Hotel Sentral Pudu Sdn Bhd v Autocube (Beijing) New Energy Technology Co Ltd (WA-24NCC(ARB)-23-04/2021)

This Originating Summons (“OS”) was filed by the Plaintiff (“Hotel Sentral”) against the Defendant pursuant to s. 37 of the Arbitration Act, 2005 (“AA 2005”) to set aside a Foreign Arbitration Award published by China International Economic and Trade Arbitration Commission (“CIETAC”) on 30.07.2015 (‘the CIETAC Arbitration Award’).

I heard the OS on 18th August 2021 and allowed it with costs. The Defendant has appealed against my decision. This judgment contains the reasons for my decision.

The background facts are set out in detail as they have a bearing in the determination of the issues involved in the present proceedings.

On 18.10.2016, vide Originating Summons (Ex-Parte) No. WA- 24NCC(ARB)-32-10/2016 (“OS 32”), one Teknologi Tenaga Baru Che 3 Lifang (Beijing) Sdn Bhd applied as Plaintiff to the High Court to register and enforce the Arbitration Award No. 0767(2015) dated 30.07.2015 issued by CIETAC as a Judgment of the High Court against Hotel Sentral.

On 23.11.21, the High Court allowed OS 32 to register and enforce the Arbitration Award No. 0767(2015) dated 30.07.2015 as a Judgment of the High Court (“the Ex-Parte Order”).

On 09.12.2016, Hotel Sentral filed a Notice of Application to set aside the Ex-Parte Order dated 23.11.2016.

At around the same time, Hotel Sentral filed Originating Summons No. WA-24NCC(ARB)-37-12/2016 (“OS 37”) at the High Court to set aside the same Arbitration Award as a Judgment of the High Court.

On 19.04.2017, Hotel Sentral’s Application to Set Aside the Ex-Parte Order was dismissed. Hotel Sentral appealed to the Court of Appeal vide Civil Appeal No. W-02(IM)(NCC)-859-05/2017 against the said decision.

On 24.05.2017, the High Court allowed OS 37 and set aside the Arbitration Award. Teknologi Tenaga Baru Che Lifang (Beijing) Sdn Bhd appealed to the Court of Appeal vide Civil Appeal No. W-02(NCC)(A)- 1220-07/2017 against the decision.

On 08.05.2018, the Court of Appeal decided both appeals in Hotel Sentral’s favour and ordered costs of RM15,000 to be paid by Autocube (Beijing) New Energy Technology Co. Ltd. It is ot be noted that Teknologi 4 Tenaga Baru Che Lifang (Beijing) Sdn Bhd did not appeal against the Court of Appeal decisions.

Almost 3 years later, on 06.04.2021, Hotel Sentral’s solicitors were served Originating Summons (Ex-parte) No. WA-24NCC(ARB)-11- 02/2021 (“OS 21) filed by the Defendant to enforce the same Arbitration Award dated 30.07.2015 as a Judgment.

Hotel Sentral filed the the present OS to set aside the Arbitration Award which is now sought for the second time to be registered and enforced under the name of AutoCube (Beijing) New Energy Technology Co. Ltd against Hotel Sentral in OS 21.

Based on the affidavit in support, the Notice of Intention to use affidavits filed by Hotel Sentral in OS 37, Hotel Sentral’s affidavits filed in OS 37, it appears that Hotel Sentral’s application is centred on 2 main grounds:

The Defendant failed to give proper notification of the CIETAC Arbitration proceedings to the Plaintiff; and

The matter is res judicata; connected to this ground, is the ground that the amendment to the Arbitration Award under the Law of China has no effect on the findings and order of the High Court given on 5

24.05.2017 and affirmed by the Court of Appeal on 08.05.2018. [14] Hotel Sentral argued that:

that they had never received the cause papers of the CIETAC arbitration proceedings;

