Ifci Limited v 1. Bishopgate Capital Limited (WA-22NCC-705-12/2019)

BISHOPGATE CAPITAL LIMITED [Company No.: LL14187]

ARCHIPELAGO INSURANCE LIMITED [Company No.: LL09355] …. DEFENDANTS GROUNDS OF JUDGMENT Introduction [1] The Writ and Statement of Claim was filed by the Plaintiff against:

the 1st Defendant for a sum of INR618,750,000.00 pursuant to a Settlement Agreement dated 22.3.2019 (“Settlement Agreement”) arising from a default by the 1st Defendant to pay on a promissory note (“the PN”) assigned to the Plaintiff; 2

(ii) against the 2nd Defendant for a sum of INR572,457,085 being the insurance claim pursuant to a Credit Default Risk Insurance Policy dated 20.11.2017 issued by the 2nd Defendant (“the AIL Policy”) where the 2nd Defendant agreed to indemnify the insured against losses arising directly from inter alia, a default of the PN; alternatively, the Plaintiff seeks to recover from the 2nd Defendant the sum of INR618,750,000.00 under the Settlement Agreement which was executed by the Plaintiff and the 2nd Defendant on behalf of the 1st Defendant. [2] This judgment concerns Enclosure 12 which is the 2nd Defendant’s application made pursuant to Section 10 of the Arbitration Act, 2005 (“AA 2005”), Order 69 Rule 10 of the Rules of Court 2012 and/or the inherent jurisdiction of the Court to stay proceedings herein pending arbitration as provided in the AIL Policy. Background [3] Arising from the 1st Defendant’s default to honour the PN, the Plaintiff lodged its claim for a sum of INR572,457,085.00 with the 2nd Defendant under the AIL Policy to recover the losses it incurred. [4] The 2nd Defendant repudiated the Plaintiff’s Claim and alleged that the AIL Policy had been rendered void and/or cancelled on various grounds, such as the purported non-payment of cash collateral to the 2nd Defendant and the purported fraud committed by the 1st Defendant’s ex-directors. 3 2nd Defendant’s grounds for a stay pending arbitration [5] The 2nd Defendant’s stay application cited the following reasons:

The Plaintiff’s present action ought to be stayed, and referred to arbitration, on the ground that there is a valid arbitration agreement in the AIL Policy. The salient terms of the AIL Policy inter alia, states: page 5 of exhibit “LBI-1”: “Arbitration : Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof shall be settled by arbitration in accordance with the Rules of Arbitration of the Kuala Lumpur Regional Centre for Arbitration”; and page 23 of exhibit “LBI-1”: “Limitation of time for bringing Arbitration If a claim is made under the Policy and is rejected by the Company [AIL], the insured or his/her legal personal representatives [IFCI being the insured or holder from time to time of the Insured Note] shall commence arbitration proceedings within six (6) months of such rejection, failing which the Company [AIL] shall be discharged from all liability whatsoever for that claim.”

(ii) AIL has not taken any other steps in these proceedings other than filed its Defence; AIL had filed its defence solely as a defensive measure and in its Defence had expressly and unequivocally 4 asserted and maintained its contention(s) that the dispute ought to be referred to, and decided, by way of arbitration;

(iii) the AIL Policy is not null and void, inoperative or incapable of being performed and no such contention(s) have been raised by the Plaintiff. AIL’s defence and contention is that it is not liable to the Plaintiff under the AIL Policy for reasons set out in its Defence;

(iv) in view of its denial of liability and/or (alleged) breach of the AIL Policy by the Plaintiff, there is indeed a dispute between the parties with regards to the matters referred;

the Plaintiff’s alternative cause of action against the 2nd Defendant premised on the Settlement Agreement is misconceived, and is simply an attempt by the Plaintiff to side-step the Arbitration Clause; all that the 2nd Defendant did was to act and negotiate settlement on behalf of the 1st Defendant;

(vi) the 2nd Defendant had confirmed unequivocally both at the time of commencement of this action, and even now, that it was, and remains, ready and willing to do all things requisite to enable the matters in dispute to be determined by arbitration in accordance with the provisions of the AIL Policy; and

