Khong Yoon Loong v Asia Plantation Capital Pte Ltd (WA-22NCC-627-11/2022)

During the course of the hearing of this application, the Plaintiffs’ counsel agrees and concedes that the following Plaintiffs have entered into separate lease agreements with the 1st Defendant: 22,23, 24, 26, 27, 28, 29, 30, 31, 32, 33, 34, 25, 36, 27, 28, 29, 75, 40, 41, 42, 43, 153, 44, 45, 46, 47, 48, 154, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 61, 62, 63, 64, 66, 67, 68, 156, 69, 70, 71, 72, 73, 74, 157, 75, 158, 76, 77,78, 79, 80, 81, 82, 84, 116, 87, 92, 93, 94, 95, 96, 97, 98, 99, 159, 100, 160, 101, 102, 161, 103, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 128, 129, 130, 131, 132, 133, 134,135, 136, 139, 140, 162, 144, 145, 146, 147, 148, 149 and 150.

The agreement to arbitrate with the 1st Defendant contained in the aforesaid agreements are as follows: -

The Plaintiffs’ claim arises out of various agreements that were executed between the Plaintiffs, the 1st Defendant, Asia Plantation Capital Berhad, and APC Plantations Sdn Bhd. Essentially, the Plaintiffs claim that they were wrongly lured to invest in a scheme to lease out lands that were utilised to plant Agarwood trees. Substantial sums of monies were paid by the Plaintiffs to the 1st Defendant, and they now claim that the scheme was wrongful, and the monies should be returned to them.

The Plaintiff alleges that the Defendants, including the directors of the companies and even employees of the companies, have committed the following alleged wrongs that should be rectified by this Court: - - failure to comply with division 5 of Part IV of the Companies Act 1965 - failure to obtain the required approvals by the Companies Commission of Malaysia - failure to set up the required trust companies, trust accounts, and management companies - failure to comply with the requirements of the above referred statuts

(ii) Fraud and misrepresentation by all of the Defendants in selling the investment scheme to the Plaintiffs

(iii) Breach of Trust and / or Fraudulent Breach of Trust by all Defendants

(iv) Conspiracy to defraud the Plaintiffs by unlawful means

(vi) Unjust Enrichment

(vii) Piercing the corporate veil B. Applicable Law General Rule – Court to Respect Parties Intention as it appears in the agreement to arbitrate 6. It is trite law that if the subject matter in dispute falls within the scope of the agreement to arbitrate then this Court shall have the claim against the said Defendant be stayed and refer the dispute to arbitration. This is following the intention of Parliament as it appears in section 10 of the Arbitration Act.

In determining whether there exists an arbitration agreement this Court must consider the said agreement to arbitrate as being a separate agreement independent of the agreement between parties. This fiction is necessitated by law. The agreement to arbitrate is seen as a separate agreement standing on its own. I refer to the decision of Lee Swee Seng JCA in Gise Kam Kwan International Trate Ltd v Antara Steel Mills Sdn Bhd [2024] 10 CLJ 370: - “Whether The Doctrine Of Separability And Kompetenze-kompetenze Apply Such That Matter Is To Be Referred To Arbitration [61] These two concepts of separability and kompetenze-kompetenze are two separate principles in arbitration jurisprudence dealing with two different issues. The doctrine of separability is used to support the stand that an arbitration agreement would survive even the termination of main contract containing the arbitration agreement and even when the main contract has become null and void. Under the doctrine of kompetenze-kompetenze, an arbitral tribunal can decide on its own jurisdiction when challenged, though its decision is not final. The arbitral tribunal may decide based on the application of the doctrine of separability where relevant. [62] Under the doctrine of separability, an arbitration agreement has a life of its own and is separate from that of the main contract containing the arbitration clause such that even if the main contract is held to be null and void because of illegality, frustration or a fundamental breach, the validity of the arbitration agreement remains intact and is unaffected by what happened to the main contract. [63] Even in a case where the main contract is said to have been entered into fraudulently, that does not necessarily mean that the arbitration agreement was procured fraudulently. It is perhaps in cases where the main contract containing the arbitration agreement was forgery, that there is no arbitration agreement.” …. “[73] Thus, where the existence of an arbitration clause in the main contract is not in dispute, but which contract containing the arbitration clause is found to be null and void, the arbitration clause still survives and is not invalid under the doctrine of separability. See the English case of DHL Project & Chartering Ltd v. Gemini Ocean Shipping Co Ltd; The Newcastle Express [2023] 3 All ER 580 at [44] - [47] and the Singapore Court of Appeal COT v. COU & Ors [2023] SGCA 31 at para [30] … [78] The court when confronted by a s. 10 of the AA 2005 application for a stay of the court proceedings and an applicant seeking to refer the matter to arbitration, need not have to abdicate its responsibility to decide on whether there was an arbitration agreement between the parties to begin with. The doctrine of kompetenze-kompetenze conferring the power on the arbitral tribunal to decide on its own jurisdiction does not mean that the court must invariably cede to the arbitral tribunal to decide on jurisdiction when the issue is raised in a s. 10 of the AA 2005 application. [79] Thus, in the English Court of Appeal case of Ahmad Al-Naimi (T/A Buildmaster Construction Services) v. Islamic Press Agency Inc [2000] 1 LI LR 522 Waller LJ held that: It is not mandatory and, contrary to a suggestion made by Mr Palmer, the existence of the power does not mean that a court must always refer a dispute about whether or not an arbitration agreement exists to the tribunal whose competence to do so is itself disputed. The Act does not require a party who maintains that there is no arbitration agreement to have that question decided by an arbitral tribunal. [80] Where the issue before the court is whether there is an arbitration agreement by way of incorporation by reference and the facts are not in dispute, then the court would proceed to interpret the relevant arbitration clause and words or method used in the reference and determine if there has been an arbitration agreement by incorporation by reference. That is a question of law which the court is perfectly poised and positioned to decide. There is no necessity to hear the parties as the intention of the parties is to be gathered from the words used and here it is the arbitration agreement in the main agreements and the dispute resolution clause in cl. 6 of the TSA. [81] If the court finds that there is no arbitration agreement then the court would not stay the proceedings before it because of the default position is always that the parties may proceed to court to ventilate their claims. See s. 29 of the Contracts Act 1950. It would also offend the basic bedrock of arbitration which is that it can only be had by the mutual consent of the parties in an arbitration agreement and so if there is none, the Court cannot compel the parties to arbitrate a dispute. [82] To require the court to refer the matter to arbitration without deciding on the issue of whether there is an arbitration agreement which is not null and void, inoperative or incapable of performance would result in the plaintiff here who is dissatisfied with the decision of the Arbitral Tribunal that it has jurisdiction, in the event it so rules as a preliminary issue under s. 18(7) of the AA 2005 to appeal against that decision under s. 18(8) and so it is then back to the High Court again.”

I am further guided by the decision of the Court of Appeal in Peninsula Education (Setia Alam) Sdn Bhd v Biaxis (M) Sdn Bhd (in liquidation) [2024] 10 CLJ 216 where Lee Swee Seng JCA held:- “[20] Under the doctrine of separability governing arbitration agreements, the arbitration agreement has a life of its own and survives the challenges made to the contract on the grounds of fraud, duress and even illegality unless the matter is not arbitrable on the grounds of public policy of the State. Therefore, even though a winding-up of a company has the effect of terminating agreements, which the liquidator may not want to affirm and continue with, the arbitration agreement would survive such a termination.”