(ii) Notwithstanding that the Arbitration Award has been amended pursuant to the Law in China to the name of AutoCube (Beijing) New Energy Technology Co. Ltd and now sought to be registered and enforced in OS 21, it is the same Arbitration Award sought to be registered and enforced in OS 32 under the name of Tenaga Baru Che Lifang (Beijing) Sdn Bhd, and the very same Arbitration Award which has been set aside by the High Court on 24.05.2017 in OS 37, where the setting aside was affirmed by the Court of Appeal on 08.05.2018. The decision of the High Court was reported as Hotel Sentral Pudu Sdn Bhd v Teknologi Tenaga Baru Che Lifang (Beijing) Sdn Bhd [2018] MLJU 597, [2018] 1 LNS 583 where Khadijah Idris JC ( as Her Ladyship then was) held: “[38] Taking into consideration the totality of the facts before this court I am of the considered opinion there is no credible evidence to show that the Applicant was duly and properly notified of the CIETAC arbitration proceedings as well as the appointment of the Arbitral Tribunal. This explains the Applicant's absence and their non-participation in the CIETAC arbitration proceedings. 6 [39] Under the circumstances the Applicant has proven a case within the ambit of s. 37(1)(a)(iii) of the AA 2005, in so far as it relate to not being given proper notification given in relation the CIETAC arbitration proceedings. This has adversely prejudiced the Applicant. On this ground alone, and bearing in mind the underlying principle of s. 37 of the AA 2005 as set out in the authorities cited above, I allowed the Applicant's application to set aside the Arbitration Award as of right. For completeness, the other grounds forwarded by the Applicant is discussed below. … Conclusion [48] Premised on the reasons stated above, it is my considered view that the Applicant has proven, on balance of probabilities, that the Applicant was not duly and properly notified of the CIETAC arbitration proceedings which is one of the grounds stipulated under s. 37 of the AA 2005 for setting aside an arbitration award. As such I am constrained to allow the OS and set aside the Arbitration Award as of right.”(plaintiff’s emphasis) Defendant’s case [15] The Defendant did not file any affidavit nor filed any submission as directed. At the hearing on 18.08.2021, Counsel for the Defendant sought to explain that the translation of the Arbitration Award and the party in the earlier proceedings was a mistake. This Court’s decision [16] The determination of the OS herein is dependent on the principles governing the setting aside of an arbitral award pursuant to s. 37 of the AA 2005. 7 [17] S. 37 reads: “37. Application for setting aside

An award may be set aside by the High Court only if-

the party making the application provides proof that-

a party to the arbitration agreement was under any incapacity;

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the laws of Malaysia;

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present that party’s case;

(iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;

subject to subsection (3), the award contains decisions on matters beyond the scope of the submission to arbitration; or

(vi) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act; or

the High Court finds that-

the subject-matter of the dispute is not capable of settlement by arbitration under the laws of

(ii) the award is in conflict with the public policy of Malaysia. 8

Without limiting the generality of subparagraph (1)(b)(ii), an award is in conflict with the public policy of Malaysia where-

the making of the award was induced or affected by fraud or corruption; or

a breach of the rules of natural justice occurred-

during the arbitral proceedings; or

(ii) in connection with the making of the award.

Where the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside;

An application for setting aside may not be made after the expiry of ninety days from the date on which the party making the application had received the award or, if a request has been made under section 35, from the date on which that request had been disposed of by the arbitral tribunal;

Subsection (4) does not apply to an application for setting aside on the ground that the award was induced or affected by fraud or corruption;

On an application under subsection (1) the High Court may, where appropriate and so requested by a party, adjourn the proceedings for such period of time as it may determine in order to allow the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside;