(vii) the Court must stay the action as s. 10 of AA 2005 is in mandatory terms. 5 Plaintiff’s objections to the stay application [6] The Plaintiff contends that the 2nd Defendant’s application for a stay is unsustainable and bound to fail because:

the 2nd Defendant had taken steps in the proceedings herein by filing and served its Statement of Defence on 10.2.2020, it is not entitled to ask for a stay of proceedings and to refer the matter to arbitration pursuant to s. 10(1) of AA 2005. On this basis alone, Encl. 12 should be dismissed. In support , Counsel cited: a. the Federal Court case of Sanwell Corp v Trans Resources Corp Sdn Bhd & Anor [2002] 2 MLJ 625: “…if the applicant has served any pleadings, then he has clearly taken a step in the proceedings within the meaning of s 6 of the Act. He has thereby elected to proceed with the proceedings in the High Court and would be barred from applying for a stay of proceedings to refer the dispute to arbitration…” b. The Court of Appeal case of Linde Gas Malaysia Sdn Bhd v Pasifik Utama Sdn Bhd & Anor [2011] 5 CLJ 40 which was decided after the AA had come into operation and which followed the Sanwell case: “[37] …it is trite law that if a defendant has served any pleadings, then he has clearly taken a step in the proceedings and has thereby elected to proceed with the proceedings in court and would be 6 barred from applying for a stay of proceedings to refer the dispute to arbitration…“ c. The Court of Appeal case of Yeo Eng Lam v. Infinity Vantage Sdn Bhd [2020] 6 CLJ 616 where the defendant, prior to filing the stay application, had filed an application to disqualify the plaintiff’s solicitors and filed her statement of defence and counterclaim. The defendant argued, among others, that the statement of defence was filed with ‘express reservation’ that the defendant reserved her right to refer the matter to arbitration. The Court of Appeal eventually rejected this argument and dismissed her appeal on the following grounds: “[20] Two things are clear from the decisions referred above. First, save for filing the memorandum of appearance, if the intention of a party to an agreement is to give effect to the arbitration clause in their agreement, that party must ensure the stay application is filed at the soonest possible time before taking any other steps in the proceedings that would indicate an intention to proceed with the litigation in court. Second, it can be surmised that any application made to the court must clearly and unequivocally state that it was made whilst reserving that party’s right to refer the matter to arbitration. [21] Prior to the filing of encl. 8, but after filing her memorandum of appearance on 3 October 2017, the defendant had filed an application to disqualify M/s Ghazi & Lim, the plaintiff’s solicitors in encl. 5 on 9 October 2017. The defendant then filed her statement of defence and the counterclaim on 13 October 2017. We were of the view that these two steps taken by the defendant (that is, 7 filing of encl. 5 and statement of defence and counterclaim) were made without express nor unequivocal reservation on her rights to refer the matter to arbitration, notwithstanding paras. 1 and 3 of her statement of defence where it is stated as follows:

Prosiding yang dibawa oleh Plaintiff di hadapan Mahkamah Yang Mulia ini adalah perkara subjek perjanjian timbangtara. Pembelaan ini oleh itu difailkan tanpa prejudis kepada hak Defendan untuk penggantungan prosiding dan membawa perkara yang dirujuk kepada timbangtara. ...

Sementara menunggu resolusi tersebut, pemfailan Pembelaan ini tidak boleh dianggap sebagai langkah dalam prosiding. [22] Moreover, the defendant had not only filed her statement of defence but also went on to even include her counterclaim, albeit making reference to refer the dispute to arbitration in para. 25, where the reliefs sought are mainly for declarations and as an alternative prayer 31(h) for the claims to be referred to arbitration. The pleadings of the defendant ran counter to her wish to refer the dispute to arbitration as stated in Sanwell (supra). We took this position notwithstanding the fact that it was as per the learned Deputy Registrar of the High Court’s direction that the defendant filed her statement of defence. The defendant could not be heard to excuse herself from filing the statement of defence because of the learned Deputy Registrar’s directions as she could have easily told the same that she would be filing an application for stay of the High Court proceedings soonest.” 8