I also note the recent decision of the Court of Appeal in Asia Pacific Higher Learning Sdn Bhd v Stamford College (Malacca) Sdn Bhd [2024] CLJU 1598 where Lim Chong Fong JCA held: - “ [22] It seems to us on first impression that there is a clash of case authorities of this Court here between Cockett Marine Oil (Asia) Pte Ltd v. MISC Bhd and Another Appeal (supra) and Macsteel International Far East Ltd v. Lysaght Corrugated Pipe Sdn Bhd (supra). …. [23] In Cockett Marine Oil (Asia) Pte Ltd v. MISC Bhd and Another Appeal (supra), the dispute is whether the arbitration agreement existed because the arbitration agreement is not contained in the contract but in another hyperlinked document that is alleged to have been incorporated into the contract. Thus, Gunalan Muniandy JCA held as follows with emphasis added by us: "[19] At the core of the present dispute is the jurisdiction of the court under s. 10 of the AA. Whilst the respondent conceded that it was the policy of the Malaysian courts to defer the issue of the existence of jurisdiction to the arbitrator under s. 18 of the AA 2005, the LJC had not erred in determining the existence of an arbitration agreement. Also, that the Malaysian courts leaned towards applying the 'kompetenz' principle whereby deference is given to the arbitrator to decide issues which can be decided by him under s. 8 of the AA 2005. However, the respondent took a different position from the appellant in respect of the latter's purported incorrect position that where it is alleged that an arbitration agreement may have come into existence, the court should immediately wash their hands of the issue and instantly order the stay to enable the arbitrators to decide their jurisdiction. [20] MISC correctly brought to our attention the position under the relevant provisions of the AA 2005 as follows: "Section 10 of the AA 2005 only empowers the court to order a stay with regard to "a matter which is the subject of an arbitration agreement". An "arbitration agreement" is defined in Section 9 of the AA 2005 as "an agreement by the parties to submit to arbitration" and "must be in writing". More importantly, in the context of this appeal, "a reference in an agreement to a document containing an arbitration clause shall constitute an arbitration agreement, provided that the agreement is in writing and the reference is such as to make that clause part of the agreement". [21] It was contended that following the Court of Appeal decision in Capping Corporation Ltd & Ors v. Aquawalk Sdn Bhd & Ors [2013] CLJU 574; [2013] 1 LNS 574 "the court itself when seized prematurely with the issue of the arbitrator's jurisdiction would confine itself to find that an arbitration agreement exists and to refer the parties to arbitration." [22] Guidance may be sought from the English Court of Appeal decision in the case of Ahmad Al-Naimi (T/A Buildmaster Construction Services) v. Islamic Press Agency Inc [2000] 1 LI.LR 522 Waller LJ held, inter alia, that: It is not mandatory and, contrary to a suggestion made by Mr Palmer, the existence of the power does not mean that a court must always refer a dispute about whether or not an arbitration agreement exists to the tribunal whose competence to do so is itself disputed. The Act does not require a party who maintains that there is no arbitration agreement to have that question decided by an arbitral tribunal. [23] A dispute as to the existence of an arbitration agreement should be left to be decided by the arbitral tribunal where the court considers that it is virtually certain that there is an arbitration agreement. (See Ahmad Al-Naimi (supra)). [24] Likewise, where an application is made to stay proceedings under the AA 2005, the duty on the court is to determine whether there ever was an agreement to arbitrate (see Albon (trading as NA Carriage Co) v. Naza Motor Trading Sdn Bhd (No 4) [2008] 1 Lloyd's Rep 1 (Malaysia arbitration)). [25] Be that as it may, the core issue in dispute between the parties is the jurisdiction to determine the existence of an arbitration agreement. In regard to this issue, our attention was brought to the governing provision in the AA 2005, s. 18(1), which reads as follows: 18(1) The arbitral tribunal may rule on its own jurisdiction, including any objection with respect to the existence or validity of the arbitration agreement. [26] We share the view of the appellant that the correct position in law is as follows: Where a party challenges the existence of the arbitration agreement, the jurisdiction of the court is to consider whether prima facie there is an arbitration agreement to resolve disputes. In this respect, the jurisdiction of the court is to decide if the issue on the existence of the arbitration agreement is in dispute and not merely a dubious or frivolous allegation." [24] On the other hand, in Macsteel International Far East Ltd v. Lysaght Corrugated Pipe Sdn Bhd (supra), there is no dispute on the existence of the arbitration agreement but to its validity because the contracts that contained the arbitration agreement are alleged to have been forged. In this regard, Lim Chong Fong JCA held as follows also with emphasis added by us: "[18] The learned Judicial Commissioner preferred and adopted the full merits approach set out in Peter Albon (supra) based on the available evidence rather than the cursory prima facie approach set out in Malini Ventura (supra) to determine whether the arbitration agreement was properly concluded and hence ultimately decide whether the court proceedings should be stayed. He focused on the following dicta of Lightman J in Peter Albon (supra) with emphasis added: "[16] Guidelines were laid down by Judge Humphrey Lloyd QC in Birse Construction Ltd v. St David Ltd [1999] BLR 194 at first instance and (though the decision of the judge was reversed) his statement of the guidelines was approved on appeal by the Court of Appeal ([1999]) 70 Con LR 10) and again by the Court of Appeal in the later case of Al-Naimi (t/a Buildmaster Construction Services) v. Islamic Press Services Inc [2000] 70 Con LR 21. These guidelines are to the effect that on an application for a stay such as the present where the conclusion of the arbitration agreement is in issue, there are four options open to the court: (1) (where it is possible to do so) to decide the issue on the available evidence presently before the court that the arbitration agreement was made and grant the stay; (2) to give directions for the trial by the court of the issue; (3) to stay the proceedings on the basis that the arbitrator will decide the issue; and (4) (where it is possible to do so) to decide the issue on the available evidence that the arbitration agreement was not made and dismiss the application for the stay. The Court of Appeal adopted the second of these options. The guidelines and the decision of the Court of Appeal establish that on an application under s. 9(1) of the 1996 Act the court can try and (subject to one qualification) should decide the issue whether the arbitration agreement was concluded. The minor qualification in respect of which the guidelines are not in accord with the construction which I have adopted is in respect of the third of the guidelines. Where there is an issue which the court cannot resolve on the available evidence on the application as to whether the arbitration agreement was concluded, the court indeed can stay the proceedings so that the arbitrators can decide the issue, but only by exercising its inherent jurisdiction and not by exercising any jurisdiction under s. 9. Support for this view may be found in a passage in the Al Naimi case ([2000] 70 Con LR 21 at 30). ... [20] I would answer the first and second submissions as follows. Whilst the doctrine of 'Kompetenz-Kompetenz' (which is given effect in a domestic arbitration by s. 30 of the 1996 Act) provides that the arbitral tribunal shall have jurisdiction to determine whether the arbitration agreement was ever concluded, it does not preclude the court itself from determining that question. There are two reasons why the court must have jurisdiction to rule on whether the arbitration agreement was concluded. The first is that the rule of law in general and subject only to limited exceptions requires that a party should not be barred from access to the court for the resolution of disputes unless the grounds for such bar are established. A bar on the ground of the alleged conclusion of an arbitration agreement (in general and subject only to limited exceptions) is not established unless and until the court has ruled on the issue whether it has been concluded. The second is that, unless and until it is held that the arbitration agreement has been concluded, the compelling factors requiring respect for the terms agreed regarding arbitration do not come into play or at any rate do not come into play with their full force and effect." [19] Consequently, the learned Judicial Commissioner decided that whilst he should be slow to interfere with the jurisdiction of the arbitral tribunal, it did not mean that he should readily grant a s. 10 AA stay application when the existence of the arbitration agreement itself is in question without evaluating the facts and evidence for himself based on the full merits approach. He emphasised that if there is no arbitration agreement in existence, then there can be no reason for the Arbitration. … [21] The learned Judicial Commissioner therefore, in the circumstances, came to the view MIFE only had circumstantial but not direct evidence that the impugned supply contracts were not forged. This is insufficient to conclude at this stage that there is a valid arbitration agreement in existence between the parties; hence he directed this issue be tried based on the 2nd option in the guidelines prescribed in Peter Albon (supra). … [30] We have therefore accordingly reviewed the interplay of s. 10(1) and Peter Albon (supra) to determine if there was a concluded arbitration agreement here which is not null and void, inoperative or incapable of being performed. [31] The pivotal issue in contention is that the impugned supply contracts which contained the arbitration agreement have been obtained through forgery; probably by PR on sheer logic. [32] We have noted in Peter Albon (supra) (at para [18] therein) that the arbitration agreement would be null and void; hence invalid if the concluded arbitration agreement has been procured by fraud. In our view, forgery is a species of fraud; see s. 463 of the Penal Code for example. [33] Based on the available options in the guidelines prescribed in Peter Albon (supra), we acknowledge that the determination on whether there is a concluded arbitration agreement that is not null and void cannot be meaningfully made based on the existing affidavit evidence before us to invoke the 1st option or 4th option. There is the necessity for further investigation here. This may be made by the High Court pursuant to the 2nd option premised upon s. 10(1) AA or by the arbitral tribunal pursuant to the 3rd option premised upon s. 18 (1) and (2) AA. In other words, both the High Court and the arbitral tribunal are forums that have jurisdiction and power to investigate and conclude on the validity of the arbitration agreement. [34] In such instance of concurrent jurisdiction and power, we proffer a flexible approach that the appropriate forum to investigate and determine the validity of the arbitration agreement must be the forum that is on balance more just and convenient having regard to the facts and circumstances in issue." [25] Foremost, we wish to clarify that the approach enunciated in Macsteel International Far East Ltd v. Lysaght Corrugated Pipe Sdn Bhd (supra) is the just and convenient approach and not the full merits approach which has been coined by the High Court therein (see paragraph [90] of Lysaght Corrugated Pipe Sdn Bhd & Anor v. Popeye Sdn Bhd & Anor [2002] CLJU 191). [26] This just and convenient approach applies in the situation when there is plainly an arbitration agreement but the issue is whether that arbitration agreement is invalidated because it is null and void, inoperative or incapable of being performed. [27] It must be contrasted with the situation where the existence of the arbitration agreement itself is in issue and in such circumstances, the approach that should be adopted is as prescribed in Cockett Marine Oil (Asia) Pte Ltd v. MISC Bhd and Another Appeal (supra). [28] Hence, it can safely be concluded that there is no inconsistency between Cockett Marine Oil (Asia) Pte Ltd v. MISC Bhd and Another Appeal (supra) and Macsteel International Far East Ltd v. Lysaght Corrugated Pipe Sdn Bhd (supra). [29] It is the just and convenient approach that is applicable here. Since the operativity of the arbitration clause is purely a question of law of construction of the clause itself, we find on the facts and circumstances of this case that the court of law is better place to decide it compared to an arbitrator who may not be legally qualified. This is in accordance with the 4th option of the guidelines recommended in the Peter Albon case (see paragraph [21] above at paragraph [18] of Macsteel International Far East Ltd v. Lysaght Corrugated Pipe Sdn Bhd (supra)). We therefore find that the learned Judicial Commissioner did not commit any appealable error when she construed the arbitration clause herself to determine whether the arbitration clause is valid and effective.”

Therefore, guided by the Court of Appeal’ decision as referred to above, as the relevant Plaintiffs’ counsel concede that there exist an agreement to arbitrate between her clients and the 1st Defendant, I shall apply the just and convenient approach as suggested by Justice Lim Chong Fong JCA in determining whether the claim against the 1st Defendant by the above referred Plaintiffs should be stayed in accordance with section 10 of the Arbitration Act. Limitation to the General Rule – Null, Void, Inoperative, Incapable of Being Performed and Section 4 Arbitration Act Challenge 11. The Plaintiffs refusal to arbitrate is premised on their argument that the said agreement to arbitrate is “null and void, inoperative or incapable of being performed” under Section 10 of the Arbitration Act or that the agreement to arbitrate is incapable of being arbitrated as to do so would be contrary to public policy and that the subject matter is not capable of being settled by arbitration.

This Court believes that the Plaintiff’s challenge relies on section 4 of the Arbitration Act.

I reproduce section 4 of the Arbitration Act: - Malaysia. Reinsurance Ltd v Akay Holdings Sdn Bhd [2019] 1 CLJ 305, where the Court had to deal with the issue of whether the charge registered under the National Land Code can be stayed and be referred to arbitration pursuant to an agreement to arbitrate. I note that the Federal Court was tasked to decide on the issue of whether a charge under the National Land Code is arbitrable in accordance with section 4 of the Arbitration Act and the express provisions of the National Land Code.

Abu Samah FCJ had this to say on this issue: - “[57] We were informed that there are no decided cases on the issue of arbitrability under s. 4 of the Arbitration Act 2005. Both sides had to rely on several decisions in foreign jurisdictions on this issue in support of their respective contentions. The following are some of the cases referred to us. [58] In Larsen Oil & Gas Pte Ltd v. Petroprod Ltd the Singapore Court of Appeal held that arbitrability was an important factor which ought to be taken into consideration when determining whether to grant a stay under s. 6(2) of the Singapore Arbitration Act. It would be a waste of time to proceed by way of arbitration if the subject matter was not arbitrable as the arbitral award would be liable to be set aside under s. 48(1)(b)(i) of the Singapore Arbitration Act. [59] In that case the respondent, Petroprod Ltd and its four subsidiaries entered into a management agreement with the appellant, Larsen Oil and Gas Pte Ltd, wherein the latter would provide management services to the former. Petroprod Ltd, a company incorporated in Cayman Islands, was subsequently placed in compulsory liquidation in Singapore. Prior to that, Petroprod Ltd and its subsidiaries had made certain payments to Larsen Oil and Gas Pte Ltd. The payments were made within two years of its insolvency. The law presumed that such payments were made with an intention to prefer Larsen Oil and Gas Pte Ltd as a creditor. The liquidators of Petroprod Ltd in Singapore commenced action to avoid certain payments made by Petroprod Ltd and its four subsidiaries to Larsen Oil and Gas Pte Ltd on the grounds that: 98 and 99 of Bankruptcy Act (Cap. 20) read with s. 329(1) of the

