KINING EXETON SDN BHD MAJLIS PERBANDARAN KUANTAN DAN SATU LAGI

KINING EXETON SDN BHD MAJLIS PERBANDARAN KUANTAN DAN SATU LAGI

The Performance Bond is conditional and required an unequivocal demand including certification by the beneficiary of sums already 'incurred'; the First Defendant's letter was an expression of intent and an estimate, not a certified demand of incurred costs, rendering the demand invalid and justifying an interlocutory injunction to restrain encashment pending arbitration.

Citation
WA-24C(ARB)-32-08/2019 (Mahkamah Tinggi)
Parties
Plaintiff: Kining Exeton Sdn Bhd; First Defendant: Majlis Perbandaran Kuantan; Second Defendant: United Overseas Bank (Malaysia) Berhad
Court
ARB
Jurisdiction
Malaysia
Judgment Date
27 February 2020
Case Number
WA-24C(ARB)-32-08/2019 (Mahkamah Tinggi)
Procedural Posture
Originating Summons Under Arbitration Act 2005 / Interlocutory Injunction Hearing and Decision
Outcome
Originating Summons allowed; declaration that the First Defendant's demand under the Bank Guarantee is invalid; interim injunctions granted.
Legal Topics
Performance Bond, On Demand Guarantee Vs Conditional Guarantee, Interim Injunction, Certification Requirement for Demands, Unconscionability, Interpretation of Guarantees
Source Language
Malay/English
Arbitration Contract Law Bank Guarantees Civil Procedure Construction Law Performance Bond On Demand Guarantee Vs Conditional Guarantee Interim Injunction +3 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 6 Authorities cited 20 Party arguments 2 Amounts and remedies 2
Sign in to unlock

Parties

Kining Exeton Sdn Bhd

Plaintiff

Majlis Perbandaran Kuantan

First Defendant

United Overseas Bank (Malaysia) Berhad

Second Defendant

Procedural Posture

Originating Summons Under Arbitration Act 2005 / Interlocutory Injunction Hearing and Decision

Legal Issues

  1. 1 Whether the performance bond is conditional or an on‑demand guarantee
  2. 2 Whether the First Defendant's letter constituted an unequivocal demand and proper certification of costs 'incurred' as required by the bond
  3. 3 Whether an interim injunction should restrain encashment pending arbitration on grounds of unconscionability

Ratio Decidendi

The Performance Bond is conditional and required an unequivocal demand including certification by the beneficiary of sums already 'incurred'; the First Defendant's letter was an expression of intent and an estimate, not a certified demand of incurred costs, rendering the demand invalid and justifying an interlocutory injunction to restrain encashment pending arbitration.

Court Disposition

Originating Summons allowed; declaration that the First Defendant's demand under the Bank Guarantee is invalid; interim injunctions granted.

Orders

  • Declaration that the demand dated 28.06.2019 under Bank Guarantee No.248PG092157 dated 04.08.2011 is invalid, null and void
  • Interim injunction restraining the First Defendant from demanding, calling upon, receiving, utilizing or dealing with any sum under the Bank Guarantee pending full and final disposal of the arbitration