Pasir Gudang Passenger Terminal Sdn Bhd v Johor Port Berhad (JA-22NCvC-205-12/2022)

JOHOR PORT BERHAD

PROBIL INDUSTRIES (M) SDN BHD

BP SEJAHTERA AMIN SDN BHD

LEMBAGA PELABUHAN JOHOR …DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT (Enclosure 13) [1] This is an appeal filed by the Plaintiff arising from the decision of this Court in allowing enclosure 13 filed by the 1st Defendant for stay of proceeding pending referral to arbitration. At the time the said application was filed, the 2nd to the 4th Defendant were not parties yet to this proceeding. 28/05/2024 08:53:36 JA-22NCvC-205-12/2022 Kand. 169 S/N 4cEYb5ku0068agBfulzJuw Page 2 of 12 [2] The 1st Defendant, having filed the Statement of Defence and the Plaintiff having perused it, filed an interlocutory application to add the 2nd to 3rd Defendant (enclosure 43) as parties to this suit which was allowed by this Court. [3] As to the 4th Defendant, an application to intervene (enclosure 76) was filed by the said 4th Defendant and this Court similarly found it necessary and relevant for the 4th Defendant to be made as party and was named as the 4th Defendant in the suit, upon clarification made before this Court, between parties subsequently. This decision to add the 4th Defendant, however is now pending appeal before the Court of Appeal. [4] As to Enclosure 13, although it was filed earlier than the 2 applications to add the 2nd to 4th Defendant, this Court however having sight of these applications including enclosure 13, was of the view that enclosures 43 and 76 ought to be heard first to ensure the necessary parties who may have certain rights or interest in this suit, be named first so as to give a clearer and bigger picture of their respective duties and roles in this suit, more so their functions in the running of the terminal have been highlighted by the 1st Defendant in the statement of defence under para 15.3 “Butir-butir Kemungkiran Plaintif”. [5] Enclosure 13 is an application seeking for a stay of proceeding pending arbitration, an action permitted by section 10 of the Arbitration Act 2005 (Act 646) which came into force on 15.3.3006. This route or option is also catered for in clause 13 of the Sub Lease Agreement entered between the Plaintiff and the Defendant on 18.4.2001. S/N 4cEYb5ku0068agBfulzJuw Page 3 of 12 [6] Section 10 of the Act provides as follows: “Section 10. Arbitration agreement and substantive claim before court