(ii) Payments by the four subsidiaries to Larsen Oil and Gas Pte Ltd were made with intent to defraud it as a creditor of the subsidiaries. Larsen Oil and Gas Pte Ltd applied for a stay of the action pending arbitration pursuant to an arbitration clause in the management agreement. The High Court dismissed it on the grounds, inter alia, that the issues were not arbitrable. Larsen Oil and Gas Pte Ltd appealed to the Court of Appeal. The Court of Appeal dismissed it and affirmed the decision of the High Court, holding that the courts should treat disputes arising from the operation of statutory provisions of the insolvency regime per se as non-arbitrable even if the parties expressly included them within the scope of the arbitration agreement. [60] Larsen Oil & Gas Pte Ltd was considered in Fulham Football Club Ltd v. Richards And Another. The English Court of Appeal held that the issue of arbitrability could be raised as a ground in challenging an application for stay of proceeding under the English Arbitration Act 1996. In that case the petitioner, Fulham Football Club Ltd, filed a petition under s. 994 of the Companies Act 2006 against the Football Association Premier League Ltd (FAPL) complaining of unfair prejudice. The complaint was directed against its chairman's involvement in facilitating the transfer of Mr Crouch from Portsmouth to Tottenham. Fulham alleged that it is an implied term of the FAPL rules that members of the board of FAPL will comply with their fiduciary obligations and not act so as to prefer the interests of one member club over another. FAPL and its chairman applied for a stay of the proceedings pending arbitration. Vos J granted the stay. It was affirmed by the Court of Appeal, holding that a claim alleging unfair prejudice did not involve the making of a winding-up order. At para. 92 of its judgment Patten CJ said: if... there is no statutory restriction or rule of public policy which prevents the parties from agreeing to submit such disputes to arbitration it is not possible to read into the language of arbitration clause the limitation contended for. [61] In Tomolugen Holdings Ltd and Another v. Silica Investors Ltd And Other Appeals [2015] SGCA 57, the Singapore Court of Appeal, in dealing with s. 11 of the Singapore International Arbitration Act, held that there will ordinarily be a presumption of arbitrability so long as the dispute falls within the scope of an arbitration clause but it can be rebutted where:

(ii) It would be contrary to the public policy considerations involved in that type of dispute to permit to be resolved by arbitration. [62] In Larsen Oil and Gas Pte Ltd v. Petroprod Ltd, supra, the above conditions were satisfied. Similarly, in Four Pillars Enterprises Co Ltd v. Beiersdorf Aktiengesellschaft [1999] 1 SLR (R) 382 and in A Best Floor Sanding Pty Ltd v. Skyer Australia Pty Ltd [1999] VSC 170 the courts held that reliefs in the form of winding-up orders were not arbitrable. [63] Under s. 4(1) of the Arbitration Act 2005 a dispute which the parties agree to submit to arbitration is not arbitrable on ground of public policy. There is no universally accepted test on what is public policy. Different courts and different tribunals might have different views as to enforceability of contracts on ground of public policy: See Westacre Investments Inc v. Jugoimport - SDPR Holding Go Ltd And Others [1993] 3 All ER 864. [64] Russel on Arbitration 24th edn, at p. 71 para. 2 makes the following observation: Limits on arbitrability. There is no agreed definition of arbitrability and none is provided in the Arbitration Act 1996, although the Act does recognise the right of the court to refuse recognition or enforcement of an award that is in respect of a matter which is not capable of settlement by arbitration. There are also well recognised categories of dispute that may not be capable of being resolved by arbitration and certain underlying principles that can be identified in determining whether a matter is arbitrable. In particular, a dispute will generally not be arbitrable if it involves an issue of public policy, public rights or the interests of third parties, or where the dispute in question is clearly covered by a statutory provision which provides for inalienable access to the courts. In these cases, as the Court of Appeal has confirmed, "even the most widely drafted arbitration agreement will have to yield". [65] In the instant appeal before us, there was a clear intention of the parties as manifested by the subscription agreement and the bonds conditions that the appellant could enforce the security under the charge in the event of default by the respondent. There is no provision in the subscription agreement and the bonds conditions that they agree to have the dispute to be determined by arbitration first before the appellant could enforce the security under the charge. [66] A registered chargee under the NLC acquires an indefeasible title to the charged security: NKM Properties Sdn Bhd v. Rakyat First Merchant Bankers Bhd [1984] 1 CLJ 231; [1984] 1 CLJ (Rep) 302; [1986] 1 MLJ 44; The Co-Operative Central Bank Ltd v. Y & W Development Sdn Bhd [1997] 4 CLJ 170; [1997] 3 MLJ 373. Under s. 340(2) of the NLC the title or interest of the chargee shall not be indefeasible only in the three circumstances specified therein. Section 256 of the NLC confers a right on the chargee to apply for an order for sale of the charged security to recover the sum secured by the charge when the chargor fails to comply with the notice of demand in Form 16D. On any such application, the court shall order the sale of the charged security unless it is satisfied of the existence of cause to the contrary: Low Lee Lian v. Ban Hin Lee Bank Bhd [1997] 2 CLJ 36; [1997] 1 MLJ 77. The statutory right of the chargee to indefeasible title and to sell the charged security in the event of default by the chargor cannot be taken away by private agreement between them. The right of a chargee under the NLC applies to all chargees. Any attempt to take away or curtail the rights of the chargee by way of a private agreement is, in our view, contrary to public policy. [67] The NLC is a complete and comprehensive code of law governing the tenure of land in Malaysia and the incidence of it as well as other important matters affecting land: United Malayan Banking Corp Bhd v. Pemungut Hasil Tanah, Kota Tinggi & Another Case [1984] 2 CLJ 146; [1984] 1 CLJ (Rep) 51; [1984] 2 MLJ 87. In Kimlin Housing Development Sdn Bhd v. Bank Bumiputera (M) Bhd, it was held that the provisions of the NLC setting out the rights and remedies of parties under a statutory charge over land comprised in Pt XVI are exhaustive and exclusive and any attempt at contracting out of those rights unless expressly provided for in the Code - would be void as being contrary to public policy. Hence, the dispute triggered by the statutory notice of demand in Form 16D is not arbitrable under s. 4(1) of the Arbitration Act 2005.”

I again refer to the decision of the Court of Appeal in Asia Pacific Higher Learning Sdn Bhd v Stamford College (Malacca) Sdn Bhd [2024] CLJU 1598 and in Padda Gurtaj Singh v Tune Talk Sdn Bhd & Ors [2022] 5 CLJ 335.

In Padda Gurtaj (supra), it was argued for the Appellant that the power to either accept or reject the registration of shares under sections 106 and 107 of the Companies Act falls within the absolute jurisdiction of the Courts. It was argued that section 107 of the Companies Act states that such powers to register such shares lie solely on an application made before the Courts. As such, it was contended that the issue of refusal to register such shares cannot be arbitrated as recognised under section 4 of the Arbitration Act.

The Court of Appeal after considering the said statutory provisos rejected the said argument. See Mee Chun JCA held: - “[89] Then comes s. 107(2) of the CA 2016 which we find confers a discretion on the court whether or not to register the shares. This is evident from the words "may" and "well founded". Such discretion can only be exercised after due enquiry into the reasons for the respondents' non-registration of the shares which necessarily has to lead to the pre-emption rights in the articles of association and SHA. The pre-emption rights are as in cl. 9 of the SHA, and arts. 37 to 52 of the articles of association. [90] The language employed in the aforesaid statutory provisions do not expressly exclude arbitration and there has been no evidence put forth that it was the legislative intent to so exclude. There are no wider interests of third parties involved such as creditors as this only involve parties within SHA. We, therefore, find the statutory provisions as per ss. 106 and 107 of the CA 2016 are not an exception to arbitrability. [91] There can therefore, also be no issue of a statutory right being taken away by a private agreement to arbitrate or such statutory right rendering the matter incapable of arbitration.”

I again refer to the judgment of Lee Swee Seng JCA in Peninsula Education (Setia Alam) Sdn Bhd v Biaxis (M) Sdn Bhd (In Liquidation) (supra). In that case one of the issues that had to be dealt with by the Court of Appeal concerns the arbitrability of the claims against the Respondent.

Lee Swee Seng JCA found that the dispute did not fall within the exception to the right to have disputes arbitrated as provided for in section 4 of the Arbitration Act. His Lordship held: - “[60] Liquidation does not change the mode of resolving a dispute, whether it is via a pre-agreed arbitration or absent that, litigation in Court. Neither is liquidation opposed to arbitration for arbitration is nothing more than a way of determining if liability is established arising from a matter the subject of the arbitration agreement and if so what is the quantum when damages are being assessed. The Privy Council in Sian Participation Corp (supra) has helpfully explained the two concepts of liquidation and arbitration as follows: "90. Nor are the policies underlying the arbitration legislation which implement the Model Law in any way offended or infringed by a party to an arbitration agreement seeking the liquidation of a debtor party which fails to pay the debt. There is a policy of insolvency legislation that the liquidation route should not be pursued, or even threatened, against a company which genuinely disputes the debt on substantial grounds. Where there is such a dispute, the policy is that the creditor should first establish his claim, by having that dispute resolved in its favour, either by a judgment in court or, if there is an applicable arbitration agreement, by an arbitral award. That identifies the extent of the negative obligation: not to seek resolution of a dispute in court. A winding up petition or similar application lies outside both that boundary and therefore the extent of the underlying policy. are offended by allowing a winding up to be ordered where the creditor's unpaid debt is not genuinely disputed on substantial grounds. To require the creditor to go through an arbitration where there is no genuine or substantial dispute as the prelude to seeking a liquidation just adds delay, trouble and expense for no good purpose. Party autonomy and pacta sunt servanda are not offended because seeking a liquidation is not something which the creditor has promised not to do. And by ordering a liquidation the court is not resolving anything about the debt, nor interfering with the resolution of any dispute about it. … “[65] The AA 2005 in s 4 recognises that there are certain subject matters that are not arbitrable under the law or which arbitration agreement would be contrary to public policy. Some of these matters are those with respect to the grant of a dissolution of marriage, orders with respect to adoption, judicial review matters involving certiorari and mandamus, contempt of court, registration and expunging of patent and other Intellectual property rights, order for sale under the National Land Code, issues arising out of liquidation, judicial management or receivership under the Companies Act 2016, to mention but a few. [66] Thus, matters with respect to an order for sale would have to be canvassed in the Court though the security over land could be part of a facility agreement where there is an arbitration clause as was held in Arch Reinsurance Ltd v. Akcay Holdings Sdn Bhd [2019] 1 CLJ 305; [2018] MLJU 2117. [67] The Singapore Court of Appeal's decision in Larsen Oil & Gas Pte Ltd v. Petrograd Ltd [2011] SGCA 21 can be distinguished from the present case as there the liquidator sought the avoidance of payment it had made to the appellant on the grounds that these payments amounted to unfair preferences or transaction at an undervalue within the meaning of their Bankruptcy Act read with their Companies Act. The Court held that the claim was non-arbitrable as the disputes were arising from the operation of statutory provisions of the insolvency regime per se. [68] Our present dispute is one arising pre-insolvency and not an insolvency dispute which requires the Court's determination under the Companies Act 2016 where Parliament had carved out these issues from arbitration and made it non-arbitrable as a matter of public policy. See also the case of Tomolugen Holdings Ltd and another v. Silica Investors Ltd and other appeals [2015] SGCA 57. [69] Our section 4 AA 2005 reads as follows: "Arbitrability of subject matter Malaysia. [70] The parties are still at the very preliminary stage of the Contractor having filed its claim in Court and the Employer, upon entering Appearance had applied for a stay of the Court proceedings on ground of a valid arbitration agreement which is not null and void, inoperative or incapable of performance. In brief, both parties are at the stage of setting forth their claims against each other. The issue is purely on whether there are monies owing by the Employer to the Contractor under the PAM Contract and it so, what is the amount. [71] As and when the claim is brought the Employer may raise the defence of set-off and a counterclaim with respect to the delay and defects if any and the amount of the LAD claim as well as damages for the Contractor's failure to complete the Works under the PAM Contract as a result of a determination of its employment due to its insolvency. These are not issues peculiarly within the province of a winding-up Court but rather issues for the Arbitral Tribunal to decide and if there is no arbitration agreement, then it would be the civil Courts that would hear and decide the matter. [72] There are no issues that have encroached onto the winding-up Court for its decision, be it the issue of whether if a set-off is raised by the Employer, should it be allowed to reduce the Contractor's claim accordingly or whether the amount owing by the Contractor to the Employer should be treated as unsecured and falling into the general pool of unsecured creditors to be distributed pari passu. [73] As and when these issues have to be decided, the arbitral tribunal should be able to decide as matters falling within the terms of reference to arbitration as was so decided by the arbitrator in UDA Land case (supra). [74] This is not a matter where the issue is purely within the purview of the Winding-up Court as in involving other creditors that do not have an arbitration agreement with the Employer. Neither is it a matter that is not arbitrable as in whether for example Goods and Services Tax ("GST") collected or amount owing by the Contractor to the Royal Malaysian Customs would be treated as preferential debt or dispute on pari passu ranking of debts or whether certain sums of monies are held in trust.”

