
Outcome
Appeal allowed; Sessions Court order to stay and refer to arbitration set aside; Respondent's s.10 application dismissed
Legal Topics
Stay of Proceedings, Arbitration Agreement Validity, Contract Construction, Incorporation by Reference, Conflict Between Clauses, Costs
Source Language
Malay/English
Arbitration Contract Civil Procedure Stay of Proceedings Arbitration Agreement Validity Contract Construction Incorporation by Reference Conflict Between Clauses +1 more

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Parties

Hitti Aluminium Sdn Bhd

Appellant/plaintiff

T.K.H. Construction Sdn Bhd

Respondent/defendant

Procedural Posture

Civil Appeal From Sessions Court / Appeal Against Order to Stay Proceedings and Refer to Arbitration Under S.10 Arbitration Act 2005

Legal Issues

  1. 1 Whether clause 26.1 of the sub-contract constitutes a binding arbitration clause
  2. 2 Whether incorporation of PAM Contract by clause 2 imports an enforceable arbitration agreement
  3. 3 Whether the specific dispute resolution clause conflicts with and nullifies any general arbitration clause

Ratio Decidendi

Clause 26.1 does not constitute an arbitration agreement because it lacks an intention to produce a binding enforceable decision and the proposed panel (two party CEOs and an expert) cannot be impartial; the specific dispute resolution mechanism in clause 26 overrides the general PAM arbitration clause incorporated by clause 2, rendering any incorporated arbitration agreement inoperative under s.10; therefore no mandatory stay to arbitrate arises and the sessions court order must be set aside.

Court Disposition

Appeal allowed; Sessions Court order to stay and refer to arbitration set aside; Respondent's s.10 application dismissed

Orders

  • Appeal allowed
  • Order of Sessions Court dated 7 May 2019 set aside