Where an application is made to set aside an award, the High Court may order that any money made payable by the award shall be brought into the High Court or otherwise secured pending the determination of the application”. 9 [18] In the case of Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413, the Federal Court in assessing s. 37 AA 2005 held that: “[57] The court must evaluate the nature and impact of the particular breach in deciding whether the award should be set aside under s 37. The court must also consider the background policy of encouraging arbitral finality and minimalist intervention approach to be adopted in line with the spirit of UNCITRAL Model Law. The effect of ss 8, 9, 37 and 42 of the AA 2005 is that the court should be slow in interfering with or setting aside an arbitral award. The court must always be reminded that constant interference of arbitral award will defeat the spirit of the AA 2005 which for all intent and purposes, is to promote one-stop adjudication in line with the international practice (see: Ajwa For Food Industries Co (MIGOP), Egypt v Pacific Inter-Link Sdn Bhd & another appeal [2011] MLJU 1537; [2013] 2 CLJ 395; Taman Bandar Baru Masai Sdn Bhd v Dindings Corporations Sdn Bhd [2009] MLJU 793; [2010] 5 CLJ 83; and Lesotho Highlands Development Authority v Impregilo SpA and others [2005] UKHL 43). In this regard, the court needs to recognise the autonomy of the arbitral process by encouraging finality; and its advantage as an efficient alternative dispute resolution process should not be undermined.” No proper notification of the CIETAC Arbitration proceedings to the Plaintiff [19] In this OS, as mentioned earlier, the Defendant did not file any affidavit to oppose the setting aside of the Arbitration Award. [20] I had rejected the Defendant’s learned Counsel’s explanation alluded to earlier in this judgment as it is a statement from the Bar. In this regard, the Court of Appeal in Ng Hee Thoong & Anor V Public Bank Berhad [1995] 1 MLJ 281; [1995] 1 CLJ 609 held: 10 “It is a principle fundamental to our system of adversarial litigation that evidence upon a matter must be given on oath. The practice of counsel giving evidence from the Bar, as was done in this case, is to be deprecated “. [21] The same case held that where one party makes a positive assertion upon a material issue, the failure on his part to contradict it is usually treated as an admission by him of the fact so asserted. I therefore have no hesitation in concluding that Hotel Sentral was not given proper notification of the CIETAC Arbitration proceedings and this entitles Hotel Sentral to set aside the Arbitration Award within the scope of s. 37(1)(a)(iii) of the AA 2005. [22] In any event, this point is easily fortified by the findings of Khadijah Idris JC (as her Ladyship then was ) in OS 37 where the High Court decided in favor of Hotel Sentral in setting aside the Arbitration Award when it found that Hotel Sentral was not duly and properly notified of the CIETAC arbitration proceedings. Teknologi Tenaga Baru Che Lifang (Beijing) Sdn Bhd aggrieved, appealed to the Court of Appeal which affirmed the decision of the High Court on 08.05.2018. Res Judicata? [23] With regard to this issue, in my view the Arbitration Award having been set aside on 24.05.2017 in OS 37 on the ground that Hotel Sentral was not duly and properly notified of the CIETAC arbitration proceedings, with the setting aside affirmed by the Court of Appeal, the Defendant cannot 3 years later, 11 under the guise of a “mistake in the name” seek to enforce the same Arbitration Award again. [24] In Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 at pp 197–198 the Supreme Court in a judgment delivered by Peh Swee Chin FCJ explained: “What is res judicata? It simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicatum. When a matter between two parties has been adjudicated by a court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur. The public policy of the law is that, it is in the public interest that there should be finality in litigation — interest rei publicae ut sit finis litium. It is only just that no one ought to be vexed twice for the same cause of action — nemo debet bis vexari pro eadem causa.” [25] At pages 199 to 202, the Federal Court comprehensively explained that:

Both the maxims of finality in litigation and that no one ought to be vexed twice for the same cause of action are the rationales for the doctrine of res judicata, but the earlier maxim of finality in litigation has the further elevated status of a question of public policy;

(ii) res judicata creates an estopel per rem judicatum and applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which 12 properly belonged to the subject of litigation and which the parties, exercising reasonable diligence might have brought forward at the time: per Wigram VC in Henderson v Henderson (1843) 3 Hare 100 at p 115; the 'point' should actually include causes of action, or all causes of action which one of the two parties has against the other, based on, or substantially on the same facts or issues, and not just all issues of law or of fact that are in dispute between the parties;

(iii) there are in fact two kinds of estoppel per rem judicatum, the first relates to cause of action estoppel and the second, to issue estoppel, which is a development from the first;