I have also considered the decision of the Singapore Court of Appeal in Larsen Oil and Gas Pte Ltd v Petropod Ltd [2011] 3 SLR 414, where VK Rajah JA delivering the decision of the Singapore Court of Appeal, inter alia, held: - "The concept of non-arbitrability is a cornerstone of the process of arbitration. It allows the courts to refuse to enforce an otherwise valid arbitration agreement on policy grounds. That said, we accept that there is ordinarily a presumption of arbitrability where the words of an arbitration clause are wide enough to embrace a dispute, unless it is shown that parliament intended to preclude the use of arbitration for the particular type of dispute in question (as evidenced by the statute's text or legislative history), or that there is an inherent conflict between arbitration and the public policy considerations involved in that particular type of dispute. … .... Many of the statutory provisions in the insolvency regime are in place to recoup for the benefit of the company's creditors losses caused by the misfeasance and/or malfeasance of its former management. This is especially true of the avoidance and wrongful trading provisions. This objective could be compromised if a company's pre-insolvency management had the ability to restrict the avenues by which the company's creditors could enforce the very statutory remedies which were meant to protect them against the company's management. It is.... not [an] unimportant consideration that some of these remedies may include claims against former management who would not be parties to any arbitration agreement. The need to avoid different findings by different adjudicators is another reason why a collective enforcement procedure is clearly in the wider public interest."

I also refer to the decision of Sundaresh Menon CJ in Tomolugen Holdings Ltd and another v Silica Investors and other appeals [2015]

In that case, Sundraresh Menon CJ delivering the judgment of the Singapore Court of Appeal had this to say on this issue:- "In our judgment, a claim for relief under s. 216 of the Companies Act stands on a different footing from the liquidation of an insolvent company or avoidance claims that arise upon insolvency because the former generally does not engage the public policy considerations involved in the latter two situations. There is certainly nothing in the text of s. 216 to suggest an express or implied preclusion of arbitration. Nor does the legislative history and statutory purpose of the provision suggest that a dispute over minority oppression or unfair prejudice is of a nature which makes it contrary to public policy for the dispute to be adjudicated by an arbitral tribunal…. … In our judgment, the approach taken by the courts in England (see Fulham FC v. Richards) and in Hong Kong SAR (see Re Quiksilver Glorious Sun) commends itself to us because it seeks to strike a balance between, on the one hand, upholding the agreement of the parties as to how their disputes are to be resolved and, on the other, recognising that there are jurisdictional limitations on the powers that are conferred on an arbitral tribunal. We accept that this has the effect of enhancing the procedural complexity of a dispute which is covered by an arbitration agreement where one or more of the reliefs sought is beyond the arbitral tribunal's powers to grant, and such complexity will be further exacerbated if, in addition, the dispute concerns other parties who are not party to the arbitration agreement in question. It is to this that we turn next; but we are satisfied that an arbitral tribunal's inability to grant certain reliefs which may be sought would not in itself render the subject matter of the dispute non arbitrable."

It would be remiss of me not to consider the decision of the English Court of Appeal in Fulham Football Club (1987) Ltd v Richards [2011] EWCA Civ 855 where the issue of whether a claim for unfair prejudice filed under section 994 of the UK Companies Act 2006 is arbitrable.

I first reproduce section 1 of the UK Arbitration Act 1996: - The provisions of this Part are founded on the following principles, and shall be construed accordingly—

(a)the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;

(b)the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest;

(c)in matters governed by this Part the court should not intervene except as provided by this Part.

In the aforesaid case, Patten LJ stated as follows: - “42. These examples show that in a number of areas the right of the party to apply to the court or tribunal is expressly preserved. Such a provision is inconsistent with an agreement to submit the dispute to binding arbitration and would therefore defeat any application for a stay of the proceedings either under s.9 or under the inherent jurisdiction. Vos J at one point in his judgment (para. 8) adopted Mr Marshall's way of characterising the issue as whether a member of a company can agree to remove or diminish, by contract, his right to present a petition under s.994 based on unfair prejudice: i.e. to contract out of the Act. This may be an inaccurate way of formulating the question insofar as most arbitration agreements will not expressly exclude any reference to the Court. But the combined effect of an arbitration agreement which covers the dispute and s.9(4) of AA 1996 is that the agreement to refer the dispute to arbitration will exclude the parties' right to bring or continue legal proceedings covering the same subject matter unless one of the exceptions contained in s.9(4) is established. I will deal later in this judgment with the separate question of whether any stay should be a permanent one or should at least be the subject of re-consideration in a case where the arbitrators consider that the winding-up of the company is the appropriate relief but are, of course, themselves unable to make such an order. …

There are no provisions in the CA 2006 which correspond to those I have referred to in other areas of the law and if a company dispute about unfair prejudice is to be held to be non-arbitrable then Fulham has to rely on either an implied restriction in the statute or some equivalent rule of public policy based on the considerations referred to in paragraph 40. Section 994 provides that: "(1) A member of a company may apply to the court by petition for an order under this Part on the ground— If the petitioner establishes unfair prejudice to at least himself as a member, the Court has wide powers. Section 996 provides that: "(1) If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of.

(ii) to do an act that the petitioner has complained it has omitted to do; …..

It is therefore open to us to decide whether the provisions of s.994 are to be construed as restricting the resolution of unfair prejudice disputes to the exclusive jurisdiction of the court free of any binding authority. I have already set out my own reasons for preferring the view that disputes of this kind which do not involve the making of any winding-up order are capable of being arbitrated. Although not necessary for the resolution of this appeal, I also take the view, as Austin J did in the ACD Tridon case, that the same probably goes for a similar dispute which is used to ground a petition under s.122(1)(g) to wind up the company on just and equitable grounds. In those cases the arbitration agreement would operate as an agreement not to present a winding-up petition unless and until the underlying dispute had been determined in the arbitration. The agreement could not arrogate to the arbitrator the question of whether a winding-up order should be made. That would remain a matter for the court in any subsequent proceedings. But the arbitrator could, I think legitimately, decide whether the complaint of unfair prejudice was made out and whether it would be appropriate for winding-up proceedings to take place or whether the complainant should be limited to some lesser remedy. It would only be in circumstances where the arbitrator concluded that winding-up proceedings would be justified that a shareholder would then be entitled to present a petition under s.122(1)(g). In these circumstances the court could be invited to lift any stay imposed on proceedings imposed under s.9(4). In much the same way, it would, I think, be open to an arbitrator who considered that the proper solution to a dispute between a shareholder and the company was to give directions for the conduct of the company's affairs to authorise the shareholder to seek such relief from the court under s.994. But such cases are likely to be rare in practice. If the relief sought is of a kind which may affect other members who are not parties to the existing reference, I can see no reason in principle why their views could not be canvassed by the arbitrators before deciding whether to make an award in those terms. Opposition to the grant of such relief by those persons may be decisive. Similarly if the order sought is one which cannot take effect without the consent of third parties then the arbitrators' hands will be tied.

But, as explained earlier in this judgment, these jurisdictional limitations on what an arbitration can achieve are not decisive of the question whether the subject-matter of the dispute is arbitrable. They are no more than the practical consequences of choosing that method of dispute resolution: see Société Commerciale de Réassurance v ERAS (International) Ltd [1992] 1 Lloyd's Rep 570; Wealands v CLC Contractors Ltd [1999] 2 Lloyd's Rep 739.

This leaves for consideration what amounts to the alternative argument that regardless of any general considerations of public policy, s.994 ("a member of a company may apply to the Court") should be construed as granting an unfettered right of access. This would have to be an implied restriction but, aside from the argument that it creates a class remedy which I have already dealt with, Mr Marshall also relies on a comparison between the treatment of s.994 relief in the context of companies and the equivalent provisions which apply to limited liability partnerships ("LLPs").

Under the Limited Liability Partnership Act 2000 an LLP is given the status of a body corporate and the members are liable to contribute to its assets on a winding up: see s.1(1), (4). The Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 ("the 2009 Regulations") which took effect on 1st October 2009 apply ss.994-996 of the CA 2006 to LLPs but in a modified form. As modified, s.994(3) provides that: "The members of an LLP may by unanimous agreement exclude the right contained in subsection (1) either indefinitely or for such period as is specified in the agreement. The agreement must be recorded in writing." Mr Marshall makes the point that no equivalent opt-out was given to the members of companies when s.994 of the CA 2006 came to be amended in 2008 by the insertion in the form of s.994(1A) of provisions dealing with the removal of a company's auditors. It is to be inferred from this, he says, that Parliament considered that the provisions of s.994 should be immutable in the case of companies. Similarly the recommendations of the Company Law Review Steering Group contained in its 2001 Report (Modern Company Law for a Competitive Economy) which favoured the promotion of ADR including arbitration for the resolution of shareholder disputes were not taken up. By 2008 Exeter City had been decided but Parliament chose to make no changes to the CA 2006 to counter its effect.

I am not persuaded that we should draw any inferences from these aspects of the legislative history of the CA 2006. The absence of any change to the provisions of s.994 following the decision in Exeter City cannot be taken as some kind of affirmation of the correctness of that decision, let alone a statutory embodiment of its effect. The Act remained unchanged throughout the period. The consequence is that if Exeter City was correctly decided then there has been no statutory change to displace it. Conversely if it was, as I believe, wrongly decided then we are free to overrule it unhindered by any alteration in the relevant legislation. Similarly, although the provisions of the 2009 Regulations in relation to LLPs are interesting, the absence of any opt-out provision in relation to companies merely confirms that this form of statutory relief remains available to contributories. Again, it cannot justify giving to the provisions of s.994 (which remain unchanged) a meaning which they cannot otherwise bear.”