(ii) the 2nd Defendant, even by asking for an extension to file its Statement of Defence, would as such be deemed to have waived its right to a stay of proceedings, citing:

the case of Winsin Enterprise Sdn Bhd v Oxford Talent (M) Sdn Bhd [2010] 3 CLJ 634 where Mary Lim J (now JCA) held in relation to a request for extension to file defence: “[15] From the facts in this case it is clear that the defendant has abandoned its right to arbitration by requesting for time to file defence. A defence is only filed where a party intends to defend an action such as is the case here. This can be seen from O. 18 r. 2(1) Rules of the High Court 1980 (RHC 1980). That order provides that where a defendant intends to defend the action instituted, the next step after an entry of a memorandum of appearance is to serve a defence on the plaintiff within the prescribed period unless granted leave to the contrary by the court: 2(1) Subject to paragraph (2), a defendant who enters an appearance in, and intends to defend, an action must, unless the Court gives leave to the contrary, serve a defence on the plaintiff before the expiration of 14 days after the time limited for appearing or after the statement of claim is served on him, whichever is the later. [16] The time period prescribed under O. 18 r. 2 may on application be extended by the court. Alternatively, it may be extended by consent of the parties involved. This is provided under O. 3 r. 5(3) RHC 1980:

(3) The period within which a person is required by these rules, or by any order or direction, to serve, file or amend any pleading or 9 other document may be extended by consent (given in writing) without an order of the Court being made for that purpose. [17] From the evidence it is clear that the defendant sought and was granted by the plaintiff an extension of time to 21 July 2008 to serve and file the defence. Having evinced such an intention to the plaintiff s. 10(1) is no longer available to the defendant. This would be the position whether under the new or old law. In fact I am inclined to go further to say that because of the language deployed in s. 10(1) where stay is now mandatory, subject to the reservations as earlier discussed, applicants who seek to rely on an arbitration agreement must make the application for stay promptly, even before the filing of an appearance.” [emphasis added]

the case of CLLS Power System Sdn Bhd v Sara Timur Sdn Bhd [2015] 11 MLJ 485 (which was also decided by Mary Lim J) “[30] …In Winsin Enterprise, an order for stay under s 10 was refused because the defendant had sought and was granted by the plaintiff, an extension of time to file defence. I took the view that the act of seeking for an extension of time to file defence was a step taken in the proceedings in court, depriving the dependant order of stay sought. [31] It is the view of this court that with the new Rules of Court 2012 doing away with the filing of conditional appearances, there is now greater reason to insist on strict compliance with the provisions of Act 646. Added to this are the recent 10 amendments to Act 646 which remind the court of non-intervention save in matters expressly provided– see s 8 of the Act 646. [32] Now, s 10 requires an applicant such as the defendant to file for a stay of the proceedings in court ‘before taking any other steps in the proceedings’. In fact, such an application may be made through the procedure provided under s 50. The object of such a requirement is clearly to preserve the defendant’s position of non-submission to jurisdiction for the purpose of resolving the dispute or claim in question. Once the defendant has made that application, it may take any other step and that would not compromise or taken as having compromised the defendant’s position on the appropriate forum for resolution of the dispute or claim.” [emphasis added]

Mun Seng Fook v AIG Malaysia Insurance Bhd (formerly known as Chartis Malaysia) [2019] 7 MLJ 59, which held as follows: “[21] The learned sessions judge had granted the extension of time for the defence to be filed by the respondent as that was all that the respondent requested and as such, by its’ own conduct or action, the respondent had waived reliance on the arbitration clause and must be taken to agree that the appellant’s claim be resolved in the court. The respondent had utilised the court’s process as found in the Rules of Court 2012 and as such it must be regarded as having taken a step other than the step of applying for a stay. Section 10 of the Act is no longer available as of right and the application for stay taken out on 28 July 2017 just before the extended time given to file the statement of defence is irrelevant as the respondent has submitted to the jurisdiction of the 11 court and in breach of the mandatory terms of s 10 of the Act.” [emphasis added]

(iii) the scope of the Arbitration Clause is confined to the determination of any difference in the amounts claimed, the subject matter of this suit does not fall within the ambit of the arbitration clause as there is no dispute as to the amount or quantum of the Insurance Claim lodged by the Plaintiff, the 2nd Defendant contention is that the AIL Policy had been cancelled and/or rendered void in respect of the Insurance. The arbitration clause provides “If any difference arises as to the amount of any loss or damage such difference shall independently of all other questions be referred to the decision of an Arbitrator…” This Court’s Determination [7] Section 10 (1) AA 2005 states: “A court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.“ [Emphasis added] [8] The scope and application of s. 10 (1) AA 2005 is well settled. authoritative decisions of the Federal Court made this clear: 12