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; …” [7] Although the Sub-Lease agreement referred to the old Arbitration Act 1952 that is Act 93, the agreement addresses any new modification or changes to that particular law that may have transpired and provides an agreement to adhere to the new law by both parties. For completeness, the old provision of Act 93 is produced below: “Arbitration Act 1952 (Revised - 1972) (Repealed by Act 646) Section 6. Power to stay proceedings where there is submission to arbitration. If any party to an arbitration agreement or any person claiming through or under him commences any legal proceedings against any other party to the arbitration, or any person claiming through or under him, in respect of any matter agreed to be referred to arbitration, any party to the legal proceedings may, before taking any other steps in the proceedings, apply to the court to stay the proceedings, and the court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement, and that the applicant was at the time when the proceedings were commenced and still remains ready S/N 4cEYb5ku0068agBfulzJuw Page 4 of 12 and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings.” [8] The Sub-Lease agreement (see: exhibit “MZ-1” of enclosure 14) on the arbitration clause provides the following: “13. ARBITRATION [1] All disputes or differences whatsoever which shall at any time hereafter during the continuance in effect of the Sub-Lease or upon or after its expiration arise between the parties hereto touching or concerning the Sub-Lease, its validity or its construction or effect as to the rights, duties or any of them under or by virtue of the Sub-Lease, shall be referred to arbitration to be held in Kuala Lumpur in accordance with the Arbitration Act 1952 (Revised 1972) or any statutory modification or re-enactment thereof for the time being in force. [2] The number of arbitrators shall be three (3), one (1) each to be nominated by the parties hereto and the third (3rd) arbitrator shall be appointed by the arbitrators nominated by the parties hereto as aforesaid. English Language shall be the language of the arbitration proceedings. [3] The arbitration award shall be final and binding on both parties.” [9] Reading the pleadings in the form of documents prepared by both the Plaintiff and the 1st Defendant before this Court, this Court finds that it cannot be disputed that the issues arising in this suit are one which are captured in clause 13 to be referred to arbitration for settlement of the differences. The limits of the disputes for purposes of referral to arbitration S/N 4cEYb5ku0068agBfulzJuw Page 5 of 12 contain in clause 13 “at any time hereafter during the continuance in effect of the Sub-Lease or upon or after its expiration arise between the parties hereto touching or concerning the Sub-Lease, its validity or its construction or effect as to the rights, duties or any of them under or by virtue of the Sub-Lease” are very wide and expanded to cover the present issues arising in this suit. [10] The issues before this Court are summarized and they touch on: a. the validity of the extended sub-lease for another 30 years; b. the rental rate of the premise if in fact agreed upon; c. the number of actual passengers passing through the terminal and this Court finds this, linked to the charges imposed and paid, which in turn relates to the duty of one party to the sub-lease agreement; d. who has the right over the terminal premise. [11] The Plaintiff however was of the view that since all relevant parties are already named and matter is ready to proceed for trial, it would facilitate to speed up the determination of the dispute by having it adjudicated by the Court instead of referring it to arbitration. Although this Court to a certain extent would agree with the submission by the Plaintiff, however this Court has its reservation as firstly that the matter is now ready for trial and can be heard by this Court within a reasonable time, is doubtful as it may not be accurate. Reason being, the proceeding before the court is subject to other interlocutory procedures and appeal process provided for by the Rules of Court 2012 and the Courts of Judicature Act. All this may take a longer time before the substantive matter can finally be determined by this court. S/N 4cEYb5ku0068agBfulzJuw Page 6 of 12 [12] The Plaintiff raised significant points in opposing this application. One point, that may be significant to divert the matter to be heard by this Court instead of going for arbitration is the allegation of fraud contended by the Defendant to have been committed by the Plaintiff. This in turn is connected to the issue on public policy as allegation of fraud which may be subject to a criminal charge ought to be before the court and not before the arbitrators. All these issues moved the Plaintiff to seek for an open hearing before the court instead. Determination by this Court [13] This Court having perused the affidavits both of the Plaintiff and the 1st Defendant, came to the findings as follows: A. Intention and knowledge of parties of clause 13 i. Parties are very much aware of the existence of this arbitration clause and the Plaintiff cannot now argue to dispense with the operation of it. The Arbitration Act itself contemplates such resistance that sees either party every now and then diverts their action in court instead of remaining steadfast with the consent to refer to arbitration given earlier. ii. The provision in the new Arbitration Act itself is wide and generously confers jurisdiction to the arbitration tribunal. It permits referral and deliberation before the arbitration tribunal of matters even not raised to be subjected to arbitration, by written law. Therefore, for this reason, this Court must allow a wider interpretation on the provisions of the Arbitration Act. S/N 4cEYb5ku0068agBfulzJuw Page 7 of 12 iii. For this, the Act readily addresses it in the following provisions: “Section 4. Arbitrability of subject-matter

Any dispute which the parties have agreed to submit to arbitration under an arbitration agreement may be determined by arbitration unless the arbitration agreement is contrary to public policy or the subject matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia. [Am. Act A1569/2018]

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. Section 8. Extent of court intervention No court shall intervene in matters governed by this Act, except where so provided in this Act.” iv. Whilst section 11, merely provides for intervention by Courts for a particular purpose and for a particular order but settlement of dispute still remains before the arbitrators as provided below: “Section 11. Arbitration agreement and interim measures by High Court S/N 4cEYb5ku0068agBfulzJuw Page 8 of 12

A party may, before or during arbitral proceedings, apply to a High Court for any interim measure and the High Court may make the following orders for the party to— [Am. Act A1569/2018]

maintain or restore the status quo pending the determination of the dispute;

take action that would prevent or refrain from taking action that is likely to cause current or imminent harm or prejudice to the arbitral process;

provide a means of preserving assets out of which a subsequent award may be satisfied, whether by way of arrest of property or bail or other security pursuant to the admiralty jurisdiction of the High Court;

preserve evidence that may be relevant and material to the resolution of the dispute; or

provide security for the costs of the dispute. [Subs. Act A1569/2018 Subsection 1(a)-(e)]

Where a party applies to the High Court for any interim measure and an arbitral tribunal has already ruled on any matter which is relevant to the application, the High Court shall treat any findings of fact made in the course of such ruling by the arbitral tribunal as conclusive for the purposes of the application.