I further refer to the judgment of Lord Justice Longmore in the same case: - “96. In relation to the second question, it is clear that there is no express requirement in the CA 2006 that matters arising on an unfair prejudice petition under section 994 should not be referred to arbitration. Nor do I consider that there is any implied prohibition of arbitration. It is true that section 994(1) empowers a company member "to apply to the court by petition" and section 996(1) provides that "if the court is satisfied that a petition … is well-founded, it may make such order as it thinks fit for giving relief". But the fact that a statutory power, which a court would not have at common law apart from the statutory provision, is given to the court does not mean that an arbitrator, to whom a dispute is properly agreed to be referred, does not have a similar power. Power to make awards of monetary sums as between joint tortfeasors and between those who together have acted in breach of separate contracts are given to "the court" by various statutory provisions but it cannot be suggested that arbitrators are prohibited from making such awards: see Wealands v ICLC Contractors Ltd [1999] 2 Lloyd's Rep 739 paras. 16-18. Such awards are frequently made. If, therefore, one looks at the actual wording of the relevant sections of the CA 2006, there is no ground for supposing that there is any implicit prohibition on agreeing to refer an allegation of unfair prejudice to arbitration.

Thirdly, does public policy prohibit or invalidate an agreement to refer to arbitration the question whether a company's affairs are being (or have been) conducted in a manner that is unfairly prejudicial to the interest of at any rate some of its members? If public policy does prohibit such an agreement, there could of course be no question of the court staying any petition seeking relief under sections 994-996 of the CA 2006 because the court would be satisfied (within the meaning of section 9(4) of the AA 1996) that the arbitration agreement would, to the extent that it purported to apply to unfair prejudice petitions, be "null and void" or, perhaps, "inoperative".

It is this question that is at the heart of the appeal and I would, for my part, derive some guidance from the principle set out in section 1(b) of the AA 1996 namely "the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest". To the extent therefore that public policy has a part to play it can only be as a "safeguard … necessary in the public interest".

This is a demanding test and I cannot see that it is necessary in the public interest that agreements to refer disputes about the internal management of a company should in general be prohibited; nor can I see any reason why it is necessary to prohibit arbitration agreements to the extent that they, in particular, apply to disputes whether a company's affairs are being (or have been) conducted in a manner unfairly prejudicial to the interests of its members. …. agreement to refer an unfair prejudice dispute should be prohibited. It would just be an incident of the agreement and an example of a reason why in some circumstances arbitration could be less satisfactory than court proceedings. The risk of that occurring cannot mean that it is necessary in the public interest to prohibit such agreements. [1992] 1 Lloyd's Rep 570, 610. The inability to give a particular remedy is just an incident of the agreement which the parties have made as to the method by which their disputes are to be resolved. The reason put forward by Mr Marshall for regarding the FAPL Rules and FA Rules as inapplicable to unfair prejudice petitions (because of the effect any award might have or might not have on third parties) is of even less substance than the supposed inability of an arbitrator to give any particular remedy. (which we do not) of not being bound by each other's decisions and, particularly in a specialist jurisdiction, it is usually useful to this court to have a considered view even if it is at variance with the latest first instance decision. I must confess to being much assisted by the views of Vos J in coming to my own conclusion in this case.”

It is also instructive to consider the decision of the Privy Council in FamilyMart China Holding Co Ltd v Ting Chuan (Cayman Islands) Holding Corporation [2023] UKPC 33. In that case Lord Hodge delivering the judgment of the Privy Council held: “58. The court in considering such an application adopts a two-stage process. First, the court must determine what the matters are which the parties have raised or foreseeably will raise in the court proceedings, and, secondly, the court must determine in relation to each such matter whether it falls within the scope of the arbitration agreement. (See Tomolugen, para 42 above; WDR Delaware, para 47 above and Sodzawiczny, para 50 above). and Sodzawiczny, para 53 above). …. …..The Board is concerned with the exception that the agreement is inoperative. The essence of the dispute between the parties on this appeal turns on this question. It is whether the arbitration agreement is inoperative or, in other words, the matters at issue between the parties are incapable of being settled by arbitration or the remedies sought are unavailable to an arbitral tribunal. Examples of such in English law in the field of employment and discrimination can be found in section 203 of the Employment Rights Act 1996 and section 144(1) of the Equality Act 2010, which, subject to specified exceptions, prevent parties by agreement from contracting out of an employee’s right to have access to an employment tribunal, or in the latter Act the courts. Subject matter non-arbitrability may also arise as a result of public policy considerations. In the Singaporean case of Larsen Oil and Gas Pte Ltd v Petropod Ltd [2011] 3 SLR 414, (“Larsen”) V K Rajah JA, delivering the judgment of the Singapore Court of Appeal, at para 44 recognised two grounds for excluding from arbitration a dispute which fell within the scope of an arbitration agreement. The first was where the legislature had precluded the use of arbitration to determine the particular type of dispute and the second was where “there is an inherent conflict between arbitration and the public policy considerations involved in that particular type of dispute”. Larsen was concerned with claims by the liquidator of an insolvent company for the avoidance of unfair preferences and payments made with an intention to defraud a creditor which arose only on the onset of insolvency and could be pursued by the liquidator of the insolvent company for the benefit of the company’s creditors. The court refused the application by Larsen, the recipient of the alleged preference, to stay the legal proceedings for arbitration of the dispute on grounds of public policy, namely that it would affect the substantive rights of the company’s creditors and undermine the policy aims of the insolvency regime. ….. Cayman Islands. It is also relevant to bear in mind, when considering these commentaries, the relatively granular meaning of “matter” in the FAAEA, which the Board discussed in paras 61-63 above, when addressing the question whether a matter is excluded from arbitral determination by subject matter non-arbitrability. creditor where the company is insolvent and there is strong authority in support of such an exclusion when the application is by a contributory where the company is solvent. This is because the power to wind up a company lies within the exclusive jurisdiction of the courts, which alone have the discretion as to whether to make such an order. See in English law, Fulham at paras 76 and 83, in Hong Kong, Quiksilver para 14, in Singapore, Tomolugen para 83 (in relation to a creditor’s application), in Australia, WDR Delaware para 26. In Quiksilver and WDR Delaware the inability of an arbitral tribunal to make a winding up order was common ground; it is also common ground between the parties on this appeal. Although the court is given the power by statute to make such orders, an arbitral tribunal may also grant such a remedy because third parties, who are not involved in the dispute, do not have a legal interest in the dispute and there is no public element in a dispute of that nature. agreement, which can be referred to an arbitral tribunal for a determination, which is binding on the parties, notwithstanding that only a court can make a winding up order: Fulham, Patten LJ at para 76; Quiksilver, Harris J at paras 14, 21-22; Tomolugen, Sundaresh Menon CJ at paras 96-103; WDR Delaware, Foster J at paras 161-164. The researches by the appellants’ counsel demonstrate that a similar approach can be found in case law in Quebec, Canada (Capital JPEG Inc v Corporation Zone B4 Ltd [2019] QCCS 2986) in relation to mediation, Cyprus (In re Kissonerga Development Co Ltd (Application no 7/20) (unreported) 9 July 2020 which was an interim decision, Jersey (Consolidated Resources Armenia v Global Gold Consolidated Resources Ltd [2015] JCA 061 (“Consolidated Resources”), and Zambia (Vedanta Resources Holdings Ltd v ZCCM Investment Holdings plc [2020] ZMCA 104). See also in Hong Kong China Europe International Business School v Chengwei Evergreen Capital LP [2021] HKCFI 3513 (“China Europe”). Counsel did not address these cases in any detail, but they are consistent with the main cases which the Board has discussed above and support a conclusion that there is substantial agreement among common law jurisdictions as to the correct approach. “With the exception of that part of the present proceeding which involves the Court forming an opinion as to whether the plaintiffs are entitled to a winding up order, the questions of fact and law which mark out the substantive controversy between the parties in this proceeding are all matters which are capable of resolution by arbitration. Any award or awards which determine those matters will be taken into account when the Court comes to consider whether a winding up order should be made. If, at the end of the arbitral process, the award or awards do not address satisfactorily or comprehensively all of the grounds relied upon by the plaintiffs in support of their claims for relief made in the present proceeding, then it will be open to them to supplement or explain the terms of the relevant award or awards by evidence. The process by which that would be done is the everyday process of applying the law of evidence.” The Board agrees as a general rule with this approach to discrete matters which involve inter partes disputes in the context of a winding up application. Matters, such as whether one party has breached its obligations under a shareholders’ agreement or whether equitable rights arising out of the relationship between the parties have been flouted, are arbitrable in the context of an application to wind up a company on the just and equitable ground and the arbitration agreement is not inoperative because the arbitral tribunal cannot make a winding up order.”

I have also taken the additional step of considering the International Council for Commercial Arbitration Guide to the Interpretation of the 1958 New York Convention – a guide for judges. Concerning the issue of (a) non arbitrate issues – (Article V(2) (a)) the learned authors of the said guide had this to say: - In summary, the “not arbitrable” ground for refusal under Article V(2)(a) is available where the dispute involves a subject matter reserved for the courts. For example, clearly criminal cases are non-arbitrable; similarly, cases reserved exclusively for the courts of a jurisdiction are non-arbitrable, including: – domestic relations, such as divorce and custody of children; – property settlements; – wills; – bankruptcy; and – tax controversies. The modern trend is towards a smaller category of disputes being reserved solely to the jurisdiction of courts, as the result of a number of factors, including the trend toward containing costs, a greater openness of many courts to accept that the parties’ agreement to arbitrate should be respected and the support of international arbitration by national legislation. In this respect it should also be noted that “not arbitrable” has a different meaning in an international as opposed to a domestic context (see this Chapter below at E.2 for the distinction between international and domestic public policy). (See also Chapter 2 at C.3 on subject matters “capable of settlement by arbitration”.) As an example of this trend, in 2023, the Belgian Supreme Court overturned decades old jurisprudence on the arbitrability of disputes concerning the termination of exclusive distribution agreements. It ruled that disputes about the termination of exclusive distribution agreements can be settled through arbitration, even where such an agreement is governed by foreign substantive law, regardless of whether such foreign law offers protections similar to those under Belgian law. Whether a subject matter of an arbitration is non-arbitrable is a question to be determined under the law of the country where the application for recognition and enforcement is being made. The non arbitrability should concern the material part of the claim and not merely an incidental part. Few cases of refusal of enforcement under Article V(2)(a) have been reported.

Touching on the issue of public policy, the said guide states: - Article V(2)(b) permits a court in which recognition or enforcement is sought to refuse to do so if it would be “contrary to the public policy of that country”. However, Article V(2)(b) does not define what is meant by “public policy”. Nor does it state whether domestic principles of public policy or the international concept of public policy should apply to an application for recognition and enforcement under the New York Convention. The international concept of public policy is generally narrower than the domestic public policy concept. As seen in this Chapter above at E.1, this distinction also applies to arbitrability. Most national courts have adopted the narrower standard of international public policy when applying the Convention. In the United States, for example, the “public policy defense is construed narrowly to apply only where enforcement would violate the United States’ most basic notions of morality and justice”. Similar language has been used in several other jurisdictions. The French judiciary has found that a violation of public policy must be “flagrant, effective and concrete”. Hong Kong courts require a “substantial injustice arising out of the award which is so shocking to the Court’s conscience as to render enforcement repugnant”. In India, “a contravention of a provision of law is insufficient to invoke the defence of public policy”; rather, a violation of public policy is one that offends the core values of national policy. The recommendations of the International Law Association issued in 2002 (the “ILA Recommendations”) as to “Public Policy” have been regarded as reflective of best international practice. Among the general points of the ILA Recommendations are that the finality of awards in “international commercial arbitration should be respected save in exceptional circumstances” and that such exceptional circumstances “may in particular be found to exist if recognition or enforcement of the international arbitral award would be against international public policy”. The ILA Recommendations state that the expression “international public policy” is used to designate the body of principles and rules recognized by a State, which, by their nature, may bar the recognition or enforcement of an arbitral award rendered in the context of international commercial arbitration when recognition or enforcement of said award would entail their violation on account either of the procedure pursuant to which it was rendered (procedural international public policy) or of its contents (substantive international public policy). The ILA Recommendations also state that the international public policy of any State includes: (i) fundamental principles, pertaining to justice or morality, that the State wishes to protect even when it is not directly concerned; (ii) rules designed to serve the essential political, social or economic interests of the State, these being known as “lois de police” or “public policy rules”; and (iii) the duty of the State to respect its obligations towards other States or international organizations.