Tindak Murni Sdn Bhd v Juang Setia Sdn Bhd and another appeal [2020] 3 MLJ 545 where Nallini Pathmanathan FCJ, delivered the judgment of the Court and held: “[53] With respect this contention is flawed and affords no answer to the employer’s application to have the dispute referred to arbitration for the following reasons:

under s 10 of the Arbitration Act 2005 as it presently stands, there is no question of the court entering into the arena of whether or not a ‘dispute’ subsists between the parties. The role of the court is simply as set out in s 10, which we have explained in extenso above. This is borne out, inter alia, by the decision of the Court of Appeal, as comprehensively explained by Anantham Kasinather JCA in TNB Fuel Services Sdn Bhd v China National Coal Group Corp [2013] 4 MLJ 857; [2013] 1 LNS 288. His Lordship compared the present version of s 10(1) of the Arbitration Act 2005 with the earlier version of the section and stated:

The present form of s 10 of the Arbitration Act 2005 is the result of the amendment to that section which came into force on 1st July 2011 (Act A1395). It is generally accepted that the effect of the amendment is to render a stay mandatory unless the agreement is null and void or impossible of performance. The Court is no longer required to delve into the facts of the dispute when considering an application for stay … (Emphasis added.) The position stated above is therefore trite, namely that the court is not to enquire or investigate whether there subsists a dispute 13 warranting referral to arbitration. That is a matter for the consideration and determination of the arbitral tribunal. Prior to the amendment to s 10 the courts expended considerable time and effort in determining whether a ‘dispute’ subsisted by virtue of the earlier wording of s 10:

The court before which proceedings brought in respect of a matter which is the subject matter of an Arbitration Agreement shall, where party makes an application before taking any other step in the proceedings, stay those proceedings and refer the parties to arbitration unless it finds:

that the agreement is null and void, inoperative or incapable of being performed; or

that there is in fact no dispute between the parties with regard to the matters to be referred. (Emphasis added.) (See for example Tjong Very Sumito and others v Antig Investments Ptd Ltd [2009] 4 SLR 732; [2009] SGCA 41 which stated that ‘if it was at least arguable that the matter is the subject of the arbitration agreement, then a stay of proceedings should be ordered … it is only in the clearest of cases that the Court ought to make a ruling on the inapplicability of an arbitration agreement’. This resulted in the courts undertaking an exercise of determining whether a dispute existed between the contracting parties).”

(ii) Press Metal Sarawak Sdn Bhd v Etiqa Takaful Berhad [2016] 9 CLJ 1, where Ramly Ali FCJ, delivering the judgment of the Court held: 14 “[32] The clear effect of the present s. 10(1) of the 2005 Act is to render a stay mandatory if the court finds that all the relevant requirements have been fulfilled; while under s. 6 of the repealed 1952 Act, the court had a discretion whether to order a stay or otherwise. [33] What the court needs to consider in determining whether to grant a stay order under the present s.10(1) (after the 2011 Amendment) is whether there is in existence a binding arbitration agreement or clause between the parties, which agreement is not null and void, inoperative or incapable of being performed. The court is no longer required to delve into the details of the dispute or difference. (see TNB Fuel Services Sdn Bhd (supra)). In fact the question as to whether there is a dispute in existence or not is no longer a requirement to be considered in granting a stay under s. 10(1). It is an issue to be decided by the arbitral tribunal”. [9] As to what comprises an arbitration agreement is set out in Section 9 AA 2005: “9 Definition and form of arbitration agreement

In this Act, ‘arbitration agreement’ means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

An arbitration agreement may be in the form of an arbitration clause in an agreement or in the form of a separate agreement.

An arbitration agreement shall be in writing.” [10] In my view, there are 2 issues in connection with enc. 12: 15

Whether the matter in respect of which the Plaintiff brings these court proceedings are "in respect of a matter which is the subject of an arbitration agreement" as provided in the AIL Policy;

(ii) Has the 2nd Defendant taken a step in the proceedings to preclude it from applying for a stay pursuant to section 10(1) AA 2005? [11] I have examined the AIL Policy to determine whether the proceedings are “brought in respect of a matter which is the subject of an arbitration agreement”. [12] The phrases “any dispute, controversy or claim”, “arising out of” (“or relating to this contract”) in the AIL Policy being common in arbitration clauses, appears to me to attract a wide interpretation and in this case cover all disputes related to the AIL Policy. In so deciding, I have sought guidance from:

the Singapore Court of Appeal decision in Tjong Very Sumito and others v Antig Investments Pte Ltd [2009] SGCA 41; [2009] 4 SLR 732, where the court had: “[69] ………………

