CYPARK SDN BHD KNM PROCESS SYSTEMS SDN BHD

CYPARK SDN BHD KNM PROCESS SYSTEMS SDN BHD

The Court of Appeal held that (1) the High Court has power under s.11 Arbitration Act 2005 to grant interim injunctions to preserve status quo pending arbitration but not power to grant final declarations or damages; (2) non‑joinder of the consortium co‑member was not fatal given the contract structure and Rules of Court; (3) on the facts there was a seriously arguable and strong prima facie case of unconscionability to justify injunctions restraining calls on the two bank guarantees; (4) the High Court properly attached conditions requiring the applicant to maintain validity/enforceability of the guarantees; and (5) all four appeals were dismissed and the High Court orders upheld,...

Citation
B-02(IM)(C)-552-03/2020 (Mahkamah Rayuan)
Parties
Defendant / Appellant in Some Appeals: Cypark Sdn. Bhd.; Plaintiff / Appellant in Some Appeals: KNM Process Systems Sdn. Bhd.
Court
IM
Jurisdiction
Malaysia
Judgment Date
15 October 2021
Case Number
B-02(IM)(C)-552-03/2020 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal (commercial/arbitration) / Court of Appeal Judgment on Appeals From High Court Orders
Outcome
All four appeals dismissed. High Court orders varied and otherwise upheld; parties to bear their own costs.
Legal Topics
Interim Measures Under Arbitration Act, On‑demand Bank Guarantees, Unconscionability and Fraud Exceptions, Injunction Pending Arbitration, Non‑joinder of Parties, Conditions Attached to Injunctions, Functus Officio and Variation of Orders
Source Language
Malay/English
Arbitration Law Contract Law Civil Procedure Banking Law Equity and Injunctions Interim Measures Under Arbitration Act On‑demand Bank Guarantees Unconscionability and Fraud Exceptions +4 more

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Parties

Cypark Sdn. Bhd.

Defendant / Appellant in Some Appeals

KNM Process Systems Sdn. Bhd.

Plaintiff / Appellant in Some Appeals

Procedural Posture

Civil Appeal (commercial/arbitration) / Court of Appeal Judgment on Appeals From High Court Orders

Legal Issues

  1. 1 Whether the High Court can grant declarations or damages under section 11(1) Arbitration Act 2005
  2. 2 Whether the plaintiff could commence proceedings without joining consortium co‑member Hitachi Zosen Corporation
  3. 3 Whether the High Court can grant injunctions restraining calls on bank guarantees pending the final arbitral award

Ratio Decidendi

The Court of Appeal held that (1) the High Court has power under s.11 Arbitration Act 2005 to grant interim injunctions to preserve status quo pending arbitration but not power to grant final declarations or damages; (2) non‑joinder of the consortium co‑member was not fatal given the contract structure and Rules of Court; (3) on the facts there was a seriously arguable and strong prima facie case of unconscionability to justify injunctions restraining calls on the two bank guarantees; (4) the High Court properly attached conditions requiring the applicant to maintain validity/enforceability of the guarantees; and (5) all four appeals were dismissed and the High Court orders upheld,...

Court Disposition

All four appeals dismissed. High Court orders varied and otherwise upheld; parties to bear their own costs.

Orders

  • Appeals B-02(C)(A)-551-03/2020, B-02(IM)(C)-552-03/2020, B-02(C)(A)-579-04/2020 and B-02(C)(A)-581-04/2020 dismissed
  • High Court injunctions restraining defendant from calling or receiving proceeds of Performance Bank Guarantee No.06702153310001 and Advance Payment Bank Guarantee No.07101IGK1601144 pending final arbitral award upheld