I opine that the above is merely a guideline and is not binding on this Court but is persuasive. This Court has to consider whether the issue of public policy raised by the litigants that suggests that the dispute cannot be arbitrated falls into any of the categories that have been recognised by the ICC. The categories suggested by the ICC are a good starting point, but I accept that this will depend on our local requirements.

I find that Issues such as (i) fundamental principles, pertaining to justice or morality, that Malaysia wishes to protect; (ii) rules designed to serve the essential political, social or economic interests of our country i.e. “lois de police” or “public policy rules” of Malaysia; and the main objective preserving the right to arbitrate must be considered by this Court. This approach is in line with the approach taken by our Courts as seen in the above cases and also in other jurisdictions as identified earlier.

I must also consider whether the dispute or issues fall within the scope of the arbitration clause. I refer to the decision of the Federal Court in Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2018] 9 CLJ 1: - “[55] An arbitration agreement or clause is a written submission, agreed to by the parties, and like other written submissions, must be construed according to its language and in the light of the circumstances in which it is made (see: Heyman v. Darwins Ltd [1942] AC 356, per Viscount Simon LC at p. 366). The question whether a given dispute comes within the provisions of an arbitration clause or not, primarily depends on the wording of the clause itself. (see: Heyman v. Darwins Ltd. (supra ) per Lord Porter at p. 392). [56] Parties must be held to what they have agreed to in an agreement. Therefore, it is essential to consider the wordings of the clause specifically and determine what they have agreed to. Whether a dispute falls within an arbitration clause must depend on (a) what is the dispute or difference between the parties and (b) what disputes the arbitration clause covers (see: Heyman v. Darwins Ltd (supra ) per Viscount Simon LC at p. 360). [57] The court must see what the matters as found in the proceedings before the court are, and then consider whether they are within the scope of the submissions in the arbitration clause. (see: Munro v. Bognor Urban Council [1915] 3 KB 167: per Bankes LJ at p. 172). An applicant for a stay under s. 10(1) of the 2005 Act must therefore establish that the matters in question are within the scope of the arbitration submission. …. [69] The law on the issue of whether a dispute or difference comes within the scope or ambit of an arbitration clause is clear and well-settled. The existence of a valid arbitration clause in an agreement between the parties does not automatically make it operative; the arbitration clause will only be operative when the given dispute or difference falls within the ambit of the arbitration clause. [70] As stated earlier, an arbitration clause, like any other written agreement, must be construed according to its language and in the light of the circumstances in which it is made. In this regard Viscount Simon LC in Heyman v. Darwins (supra ) said at p. 360 of the report: The answer to the question whether a dispute falls within an arbitration clause in a contract must depend on (a) what is the dispute and (b) what disputes the arbitration clause covers. … [72] Lord Macmillan, in that case, had given a comprehensive guideline of the law on the matter, as follows (see: p. 370): Where proceedings at law are instituted by one of the parties to a contract containing an arbitration clause and the other party, founding on the clause, applies for a stay, the first thing to be ascertained is the precise nature of the dispute which has arisen. The next question is whether the dispute is one which falls within the terms of the arbitration clause. Then sometimes the question is raised whether the arbitration clause is still effective or whether something has happened to render it no longer operative. Finally, the nature of the dispute being ascertained, it having been held to fall within the terms of the arbitration clause, and the clause having been found to be still effective, there remains for the court the question whether there is any sufficient reason why the matter in dispute should not be referred to arbitration. In our view, the aforesaid guidelines provide useful reference by our courts in dealing with the matter. In the context of s. 10(1) of the 2005 Act, "sufficient reason why the matter in dispute should not be referred to arbitrator" refers to the fact that the agreement is null and void, inapplicable or incapable of being performed. [73] In Sulamérica CIA Nacional De Seguros SA & Ors v. Enesa Engenharia SA & Ors [2012] EWCA Civ 638, the English Court of Appeal dealt with an arbitration clause which reads: In case the Insured and the Insurer(s) shall fail to agree as to the amount to be paid under this Policy through mediation as above, such dispute shall then be referred to arbitration under ARIAS Arbitration Rule. [74] Lord Justice Moore - Bick upheld the ruling made by the trial judge to the effect that "As a matter of language, a failure to agree "as to the amount to be paid under this policy" includes a dispute about whether any sum is due under the policy at all, and thus includes matters of liability and coverage". …… [91] In determining what is the dispute or difference the parties intended to submit to arbitration, the arbitration clause ought to be interpreted widely, based on its express terms and the intention of the parties, taking into consideration the commercial reality and the purpose for which the contract or agreement was made. A proper approach to construction requires the court to give effect, so far as the language used by the parties in the arbitration clause will permit, to the commercial purpose of the arbitration clause. This principle was adopted in Fiona Trust & Holding Corporation & Ors v. Privalov & Ors [2007] 4 All ER 951. [92] The above principle was followed by our courts. In KNM Process Systems Sdn Bhd v. Mission Biofuels Sdn Bhd [2013] 1 CLJ 993, Mohamad Ariff Yusof J (later JCA), in allowing an application for a stay of proceedings under s. 10(1) of the 2005 Act, ruled as follows (see pp. 1005, 1006): ... the approach in Fiona Trust should be followed. Quite apart from the broad reading to be given to linking words such as "in relation to", or "in connection with", or "arising under", the principle that it is to be presumed that rational businessmen would intend to have the same forum decide disputes between themselves in respect of the same broad subject matter unless they have expressed otherwise by clear language, has much to commend it, both in terms of legal principle, logic, commercial sense and policy.... presently I believe it will be better to consider Fiona Trust as the starting point for any consideration of the principles of stay of proceeding, in relation to widely-drafted arbitration clauses.” Summary of the Applicable Legal Principles 35. I therefore summarise the legal principles on this area as follows: -

This Court must first determine what are the issues in disputes between the litigants.

(ii) This Court must then consider whether the issues in disputes fall within the scope of the arbitration clause.

(iii) Sections 4, 10 and 38 of the Arbitration Act presumes that parties are at liberty to agree to have any issues to be arbitrated. The scheme of the Arbitration Act is to preserve party autonomy, and the Court should not interfere with the said party autonomy unless provided under the said Act.

(iv) The Court may however find that the issue in dispute is not capable of being arbitrated if (a) Parliament intended that the dispute is not a subject matter capable of being arbitrated or (b) there are public policy issues that prevent such issues from being arbitrated.

What constitutes public policy consideration will depend on the facts of each case and cannot be subject to a straitjacket formula as to how this should be applied. This will depend on the legislative intent of the applicable statute, history of the legislation, its effect to the public at large and whether the said dispute is a reserve of the Court and cannot be arbitrated. For example, disputes concerning a charge registered pursuant to the National Land Code or criminal law may fall within the said exception to the general rule.

(vi) This Court should not be convolute the subject matter of the dispute with that of the remedies that are available to Court and to arbitrators. Arbitrators and Judges have wide powers to grant damages and remedies that are available based on the jurisdiction conferred on them by way of statutes or by virtue of the agreement to arbitrate.

(vii) If the arbitrator did not have the power to grant certain powers, such as winding-up, that does not mean that the subject matter of the dispute or issue in dispute cannot be arbitrated. That will only mean that parties are subject to the remedies that they have agreed to.

(viii) It is also important to note that section 4 of the Malaysian Arbitration Act also states that “the fact that any written law confers jurisdiction in respect of any matter on any court of law but does not refer to the determination of that matter by arbitration shall not, by itself, indicate that a dispute about that matter is not capable of determination by arbitration.” There must therefore be something more that is inherently strong appearing in the legislation or public policy considerations that prevents such issues from being arbitrated. C. Application of the law to the Facts Whether the dispute falls within the scope of the agreement to arbitrate and whether they fall within the exception under section 4 of the Arbitration Act 2005 36. In this case, the Plaintiffs’ counsel ably argues that the investment schemes as described in the agreements between her clients and the 1st Defendant are actually investment schemes that fall within the purview of the following legislation: -

(i)

(ii) Interest Scheme Act 2016

(iii) Companies Commission Malaysia’s Policy Guidelines and Requirements for Sale of Share-Farming Plot dated 13-7-2010.

(iv) Sections 84 and 85 of the Companies Act.

Counsel suggests that these legislations are social legislation that were created to protect the public and in particular Malaysian investors from devious schemes created to defraud. She also ably argues that the above legislation confers remedies that will only be available against the other Defendants, especially the directors of the relevant companies, that could only be imposed by this Court. This includes not only statutory remedies as provided in the said legislation but also common law remedies such as lifting the corporate veil against the individual directors or agents who had used the companies as a means to commit fraud.

The material case relied on by counsel is Suruhanjaya Syarikat Malaysia v NV Multi Corp Bhd & Ors [2008] 5 MLJ 61. In that case, Counsel for the Plaintiffs suggests that the Court of Appeal considered that Division 5 and section 84 of the Companies Act is a piece of social legislation. As such, the Plaintiff suggests that the issue in dispute should only be determined in Court and not through arbitration. She also refers to PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor and another appeals [2021] 2 MLJ 60.

In support of this argument, the Plaintiff also refers to Vertex Superier Sdn Bhd & Anor v Shell Malaysia Trading Sdn Bhd [2021] 1

I note the decision of Justice Wong Kiang Kheong J that had refused to have the dispute arbitrated on the ground that there was an alleged corruption or bribery that allegedly must be heard only in Court.