………. 16

If the arbitration agreement provides for arbitration only if "disputes" or "differences" or "controversies" exist, then the subject matter of the proceedings would fall outside the terms of the arbitration agreement if:

there is no "dispute", "difference" or "controversy" as the case may be (see [23] above); or

(ii) the alleged "dispute" is unrelated to the contract which contains the arbitration agreement (see [23] above).

In line with the prevailing philosophy of judicial non intervention in arbitration, the court will interpret the word "dispute" broadly (see [28], [29], [33] and [34] above), and will readily find that a dispute exists unless the defendant has unequivocally admitted that the claim is due and payable (see [56] and [59] above). The court should not be astute in searching for an admission of a claim, and would ordinarily be inclined to find that a claim is not admitted in all but the clearest of cases (see [61] above).

There is undoubtedly a "dispute" referable to arbitration if the defendant expressly asserts that he denies the claim (see [49] above).

The court will not assess the merits of a denial/defence or the genuineness of a "dispute" since these matters should properly be left to the arbitrator to assess (in accordance with the parties' contractual bargain to arbitrate) (see [40] and [49] above).

Apart from an express denial or rejection of the claim, the court can also infer that the claim is not admitted from the previous inconclusive discussions between parties, prevarication or even silence (see [61]) above. 17

There is prevarication where a defendant unequivocally admits the claim, but then later purports to deny the claim on the ground that the admission was mistaken, or fraudulently obtained, or was never made. In such a case, there might well be a "dispute" before the court, both over the substantive claim as well as over whether the defendant can challenge the alleged earlier admission, and the matter should ordinarily be referred to arbitration (see [62] above).

(ii) The defendant's silence (even in the face of repeated claims against it), without more, is often equivocal at best and may be insufficient to constitute the clear and unequivocal admission necessary to exclude the existence of a "dispute", since there may be good reasons why a party remains silent. For example, a party may think (rightly or wrongly) a claim so preposterous that "silent treatment" is the most appropriate response (see [61] above).

(g)…

(h)…. “

(ii) Press Metal (supra) where the Federal Court made the following observations:

that the court should lean towards granting a stay even if there is doubt as to the validity of the arbitration clause or where it is arguable if the subject matter falls within the ambit of the arbitration clause (para 88 of the judgment); and