This section shall also apply in respect of an international arbitration, where the seat of arbitration is not in Malaysia.” v. As can be seen, the Arbitration Act safeguards the role played by the arbitration tribunal and this Court similarly, must give effect to clause 13 as otherwise the act of attesting to agree S/N 4cEYb5ku0068agBfulzJuw Page 9 of 12 to submit to the tribunal’s jurisdiction will turn out to be a mockery or is without force. (see: Federal Court decision in Tindak Murni Sdn Bhd v Juang Setia Sdn Bhd & Another Appeal [2020] 4 CLJ 301) vi. The Notice to Refer to Arbitration dated 15.3.2023 was issued and served on counsel for the Plaintiff on the same date. (see: enclosure 54 page 8) B. On the issue of fraud The contention of fraud made by the Defendant is based on the documents available and are merely issues that are based on facts by comparing figures existing on these documents. This Court (without making any finding on this allegation as yet, as the merits and truth of this contention will only be determined by examining those documents and any explanations that may be offered by witnesses) is of the view that it is a matter that centers on a finding of facts and is straightforward, is neither complicated nor complex and can be easily determined by the arbitrators. The arbitration tribunal has the jurisdiction to hear and determine on issues of fraud as decided by the Federal Court in Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 5 MLJ 417. C. Issue on public policy i. Although there is truth in the submission by Plaintiff that the Pasir Gudang Passenger Terminal is a public terminal and public transportation service also used by government authorities such as the Immigration agency, but this does not S/N 4cEYb5ku0068agBfulzJuw Page 10 of 12 qualify under public interest and public policy to have the issues heard and ventilated before the court instead of the arbitration tribunal, as this Court having perused the cause papers, agrees with the submission by the applicant Defendant that the cause of action in this suit is based purely on contractual obligations between the Plaintiff and the 1st Defendant as per the sub-lease agreement. Therefore, there is nothing before this Court for this Court to refuse to enforce clause 13. ii. It is to be highlighted that the order for the inclusion of the other Defendants in this suit was made by this Court on the application made by the Plaintiff and intervener, with the 1st Defendant opposing these applications. It is therefore correct on the part of the Defendant to submit and maintain the stand that no step has been taken in court proceeding at least not on the part of the Defendant. iii. Rather, relying on the decision in Tindak Murni Sdn Bhd (supra) the filing of this suit by the Plaintiff to be adjudicated by this Court may amount to a breach of clause 13, although it could be understood from this Court’s perspective that the intention of the Plaintiff possibly is to safeguard against any issue that may arise later of being barred by the limitation period. iv. As the Plaintiff and intervener’s applications were filed later than this stay application (about a month after the filing of S/N 4cEYb5ku0068agBfulzJuw Page 11 of 12 statement of defence), rightly so the Defendant can still proceed to procure the relief for a stay under section 10. D. Issue on consent judgment entered earlier on 19.8.2003 between JPB as Plaintiff and PGPT as Defendant in Johor Bahru High Court No. MT3 24-118 TAHUN 2003 despite the presence of the same agreement and same arbitration clause This previous action by JBP as Defendant then (now JBP as Defendant in this suit) to initiate a suit before this Court should not be taken as a contrary stand being taken by the Defendant, now. As highlighted earlier by this Court, the purpose of filing the suit before this Court may possibly be to pre-empt any issue on limitation setting in, if filed later. Therefore, this should not be viewed as anything inconsistent on the part of JBP’s viewpoint. [14] For all these reasons, this Court finds there is no merits in the objection taken by the Plaintiff in opposing enclosure 13. Once there is a valid arbitration clause as in clause 13 in this case, the stay under section 10 is warranted and must be allowed by this Court. Enclosure 13 is therefore allowed. -Signed- (NURULHUDA NUR’AINI BINTI MOHAMAD NOR) Judge High Court of Malaya Johor Bahru Dated: 27th MAY 2024 S/N 4cEYb5ku0068agBfulzJuw Page 12 of 12 COUNSEL For the Plaintiff: Dato’ Jerald Gomez (Michelle Wong with him) Messrs. Jerald Gomez & Associates Advocates & Solicitors Penthouse D2-U6 Solaris Dutamas No. 1, Jalan Dutamas 1 50480 Kuala Lumpur For the First Defendant: Rabindra S. Nathan (Nad Segaram, Vimal Sathiaseelan with him) Messrs. Shearn Delamore & Co Advocates & Solicitors 7th Floor, Wisma Hamzah Kwong Hing No. 1, Leboh Ampang 50100 Kuala Lumpur For the Second Defendant: Mohd Iqbal bin Zainal Abidin Messrs. Megat Iqbal & Co Advocates & Solicitors No. 16-a, Tingkat 1, Jalan Bandar 3 Taman Melawati 53100 Kuala Lumpur For the Third Defendant: John Fernandez Messrs. R. Muthu & Co Advocates & Solicitors Suite 6.13, 6th Floor, Menara TJB No. 9 Jln. Syed Mohd Mufti 80000 Johor Bahru S/N 4cEYb5ku0068agBfulzJuw