With due respect, I do not agree with the said argument after having considered the decision of Lord Hoffman in Premium Nafta Products Ltd v Fili Shipping Company [2007] UKHL 40. In that case Lord Hoffman stated: - “The case has been argued on the basis that there are two issues: first, whether, as a matter of construction, the arbitration clause is apt to cover the question of whether the contract was procured by bribery and secondly, whether it is possible for a party to be bound by submission to arbitration when he alleges that, but for the bribery, he would never have entered into the contract containing the arbitration clause. It seems to me, however, that for the reasons I shall explain, these questions are very closely connected.” … “If one adopts this approach, the language of clause 41 of Shelltime 4 contains nothing to exclude disputes about the validity of the contract, whether on the grounds that it was procured by fraud, bribery, misrepresentation or anything else. In my opinion it therefore applies to the present dispute. The next question is whether, in view of the allegation of bribery, the clause is binding upon the owners. They say that if they are right about the bribery, they were entitled to rescind the whole contract, including the arbitration clause. The arbitrator therefore has no jurisdiction and the dispute should be decided by the court. The principle of separability enacted in section 7 means that the invalidity or rescission of the main contract does not necessarily entail the invalidity or rescission of the arbitration agreement. The arbitration agreement must be treated as a "distinct agreement" and can be void or voidable only on grounds which relate directly to the arbitration agreement. Of course there may be cases in which the ground upon which the main agreement is invalid is identical with the ground upon which the arbitration agreement is invalid. For example, if the main agreement and the arbitration agreement are contained in the same document and one of the parties claims that he never agreed to anything in the document and that his signature was forged, that will be an attack on the validity of the arbitration agreement. But the ground of attack is not that the main agreement was invalid. It is that the signature to the arbitration agreement, as a "distinct agreement", was forged. Similarly, if a party alleges that someone who purported to sign as agent on his behalf had no authority whatever to conclude any agreement on his behalf, that is an attack on both the main agreement and the arbitration agreement. On the other hand, if (as in this case) the allegation is that the agent exceeded his authority by entering into a main agreement in terms which were not authorized or for improper reasons, that is not necessarily an attack on the arbitration agreement. It would have to be shown that whatever the terms of the main agreement or the reasons for which the agent concluded it, he would have had no authority to enter into an arbitration agreement. Even if the allegation is that there was no concluded agreement (for example, that terms of the main agreement remained to be agreed) that is not necessarily an attack on the arbitration agreement. If the arbitration clause has been agreed, the parties will be presumed to have intended the question of whether there was a concluded main agreement to be decided by arbitration. In the present case, it is alleged that the main agreement was in uncommercial terms which, together with other surrounding circumstances, give rise to the inference that an agent acting for the owners was bribed to consent to it. But that does not show that he was bribed to enter into the arbitration agreement. It would have been remarkable for him to enter into any charter without an arbitration agreement, whatever its other terms had been. Mr Butcher QC, who appeared for the owners, said that but for the bribery, the owners would not have entered into any charter with the charterers and therefore would not have entered into an arbitration agreement. But that is in my opinion exactly the kind of argument which section 7 was intended to prevent. It amounts to saying that because the main agreement and the arbitration agreement were bound up with each other, the invalidity of the main agreement should result in the invalidity of the arbitration agreement. The one should fall with the other because they would never have been separately concluded. But section 7 in my opinion means that they must be treated as having been separately concluded and the arbitration agreement can be invalidated only on a ground which relates to the arbitration agreement and is not merely a consequence of the invalidity of the main agreement. Mr Butcher submitted that the approach to construction and separability adopted by the Court of Appeal infringed the owners' right of access to a court for the resolution of their civil disputes, contrary to article 6 of the European Convention on Human Rights. I do not think there is anything in this point. The European Convention was not intended to destroy arbitration. Arbitration is based upon agreement and the parties can by agreement waive the right to a court. If it appears upon a fair construction of the charter that they have agreed to the arbitration of a particular dispute, there is no infringement of their Convention right. For these reasons, which are substantially the same as those given by Longmore LJ in the Court of Appeal, I would hold that the charterers are entitled to a stay of the proceedings to rescind the charters and dismiss the appeal.” I further refer to Tunku Abdul Rahman Aminullah bin Tunku Imran & Ors v Genesis Corp Pte Ltd [2022] MLJU 3394 and Federal Land Development Authority & Anor v Tan Sri Haji Mohd Isa bin Samad [2020] MLJU 1586.

In this case, I find that the legislation referred to by the Plaintiffs do not restrict the Defendant the right to have the dispute between them to be determined at arbitration.

The said statutes do not make it explicit that no such claims that arises from a breach of the said legislation must be solely determined in a Court of law and cannot be arbitrated. If the Plaintiffs are correct that the said legislations have been breached, the arbitrator is entitled to make the required orders, even declaratory orders as sought by the Plaintiffs and damages, including the return of the sums of monies paid by them to the 1st Defendant.

I also do not find anything in the said legislation or under our corpus of law that prevents such disputes from being disputed. The claim by the Plaintiffs against the Defendants is essentially concerning investments into a plantation scheme that they say were made under false pretences, was undertaken fraudulently, or was made in contravention of the applicable law. These issues arise out of and are in connection with the contracts executed by the above-named Plaintiffs with the 1st Defendant.

The Plaintiffs have failed to show why Malaysia’s (i) fundamental principles, pertaining to justice or morality our (ii) rules designed to serve the essential political, social, or economic interests of our country i.e. “lois de police” or “public policy rules” of Malaysia does not allow the dispute between the 1st Defendant and the Plaintiffs to be resolved in accordance with what they have agreed to. This dispute is unlike a foreclosure proceeding under the National Land Code where third-party rights may be affected. If one were to look at the claim by the Plaintiffs in this case against the 1st Defendant, it is merely seeking remedies in relation to the alleged fraudulent or wrongful scheme.

Therefore, I do not believe that section 4 of the Arbitration Act applies to this case. I find that the dispute between the 1st Defendant and the Plaintiffs should be referred to arbitration. I do not find that the arbitration is contrary to public policy or that the subject matter of the dispute is not capable of settlement by arbitration. The issue in dispute only concerns an alleged investment that was undertaken under false pretext and is allegedly contrary to the applicable statutes. As a result of which the Plaintiffs seek the return of the monies that they have invested based on the alleged representations and promises made by the 1st Defendant. These issues can be addressed before the arbitration panel.

I also do not find that the arbitration agreement is null and void or is inoperative or is incapable of being performed. The Plaintiffs have failed to show that the said clause falls foul of any of the provisos laid down under section 10(1) of the Arbitration Act. There is no evidence that (i) the arbitration agreement is intrinsically defective and that the consent of the parties to arbitrate the dispute was vitiated by misrepresentation, fraud or undue influence. I refer to Stretford v Football Association Ltd [2007] EWCA (Civ) 238.

I also find that the said agreement to arbitrate (ii) is capable of being acted upon as the rules of arbitration and the place of the arbitration have been clearly defined to be those of Singapore and that the SIAC rules shall be applicable. There is also no evidence (iii) of any obstacle that renders the arbitration from being set in motion. Reference is made to the following paragraphs from Mustill and Boyd: - “The expression “inoperative” has no accepted meaning in English law, but it would seem apt to describe an agreement which, although not void ab initio, has for some reason ceased to have effect for the future. Three situations can be envisaged in which an arbitration agreement might be said to be “inoperative.” First, where the English court has ordered that the arbitration agreement shall cease to have effect, or a foreign court has made a similar order which the English court will recognise. Second, … there may be circumstances in which an arbitration agreement might become “inoperative” by virtue of the common law doctrines of frustration, discharge by breach, etc. Third, the agreement may have ceased to operate by reason of some further agreement between the parties. But the fact that issues in the arbitration overlap issues in proceedings between parties who are not bound by an arbitration agreement does not make the agreement “inoperative.” …. “Incapable of being performed” connotes something more than mere difficulty or inconvenience or delay in performing the arbitration. There must be some obstacle which cannot be overcome even if the parties are ready, able and willing to perform the agreement: for example, where the mechanism for constituting the tribunal breaks down in a way which the Court has no ability to repair, or where a sole arbitrator named in the agreement cannot or will not act. The fact that the claim is time-barred does not in itself render the arbitration incapable of being performed: the arbitration can proceed, although it will inevitably result in the claim being dismissed. Where the effect of the time lift is not to bar the claim but merely to bar the right to arbitrate the position is, however, less clear. It might be argued in such a case that the arbitration agreement was not “incapable of being performed,” but merely “incapable of being invoked.” But we consider that this argument is unsound, and that the plaintiff should be permitted to pursue his claim by action, as was presumably the intention of the parties in agreeing to a time bar which barred the right to arbitration without extinguishing the claim.”

For the above reasons I find that: -

(ii) The dispute does not fall within the exception to the general rule. Parties are required to abide by the agreement to arbitrate.

(iii) The agreement to arbitrate is a valid and enforceable agreement. It is not null and void or incapable of being performed as suggested by the Plaintiffs.

(iv) The dispute between the litigants does not fall into any of the categories laid down in section 4 of the Arbitration Act. Allegation of Split Litigation 50. Counsel for the Plaintiffs further argues that to allow the stay of proceedings as prayed for by the 1st Defendant will be unfair to the Plaintiffs. This will allegedly cause a split in litigation and will possibly lead to a bifurcation of the dispute between the Plaintiffs claims against the 1st Defendant and against the other Defendants.

The Plaintiffs refers to Bina Jati Sdn Bhd v Sum-Projects (Brothers) Sdn Bhd [2002] 1 CLJ 433 and the decision of the Federal Court in Jaya Sudhir Jayaram v Nautical Supreme Sdn Bhd [2019] 7

Firstly, I find that the case of Bina Jati (supa) is a case that was applying the old Arbitration Act 1952. Applying the then applicable law Alauddin Mohd Sheriff JCA held: - “The third ground raised by learned counsel touches upon the jurisdiction of the High Court in matters of arbitration. There is no doubt that the High Court has supervisory jurisdiction over arbitration and arbitrators. Section 25(2) Arbitration Act 1952 provides: Where an agreement between any parties provides that disputes which may arise in the future between them shall be referred to arbitration and a dispute which so arises involves the question whether any such party has been guilty of fraud, the High Court shall, so far as may be necessary to enable that question to be determined by the High Court, have power to order that the agreement shall cease to have effect and power to give leave to revoke the authority of any arbitrator or umpire appointed by or by virtue of the agreement. Paragraph 11 of the Schedule to the Courts of Judicature Act 1964 provides additional power to the High Court to dismiss or stay proceedings by reason of multiplicity of proceedings. In any event the High Court can invoke its inherent powers under O. 92 r. 4 Rules of the High Court to make any order as may be necessary to prevent injustice. In the instant appeal the respondent should not be harassed by succession of proceedings as they are under a threat of a winding-up petition. The House of Lords in Beaufort Development Ltd v. Gilbert-Ash N.I. Ltd[1998] WLR 860 held: ... that the arbitration clause was intended to confer on the arbitrator the plenitude of powers possessed by the court to determine the rights of the parties; that it was necessary to spell out those powers in the case of the arbitrator but not in the case of the Court since his powers were derived from the contract under which he was appointed, whereas the Court's jurisdiction was unlimited; that, therefore, the fact that power to open up, review and revise was expressly conferred upon the arbitrator but not upon the Court could not be construed as removing the Court's power, and that, accordingly, in the circumstances, there would be no injustice to the Contractors in refusing a stay. (See also Compagnie Europene de Dereale SA v. Tradax Export SA [1986] 2 Lloyd's Rep 301 at 304, 305; Jasa Keramat Sdn. Bhd. v. Monatech (M) Sdn. Bhd. [1999] 4 CLJ 533).”