(iv) cause of action estoppel arises when rights or liabilities involving a particular right to take a particular action in court for a particular remedy are determined in a final judgment and such right of action ie cause of action, merges into the final judgment; the cause of action may not be relitigated between the same parties because it is res judicata;

to prevent multiplicity of action and also in order to protect the underlying rationales of estoppel per rem judicatum, cause of action estoppel has been extended to all other causes of action (based on the same facts or issues) which should have been litigated or asserted in the original earlier action resulting in the final judgment, and which were not, either deliberately or due to inadvertence; see Public Trustee v Kenward [1967] 2 All ER 870; [1967] 1 WLR 1062; Conquer v Boot [1928] 2 KB 336; Chamberlain v Deputy Commissioner of Taxation 13

62 ALJR 324; and LE Walwin & Partners Ltd v West Sussex County Counci [1975] 3 All ER 604;

(vi) issue estoppel literally means simply an issue which a party is estopped from raising in a subsequent proceeding. However, in law, issue estoppel means a lot more, ie that neither of the same parties or their privies in a subsequent proceeding is entitled to challenge the correctness of the decision of a previous final judgment in which they, or their privies, were parties; neither of such parties will be allowed to adduce evidence or advance any argument to contradict such decision;

(vii) issue estoppel prevents contradiction of a previous determination, whereas cause of action estoppel prevents reassertion of the cause of action: per Peter Gibson J in Lawlor v Gray [1984] 3 All ER 345 at p 350;

(viii) in preventing such contradiction of the previous judgment, there is one school of thought that issue estoppel applies only to issues actually decided by the court in the previous proceedings and not to issues which might have been and which were not brought forward, either deliberately or due to negligence or inadvertence, while another school of thought holds the contrary view that such issues which might have been and which were not brought forward as described, though not actually decided by the court, are still covered by the doctrine of res judicata, ie the doctrine of estoppel per rem judicatum; 14

(ix) the Federal Court prefers the aforesaid contrary view, which represents a correct, even though broader, approach to the scope of issue estoppel and is warranted by the weight of authorities being completely in accord or resonant with the rationales behind the doctrine of res judicata, particularly the question of the public policy that there should be finality in litigation in conjunction with the exploding population; the increasing sophistication of the populace with the law and the expanding resources of the courts being found always one step behind the resulting increase in litigation;

Res judicata therefore is not confined to the issues which the court is actually asked to decide, but covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them, citing Somervell LJ in Greenhalgh v Mallard [1947] 2 All ER 255 at p 257; and quoted with approval in the Privy Council in Yat Tung Investment Co v Dae Heng Bank & Anor [1975] AC 581; [1975] 2 WLR 690 and discussed the cases of SCF Finance Co Ltd v Masri & Anor (No 3) [1987] QB 1028; [1987] 1 All ER 194 (CA); Bell v Holmes [1956] 3 All ER 449; [1956] 1 WLR 1359; and Hoystead v Taxation Commissioner [1962] AC 155);

(xi) the words 'exercising reasonable diligence' in Henderson v Henderson (1843) 3Hare 100: 15

necessitate a mental exercise of making a finding as to whether there was diligence, or reasonable diligence, in the earlier failure to bring in at the previous trial, the issues which should have been brought in the earlier action and which were not, or in asserting all other causes of action arising out of the same facts in the earlier action and which were not;

ought to be understood as a gentle rebuke for the failure aforesaid despite the fact that the party had the opportunity of bringing forward all such issues or asserting all such causes of action; and

are not meant to impose a pre-condition for applying the doctrine of res judicata, but are meant to say that the non-bringing of the issues would count in any event irrespective of whether the failure was or was not deliberate or due to inadvertence or negligence; and

