Peak Model Sdn. Bhd. v Hati Janakuasa Sdn. Bhd. (BA-22NCvC-285-07/2025)

1 IN THE HIGH COURT OF MALAYA AT SHAH ALAM IN THE STATE OF SELANGOR DARUL EHSAN, MALAYSIA CIVIL SUIT NO.: BA-22NCvC-285-07/2025 BETWEEN PEAK MODEL SDN. BHD. (COMPANY NO. 200701013765 (771770-M) … PLAINTIFF AND

1. HATI JANAKUASA SDN. BHD. (COMPANY NO.: 201101012208 (940347-H)

2. GONG WEI (CHINESE PASSPORT NO.: PE2109729)

3. LIU JIANGLIN (CHINESE PASSPORT NO.: PE2267746) … DEFENDANTS GROUNDS OF JUDGMENT Introduction

1. This judgment concerns two interlocutory applications filed in this suit. 15/04/2026 09:32:57 BA-22NCvC-285-07/2025 Kand. 73 **Note : Serial number will be used to verify the originality of this document via eFILING portal 2 2. The first is the Plaintiff's application in Enclosure 28 seeking an order to disqualify Messrs. Zain & Co, the solicitors acting for the 1st Defendant. The second is the 1st Defendant's application in Enclosure 9 seeking a stay of these proceedings pursuant to section 10 of the Arbitration Act 2005 based on an arbitration clause contained in the Shareholders' Agreement between the Plaintiff and the 1st Defendant.

3. After hearing the parties, I dismissed both applications with costs.

4. Both parties have appealed to the Court of Appeal, and I set out my reasons below. Parties

5. The Plaintiff, Peak Model Sdn Bhd, is a shareholder in Janakuasa Sdn Bhd (JSB), holding 22% of the shares.

6. The 1st Defendant, Hati Janakuasa Sdn Bhd, holds the remaining 78% shareholding in JSB. JSB, in turn, wholly owns Janakuasa Vietnam Limited (JVL), the operating entity that generates profits.

7. The 2nd and 3rd Defendants are directors of the 1st Defendant and JSB, and members of the Members' Council of JVL. They were appointed by China Huadian Engineering Co Ltd (CHEC), the 1st Defendant's majority shareholder. **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 8. The Shareholders' Agreement dated 18.12.2015 governs the relationship relating to JSB. Both parties rely on this agreement in support of their case. Issues for Determination

9. The issues before this Court are divided into two parts corresponding to the two applications. Enclosure 28

(1) Whether Messrs. Zain & Co ought to be disqualified on the grounds of conflict of interest, lack of authority, or appearance of impropriety.

(2) Whether the alleged lack of authority to act for the 1st Defendant provides a legal basis for disqualification. Enclosure 9

(1) Whether the requirements under section 10 of the Arbitration Act 2005 are satisfied.

(2) Whether the dispute falls within the scope of the arbitration clause in the Shareholders' Agreement. **Note : Serial number will be used to verify the originality of this document via eFILING portal 4

(3) Whether the presence of the 2nd and 3rd Defendants, who are not parties to the Shareholders' Agreement, affects the grant of a stay.

(4) Whether the nature of the Plaintiff's claims, including tortious claims, justifies the refusal of a stay.

(5) The effect of Clause 17.2 of the Shareholders' Agreement. Salient Facts

10. The dispute arises from the alleged failure to approve and effect the distribution of dividends from JVL to JSB and ultimately to its shareholders.

11. Under Section 11.10 of the Shareholders' Agreement, excess cash held by JSB or JVL is to be distributed to shareholders after provision for financial obligations.

12. The Plaintiff relies on financial documents showing that JVL had substantial accumulated profits and available cash for distribution. These include audited financial statements, confirmation from the lender, and internal memoranda indicating available distributable sums.

13. Resolutions were circulated to JVL's Members' Council for approval of dividend distributions. These were signed by one **Note : Serial number will be used to verify the originality of this document via eFILING portal 5 member but not by the 2nd and 3rd Defendants. No reasons were provided for their refusal.

14. The Plaintiff contends that the refusal to approve the resolutions constitutes a breach of the Shareholders' Agreement by the 1st Defendant, and further gives rise to tortious claims against the 2nd and 3rd Defendants, including interference, inducement of breach, and conspiracy.

15. The 1st Defendant disputes liability. It maintains that the conditions for distribution have not been satisfied and that the dispute falls within the arbitration clause contained in the Shareholders' Agreement.