On the other hand, Jaya Sudhir (supra) is case concerning the right of non-parties to an agreement to arbitrate to injunct the arbitration proceedings or the agreement to arbitrate and have the subject matter of dispute be heard before the Courts first. It is not a case concerning the right of a party to have the suit stayed in accordance with section 10 of the Arbitration Act. I reproduce relevant parts of the judgment of Idrus Harun FCJ in that case: - “[70] We must now embark upon a consideration of the issue of commonalities between the instant suit, the 544 Suit and the arbitration proceedings. No doubt, we find clear and unarguable similarities and significant overlap between both suits and the arbitration proceedings. In summary, the identical issues relate to the 10% shares in question, the remaining 70% shares in the third respondent registered in the name of the second respondent, and the shareholder agreement. The reliefs sought in the arbitration proceedings and the two suits are: shares in the third respondent from the second respondent to the appellant is in breach of the shareholder agreement. In the instant suit the appellant seeks to declare that he is the legal and beneficial owner of the said 10% shares and that the transfer of these shares by the second respondent does not require the consent of the first respondent; and [71] Therefore, due to the similarities highlighted above, it has become immediately clear that apart from the above possibilities and risks, costs will also be duplicated in the event that both the present consolidated suit and the arbitration proceedings are to proceed simultaneously. We are also mindful that the application by the second and third respondents to stay the proceedings in this suit had been dismissed and the appeal to the Court of Appeal against the decision had been withdrawn. In fact, as we have indicated earlier, this suit and the 544 Suit are already at the trial stage. These factors, taken together with the other risks and possibilities discussed above attach a very strong and significant degree of credence to the argument of the appellant that this suit should take precedence over the arbitration. Hence the injunction granted by the learned judge is undoubtedly correct.”

The issue of multiplicity of proceedings due to the split of the claims with some of the defendants to be heard in arbitration and some before the Courts is nothing peculiar. This could be seen from the judgment of Jeffrey Tan JCA (as he then was) in Comos Industry Solution GMBH v Jacob and Toralf Consulting Sdn Bhd [2011] CLJU 1770 where his Lordship held:- “[16] Enclosure 41 was not a step in the proceedings. The fact that other defendants applied but failed to set aside the writ could not be held against the appellant (see 8ART). There was a valid and binding arbitration agreement between the appellant and respondent, and the fact that the respondents had other defendants should not impact on the right of the appellant to refer the dispute to arbitration.”

The approach of the Courts in dealing with potential multiplicity of proceedings can be seen in Protasco Bhd v Tey Por Yee & another appeal [2018] 5 CLJ 299 where the Court held:- “[60] Our conclusion is fortified, and we are indeed bound by the decision of the Federal Court in Press Metal Sarawak Sdn Bhd v. Etiqa Takaful Bhd [2016] 9 CLJ 1; [2016] 5 MLJ 417 in this respect. In that case, the apex court held that in determining the scope or precise nature of the dispute intended to be submitted to arbitration, the clause ought to be interpreted widely. The commercial purpose was of primary importance. In arriving at this decision, it was held that the approach adopted in the case of KNM Process Systems Sdn Bhd v. Mission Biofuels Sdn Bhd [2013] 1 CLJ 993 by Mohamad Ariff Yusof J (later JCA) was correct and approved accordingly. [61] It therefore follows that the stay of proceedings granted by this court pursuant to the application made under s. 10 of the AA by PT ASU encompasses the entirety of the dispute including that part of Protasco's claim relating to a conspiracy to defraud/injure as well as the imposition of a constructive trust. Therefore, no part of Protasco's claim against PT ASU falls to be considered in the civil proceedings, which are stayed pending arbitration. In effect, this means that the claims premised on a breach of contract as well as the conspiracy allegations and the imposition of a constructive trust all fall to be determined by way of arbitration. This was clearly the intention of the parties when they entered into the agreement and must be given full effect.”

56.

stay the court proceedings only to the extent required under s. 10 of the AA, as per the order of this court in relation to PT ASU, but on condition that the proposed arbitration proceed only after the resolution of the remaining court proceedings, ie, resolve that part of the court proceedings which falls outside s. 10 first; or

(ii) stay the court proceedings only to the extent required under s. 10 of the AA insofar as PT ASU only is concerned, and allow the arbitration and the remaining court proceedings to run in parallel, namely a concurrent resolution of the arbitration involving Protasco and PT ASU, and that part of the court proceedings that fall outside s. 10, namely that part of the suit relating to Protasco versus Tey and Ooi. …. [86] The consequence of staying the arbitration means only that it will be heard after the court proceedings. The arbitration is not avoided or nullified in any way. On the contrary, the arbitration agreement is given full effect, only at a later stage. The non-granting of a stay to the non-parties does not affect the stay of proceedings order against PT ASU, save that the arbitration process does not commence until after the adjudication of the non-parties' claims in the High Court. And such a course, in our view is calculated to achieve the most-just result between the parties. [87] Finally, we are cognisant that Protasco's right to sue while being a fundamental right, is not an absolute one. It may be stayed even against non-parties to an arbitration agreement. [88] We also considered the need to hold Protasco to its agreement to arbitrate vis a vis PT ASU. Protasco ought not to be allowed to evade or circumvent its agreement in this context. [89] We also note, that as in Tomolugen, Protasco is the sole plaintiff and is bound to arbitrate the issues raised by it in its claim against PT ASU. To that extent, it cannot complain that its right to timely access to the court has been adversely affected. These factors were all considered and weighed. [90] However, as against this, it does not mean that just because Protasco's claim against PT ASU is stayed, it necessarily follows that the rest of the dispute against Tey and Ooi must necessarily be stayed as a matter of course. As reasoned in Tomolugen, which reasoning we respectfully adopt, the court is bound to strike a balance between the following considerations:

The plaintiff's right to choose whom it wants to sue and where;

The court's desire to prevent a plaintiff from circumventing the operation of an arbitration clause; and

The court's inherent power to manage its processes to prevent an abuse of process and ensure the efficient and fair resolution of disputes.

The balance that is achieved should be just in all the circumstances of the case.”

I also refer to the decision of the Supreme Court of Queensland in Bulkbuild Pty Ltd v Fortuna Well Pty Ltd & Ors [2019] QSC 173. The case concerns a design and construct building contract that included an agreement to have the dispute arising therein to be referred to arbitration. Bulkbuild commenced proceedings before the Courts in Queensland and Fortuna sought an order to stay the basis of the said arbitration clause. Bulkbuild argued that the said arbitration agreement was incapable of being performed as it suggests that it has also commenced proceedings not just against Fortuna but also against 2 other defendants in the same suit. This will cause a split in the claims and the potential danger or differing decisions against the said Defendants.

The Supreme Court of Queensland held that this does not justify not enforcing the agreement to arbitrate. The potential splitting of claims and the potential inconsistent factual findings does not mean that the right of Fortuna to have the dispute arbitrated is not abrogated. Parties are still required to comply with what they have agreed to.

For the above reasons, I reject the Plaintiffs contention that this Court is entitled not to stay the proceedings if there is a danger of a split in litigation and the potential danger of conflicting decisions made in these two forums.

The Plaintiffs further contends that the 2nd, 3rd, 5th, 7th, 9th, 10th, 13th, 15th, 16th and 23rd Defendants had filed an application to stay the proceedings in favour of arbitration. These applications were dismissed by the High Court and confirmed by the Court of Appeal.

I have considered the judgment of Liza Chan J and the notes of the Court of Appeal. I find that the said decision does not apply to the facts at hand. The Plaintiffs now concedes that there exists agreement to arbitrate between the named Plaintiffs and the 1st Defendant. In those agreements, I find that parties did enter into an agreement to arbitrate and that the dispute fall within scope of the agreement to arbitrate.

The notes of the Court of Appeal also confirms that the claims between the Plaintiffs and the other Defendants do not fall within any agreement to arbitrate, and it would be incorrect to force an arbitration on parties who have not agreed to resolve the dispute by arbitration. This is unlike with the application filed by the 1st Defendant. E. Issue of Forum non Conveniens

I also note that the 1st Defendant have also prayed for ancillary orders to stay these proceedings on the grounds that the claim should be heard by way of arbitration and that this Court does not have jurisdiction.

The 1st Defendant relies on Globus Shipping & Trading Co. (Pte) Ltd v Taiping Textiles Berhad [1976] CLJU 31, Petrodar Operating Co Ltd v Nam Fatt Corporation Bhd [2014] MLRA 21 and American Express Bank Ltd v Mohamad Toufic Al-Ozeir [1995] 1 CLJ 273.

I do not agree with the contentions raised by the 1st Defendant on this issue. I find that the appropriate forum to hear this claim is with the Malaysian Courts in view that the Plaintiffs are residing in Malaysia and that the scheme relates to investments to be undertaken in Malaysia. The relevant witnesses are also within jurisdiction and therefore this Court is the most appropriate fo5rum to hear the claim.

Nevertheless, as parties have agreed to have the dispute arbitrated and there is no evidence that the agreement to arbitrate is null and void or is incapable of being performed, the agreement to arbitrate must be complied with. As such, this suit against the 1st Defendant by the above referred Plaintiffs is stayed due to section 10 of the Arbitration Act and not on the basis of forum non-conveniens as suggested by the 1st Defendant. F. Orders of this Court 67. For the above reasons, I allow the 1st Defendant’s application to stay only the claim between the 1st Defendant and the Plaintiffs number 3,4,5,6, 7, 8,9, 10,11,12,13,14,151, 15, 16, 18, 19, 20, 21, 22,23, 24, 26, 27, 28, 29, 30, 31, 32, 33, 34, 25, 36, 27, 28, 29, 75, 40, 41, 42, 43, 153, 44, 45, 46, 47, 48, 154, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 61, 62, 63, 64, 66, 67, 68, 156, 69, 70, 71, 72, 73, 74, 157, 75, 158, 76, 77,78, 79, 80, 81, 82, 84, 116, 87, 92, 93, 94, 95, 96, 97, 98, 99, 159, 100, 160, 101, 102, 161, 103, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 128, 129, 130, 131, 132, 133, 134,135, 136, 139, 140, 162, 144, 145, 146, 147, 148, 149 and 150.

The claim against the 1st Defendant by the other Plaintiffs (save those named herein) is to proceed.

Costs of this application are to be paid by the 1st Defendant to the Plaintiffs. The only reason that the costs are to be borne by the 1st Defendant is due to the delay by the said Defendant in filing the application. I note that the said Defendant had only recently entered appearance and did not take any steps in the said proceedings. However, they should have acted expediently to ensure that the proceedings are not delayed unnecessarily. As such, it would be fair, in view of the delay caused by the 1st Defendant’s indolence, that the costs of this application are borne by the said Defendant to be paid to the Plaintiffs.

I also direct that the said Defendant file its defence to the claims filed by the other Plaintiffs. As there is no agreement to arbitrate between them, the 1st Defendant must be directed to file its defence and comply with directions made at case management on an urgent basis. This is to ensure that the trial of this claim is not derailed. Dated 23rd December 2024 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC5 Counsel: Brenda Chan Qing Wen together with Chai Zi Yan for the Plaintiffs Messrs. David & Paulian Zack Lim for 1st Defendant Messrs. Susielan & Associates Evon Chin for 3rd Defendant Messrs. K.F.EE & Co. Afiqah Aina for 5th, 6th, 7th, 10th, 16th & 21st Defendants Messrs. Lavania & Balan Chambers Arul Ganesh Boopalan for 9th,15th & 23rd Defendants Messrs. Kamil Hashim Raj & Lim Razeena Rahumat for 11th & 24th Defendants Messrs. Moideen & Max Elizabeth Goh for 12th, 17th & 20th Defendants Messrs. Robert Low & Ooi 105