to determine if the dispute is to be arbitrated, the arbitration clause is to be interpreted widely (para 90 of the judgment). 18 [13] Lord Justice Templeman in Ellerine Bros (Pty) Ltd v. Klinger [1982] 2 All ER 737 in delivering the lead judgment of the Court held at pg. 743 “There is a dispute until the defendant admits that a sum is due and payable.” In Hayter v Nelson and Home Insurance Co [1990] 2 Lloyd’s Rep 265, Saville J summarised his conclusions pithily at pg. 268 as follows: “In my judgment in this context neither the word "disputes" nor the word "differences" is confined to cases where it cannot then and there be determined whether one party or the other is in the right. Two men have an argument over who won the University Beat Race in a particular year. In ordinary language they have a dispute over whether it was Oxford or Cambridge. The fact that it can be easily immediately demonstrated beyond any doubt that the one is right and the other is wrong does not and cannot mean that that dispute did not in fact exist. Because one man can be said to be indisputably right and the other indisputably wrong does not, in my view, entail that there was therefore never any dispute between them…” [14] I do not accept the Plaintiff’s argument that the scope of the Arbitration Clause is confined to the determination of any difference in the amounts claimed and that there is no dispute in this case. That will be ignoring and condoning a breach of the Arbitration Clause set out at paragraph 5 of this judgment. Following high authorities as discussed in an earlier part of this judgment, this court need not delve into the dispute or controversy, and the merits of the underlying litigation are not of concern in a stay application such as the one before me. [15] This court is willing and readily infers that as the Plaintiff’s claim is not admitted by the 2nd Defendant, a dispute exists so that it can be referred to 19 arbitration. I have no hesitation to conclude that the matter in respect of which the Plaintiff brings these court proceedings are "in respect of a matter which is the subject of an arbitration agreement" as provided in the AIL Policy and there is in existence a binding arbitration agreement, which agreement is not null and void, inoperative or incapable of being performed. [16] As to whether the 2nd Defendant had “taken any other steps in the proceedings” prior to the filing of Enclosure 12 to be precluded from applying for a stay, I find that it has not. My reasons are as follows. [17] I deal firstly with the issue whether an application seeking an extension of time to file a defence constitutes a “step in the proceedings” under the Arbitration Act. [18] I have considered the context in which the extension of time is sought and do not agree with the Plaintiff that this mere request for extension of time to file defence is an unequivocal act of submitting to the court’s jurisdiction. I accept the reason advanced by the 2nd Defendant that it is to preserve its position so that Judgment in Default will not happen. [19] In the Defence filed, the 2nd Defendant did not demonstrate a clear election to abandon its rights to arbitrate the matter. In fact, in Sanwell, at pg. 635 the Federal Court endorsed a passage in Halsbury’s Laws of England para 627: “….An applicant may take what would otherwise be a step if he makes it clear that the act is done without prejudice to his right to apply for a stay.” 20 [20] In paragraph 2 of its Defence, the 2nd Defendant did precisely that; it expressly and unequivocally asserted that it was answering the Plaintiff’s claim strictly without prejudice to the 2nd Defendant's contentions that the Plaintiff's action ought to be stayed, and referred to arbitration, on the ground that the AIL Policy stipulates and provides for arbitration of the dispute. [21] The 2nd Defendant then filed enc. 12 to stay proceedings pending arbitration. [22] The Linde Gas Malaysia case did not make clear whether the defendants filed the defence without prejudice to their rights to refer the matter to arbitration. It is also not clear from the judgment whether the passage in the Sanwell case as produced in para 17 of this judgment was brought to the attention of the Court of Appeal. I agree with the 2nd Defendant’s counsel that Yeo Eng Lam’s case is also distinguishable as prior filing the application for a stay on 17.10.17, the Defendant there took 2 steps of: (i) filing an application to discharge her solicitors; and (ii) included a counterclaim in her Defence unlike the present case here. [23] I also took guidance from the United Kingdom position where Potter J’s erudite observations in Blue Flame Mechanical Services Limited v David Lord Engineering Limited (1992) 8 Const LJ 266 viz, that an act which “has been done manifestly without prejudice to an intention to invoke arbitration and merely to preserve the status quo until a summons to stay is promptly issued” cannot constitute or be viewed as a step in the proceedings. Potter 21 J summarised (at 267) the crux of what a “step” in the proceedings, in the light of the Arbitration Act 1975, refers to:

a step in the action which bars the defendant is something actually done or acquiesced in by him which is a significant procedural act in the case;

done with the intention of electing to litigate rather than stand on the right to arbitrate. [24] Besides Blue Frame (supra), in the Court of Appeal case of Patel v Patel [2000] QB 551, Lord Woolf MR determined that an act which would otherwise be regarded as a step in the proceedings would not be treated as such if the applicant had specifically stated that he intended to seek a stay. The Court of Appeal in allowing the appeal and granting a stay held that the defendant had not taken a step in the proceedings to answer the substantive claim within section 9 of the Arbitration Act 1996 merely because, when applying to set aside the default judgment, he had asked for leave to defend the action and counterclaim, which he did not need, and for consequential directions to be given. [25] In Capital Trust Investments Ltd v Radio Design TJ AB [2002] 2 All ER 159, the English Court of Appeal followed Patel v Patel and considered if the defendant’s application for summary judgment amounted to taking a step in the action so as to deprive him of the right to seek a stay. The Court of Appeal concluded that the application for summary judgment did not amount to taking a “step” because, as Clarke LJ perceptively observed at [60]: 22 “… it did not … express the willingness of [the defendant] to go along with a determination of the courts instead of arbitration. On the contrary, it made it clear that the application for summary judgment was only advanced ‘in the event that its application for a stay is unsuccessful’. “ [26] The Singapore Courts agree with Potter J’s insightful observations in Blue Flame Mechanical viz, that an act which “has been done manifestly without prejudice to an intention to invoke arbitration and merely to preserve the status quo until a summons to stay is promptly issued” cannot constitute or be viewed as a step in the proceedings. See: Chong Long Hak Kee Construction Trading Co v IEC Global Pte Ltd [2003] 4 SLR 499. [27] In Chong Long Hak Kee (supra), Tay Yong Kwang J held that, in the event any steps were made with the express reservation of the pre-existing rights under the arbitration agreement, the defendant’s right to stay the proceedings could be preserved. [28] My research shows the Hong Kong courts have taken the approach of the English courts. [29] As such, with respect, the High Court decisions in Winsin Enterprise S/B v Oxford Talent (supra), CLLS Power System Sdn Bhd v Sara Timur Sdn Bhd (supra) and Mun Seng Fook (supra) are not followed as going against the grain of authorities in other jurisdictions. In my respectful view, each case should be approached and resolved on the basis of principle and its own facts particularly as here, where one party does an act with the consent of 23 the other party (extension of time to file defence), such extension cannot by itself, in my view tantamount to taking a step in the proceedings and an unequivocal submission to jurisdiction. [30] The 2nd Defendant has also stated it remains ready and willing to do all things requisite for the proper conduct of the arbitration. [31] I find that the filing of the defence by the 2nd Defendant which expressly reserved its rights to arbitration did not demonstrate a clear election by the 2nd Defendant to abandon its right to a stay, and is not a step in the proceedings. “An applicant may take what would otherwise be a step if he makes it clear that the act is done without prejudice to his right to apply for a stay “– Sanwell. Conclusion [32] Pursuant to s. 10(1) AA 2005, this court must stay the proceedings before it, if the following requirements are fulfilled:

there subsists an agreement to arbitrate;

the applying party has not taken any other steps in the court proceedings;

the arbitration agreement is not null and void, inoperative or incapable of being performed. 24 [33] I am satisfied that all the 3 requirements are met. The policy of upholding party autonomy and non curial interference mandates the court under s.10(1) AA to stay proceedings. Section 10 must be read together with s. 8 AA which states: “No court shall intervene in matters governed by this Act, except where so provided in this Act.” [34] In the circumstances, Enclosure12 is allowed with costs of RM8,000 subject to allocator. Dated: 21st December 2020 - Sgd - Liza Chan Sow Keng Judicial Commissioner High Court of Malaya at Kuala Lumpur COUNSEL: For the Plaintiff : Ng Kar Man (Messrs. Skrine) For the 1st Defendant : Yeow Tze Yi (Messrs. Yeow Yap & Co) For the 2nd Defendant : Wong Leong Hong (Messrs. The Law Office of LH Wong) 25 CASES REFERRED: Sanwell Corp v Trans Resources Corp Sdn Bhd & Anor [2002] 2 MLJ 625 Linde Gas Malaysia Sdn Bhd v Pasifik Utama Sdn Bhd & Anor [2011] 5 CLJ 40 Yeo Eng Lam v. Infinity Vantage Sdn Bhd [2020] 6 CLJ 616 Winsin Enterprise Sdn Bhd v Oxford Talent (M) Sdn Bhd [2010] 3 CLJ 634 CLLS Power System Sdn Bhd v Sara Timur Sdn Bhd [2015] 11 MLJ 485 Mun Seng Fook v AIG Malaysia Insurance Bhd (formerly known as Chartis Malaysia) [2019] 7 MLJ 59 Tindak Murni Sdn Bhd v Juang Setia Sdn Bhd and another appeal [2020] 3 MLJ 545 Press Metal Sarawak Sdn Bhd v Etiqa Takaful Berhad [2016] 9 CLJ 1 Tjong Very Sumito and others v Antig Investments Pte Ltd [2009] SGCA 41; [2009] 4 SLR 732 Ellerine Bros (Pty) Ltd v. Klinger [1982] 2 All ER 737 Hayter v Nelson and Home Insurance Co [1990] 2 Lloyd’s Rep 265 Blue Flame Mechanical Services Limited v David Lord Engineering Limited

8 Const LJ 266 Patel v Patel [2000] QB 551 Capital Trust Investments Ltd v Radio Design TJ AB [2002] 2 All ER 159 Chong Long Hak Kee Construction Trading Co v IEC Global Pte Ltd [2003] 4 SLR 499 26 STATUTE/LEGISLATION REFERRED: Section 8, s. 9 and s.10 of the Arbitration Act, 2005 Order 69 Rule 10 of the Rules of Court 2012