KNM PROCESS SYSTEMS SDN BHD CYPARK SDN BHD

KNM PROCESS SYSTEMS SDN BHD CYPARK SDN BHD

The Court of Appeal dismissed all four appeals and upheld the High Court's exercise of discretion under s.11(1) Arbitration Act 2005 to grant interim injunctions restraining the defendant from demanding or receiving proceeds of the two bank guarantees pending the final arbitral award, endorsing that intervention is permissible where there is a seriously arguable case of unconscionability and that the Court may attach conditions (require renewal/extension of guarantees) as necessary to preserve the status quo; however, final reliefs (declarations/damages) are beyond s.11 and were set aside.

Citation
B-02(C)(A)-581-04/2020 (Mahkamah Rayuan)
Parties
Plaintiff: KNM Process Systems Sdn. Bhd.; Defendant: Cypark Sdn. Bhd.
Court
C
Jurisdiction
Malaysia
Judgment Date
15 October 2021
Case Number
B-02(C)(A)-581-04/2020 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal (court of Appeal) / Judgment on Appeals From Shah Alam High Court
Outcome
All four appeals dismissed; High Court orders granting interim injunctions and conditions upheld in substance; final declaratory/damages relief set aside as beyond s.11 jurisdiction; parties to bear their own costs.
Legal Topics
Interim Measures Under Arbitration Act S.11, On‑demand Bank Guarantees, Unconscionability as Ground to Restrain Guarantee Calls, Non‑joinder of Consortium Member, Conditions Attached to Interim Injunctions, Functus Officio
Source Language
Malay/English
Arbitration Civil Procedure Contract Law Bank Guarantees Equity and Injunctions Interim Measures Under Arbitration Act S.11 On‑demand Bank Guarantees Unconscionability as Ground to Restrain Guarantee Calls +3 more

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Parties

KNM Process Systems Sdn. Bhd.

Plaintiff

Cypark Sdn. Bhd.

Defendant

Procedural Posture

Civil Appeal (court of Appeal) / Judgment on Appeals From Shah Alam High Court

Legal Issues

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

Ratio Decidendi

The Court of Appeal dismissed all four appeals and upheld the High Court's exercise of discretion under s.11(1) Arbitration Act 2005 to grant interim injunctions restraining the defendant from demanding or receiving proceeds of the two bank guarantees pending the final arbitral award, endorsing that intervention is permissible where there is a seriously arguable case of unconscionability and that the Court may attach conditions (require renewal/extension of guarantees) as necessary to preserve the status quo; however, final reliefs (declarations/damages) are beyond s.11 and were set aside.

Court Disposition

All four appeals dismissed; High Court orders granting interim injunctions and conditions upheld in substance; final declaratory/damages relief set aside as beyond s.11 jurisdiction; 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 by Court of Appeal
  • High Court injunctions restraining Cypark from demanding or receiving proceeds of Performance Bank Guarantee No. 06702153310001 and Advance Payment Bank Guarantee No. 07101IGK1601144 pending issuance of final arbitral award upheld