(xii) the court has the inherent jurisdiction to dismiss an action by applying the doctrine of res judicata against a party even if it has not been pleaded, as estoppel is based on a question of public policy, and there should be finality in litigation: Superintendent of Pudu Prison & Ors v Sim Kie Chon [1986] 1 MLJ 494 at p 498, per Abdoolcader SCJ (as he then was). 16 [26] I shall now revert to the fundamental facts in the instant proceedings. [27] Having carefully srutinised the causepapers, it is indisputable that in OS 21, the Arbitration Award sought to be registered and enforced relates to the same Arbitration Award amended to the Defendant’s name. [28] To me, it is the same “old wine in a new bottle” and as such, I hold that the issue of whether the Arbitration Award can be enforced and its setting aside was considered and already determined by the High Court, and subsequently, conclusively decided with finality by the Court of Appeal; there being no appeal against the Court of Appeal order. [29] In my judgment, the High Court Order dated 24.05.2017 and the Court of Appeal order dated 08.05.2018 affirming that the Arbitration Award was set aside, are binding on all the parties including the Defendant before this court . The matter is now clearly res judicata and it cannot be re-opened and re-litigated by the parties or their privies. It is in the public interest that there should be finality in litigation. [30] For setting aside an arbitral award based on a breach of public policy, I would refer to an excerpt from the Federal Court decision in Jan De Nul (M) & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413 (supra) as follows: “[58] The scope of public policy ground for setting an arbitral award could only be invoked in deserving case i.e., in instances where it appears a violation of the most basic notions of morality and justice. It covers fundamental principles of law and justice in substantive as well as procedural respect. 17 Instances where the upholding of an arbitral award would shock the conscience, or clearly injurious to the public good, or wholly offensive to the ordinary reasonable and fully informed member of the public, had been held by courts in various jurisdiction to fall within the category of public policy ground for setting aside an arbitral award. Thus, instances such as ‘patent injustice’, ‘manifestly unlawful and unconscionable’, substantial injustice’, ‘serious irregularity’ and other similar serious flaws in the arbitral process and award, would also fall within the applicable concept of public policy and therefore by virtue of s 37 (1)(b)(ii) of the AA 2005 when proven, can be a ground for the court to exercise its discretion to set aside the award (see: Ajwa for Food Industries). Such instances fall within ‘the basic and fundamental notions or principles of justice’. The court must adopt the principle as laid down by Howard M Holtzmann and Joseph E Neuhans as found in their commentary in A guide to the UNCITRAL Model on International Commercial Arbitration: Legislative History and Commentary ‘that the term ‘public policy’ which was used in the 1958 New York Convention and many other treaties, covered fundamental principles of law and justice in substantive as well as procedural respects’. The terms ‘patent injustice’ or ‘substantial injustice’ or ‘manifestly unlawful and unconscionable’ as often used by the court in setting aside arbitral awards, do not mean injustice which is more than de minimis; what is required is that the injustice had real effect and had prejudiced the basic right of the applicant (see: Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR 86).”(emphasis added) [31] As such, I find that Hotel Sentral’s plea of res judicata has merit, within the scope of the principles set out in Asia Commercial Finance, and within the ambit of s. 37 (1) (b) (ii) of the AA 2005. By seeking to enforce the same Arbitration Award albeit now amended in the name of the Defendant, will defy ‘the basic and fundamental notions or principles of justice’ viz the public policy of finality in litigation. 18 [32] For all these reasons, the CIETAC Arbitration Award dated 30.07.2015 is set aside pursuant to s. 37(1)(a)(iii) and s. 37 (1) (b) (ii) of the AA 2005, with costs. Date: 23rd October 2021 -sgd- ….……………………….. Liza Chan Sow Keng Judicial Commissioner High Court of Malaya at Kuala Lumpur COUNSEL: For the Plaintiff : Loh Chun Hoo, Siti Syafiqah Sofia Messrs Chun Ho & Partners For Defendant : Chia Cheng Wee, Lay Fong Tan Messrs Chia & Lee CASES REFERRED: Hotel Sentral Pudu Sdn Bhd v Teknologi Tenaga Baru Che Lifang (Beijing) Sdn Bhd [2018] MLJU 597, [2018] 1 LNS 583 Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413 Ng Hee Thoong & Anor V Public Bank Berhad [1995] 1 MLJ 281; [1995] 1 CLJ 609 Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 19 STATUTES/LEGISLATION REFERRED: Section 37(1)(a)(iii) and s. 37 (1) (b) (ii) of the Arbitration Act 2005