16. It is not disputed that the Shareholders' Agreement contains an arbitration clause, which provides that disputes arising out of or in connection with the agreement are to be referred to arbitration. At the same time, the Plaintiff relies on Clause 17.2 of the Shareholders' Agreement, which provides that the parties submit to the jurisdiction of the courts, and contends that this clause preserves its right to commence proceedings in Court.

17. It is also not disputed that the 2nd and 3rd Defendants are not parties to the Shareholders' Agreement and are therefore not parties to the arbitration clause contained in that agreement. **Note : Serial number will be used to verify the originality of this document via eFILING portal 6 18. A further factual issue raised in the affidavits and submissions concerns the authority of the 1st Defendant to commence or defend proceedings.

19. The Plaintiff's position is that, under the Shareholders' Agreement, certain matters, including litigation steps, constitute "Reserved Matters" requiring unanimous shareholder approval. The Plaintiff contends that such approval was not obtained and that the 1st Defendant's solicitors therefore acted without proper authority.

20. The 1st Defendant accepts that unanimous approval was required, but submits that it could not be obtained due to a deadlock among the shareholders. The 1st Defendant further states that steps were taken to resolve this issue through a separate proceeding (BA-24NCC-91-08/2025), but that Originating Summons was dismissed and is now the subject of an appeal. In the meantime, the 1st Defendant maintains that it was necessary to take steps in this suit to protect its position.

21. These are the material facts relevant to the two applications, which I now turn to consider. **Note : Serial number will be used to verify the originality of this document via eFILING portal 7 Analysis and Findings Enclosure 28 – Disqualification of Solicitors

22. The Plaintiff seeks to disqualify Messrs Zain & Co on two grounds, namely, lack of authority and conflict of interest.

23. The 1st Defendant, on the other hand, submits that the application is misconceived. It is argued that there is no solicitor-client relationship between the Plaintiff and the 1st Defendant's solicitors, no confidential information is involved, and that the complaint on "lack of authority" is an internal corporate issue which does not engage the principles governing disqualification.

24. Having considered the parties’ submissions, I agree with the 1st Defendant.

25. The starting point is that the power to disqualify solicitors is grounded in the Court's inherent jurisdiction to protect the integrity of the judicial process. However, that power is exercised sparingly. The right of a litigant to be represented by counsel of its choice is an important right and will not be interfered with unless clearly necessary. This principle is well established in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 and has been adopted in Malaysia, including in Dato' Azizan Abdul Rahman & Ors v Pinerains Sdn Bhd [2021] 6 MLRA

663. **Note : Serial number will be used to verify the originality of this document via eFILING portal 8 26. The authorities show that disqualification generally arises in recognised categories. These include situations where there is a real risk of misuse of confidential information, a direct conflict of interest, or where counsel's continued involvement would undermine public confidence in the administration of justice.

27. On the facts before me, none of these grounds is established.

28. First, there is no solicitor-client or fiduciary relationship between the Plaintiff and the 1st Defendant's solicitors. The Plaintiff does not assert that the solicitors previously acted for it, nor is there any evidence that they were ever placed in a position of confidence vis-à-vis the Plaintiff. In the absence of such a relationship, the "real risk" test articulated in Prince Jefri Bolkiah does not arise. I am of the view that the burden is on the applicant (Plaintiff) first to establish a relationship of confidence and the possession of relevant confidential information. This has not been done in the present case.

29. Second, there is no evidence of any confidential information belonging to the Plaintiff having been conveyed to or held by the 1st Defendant's solicitors. The Plaintiff's case is not framed on confidentiality but on alleged lack of authority and control. This is insufficient in law to justify disqualification. The courts have consistently required a "real risk", not a speculative or theoretical possibility, before disqualification may be ordered (see Prince Jefri Bolkiah and Dato' Azizan Abdul Rahman) **Note : Serial number will be used to verify the originality of this document via eFILING portal 9 30. Against that background, I turn to the Plaintiff’s argument on appearance of impropriety.

31. Third, the Plaintiff relies on the "appearance of impropriety", contending that the solicitors are effectively advancing the interests of CHEC, the majority shareholder.

32. The applicable test is whether a fair-minded and reasonably informed member of the public would conclude that the proper administration of justice requires the removal of the solicitors. This is reflected in Ng Yee Hong v Malaysian Institute of Accountants [2021] 2 MLRA 669, which emphasises that the test is objective and directed at maintaining public confidence.

33. Applying that test, I do not find that the threshold is met. The Plaintiff's concerns arise from the underlying shareholder dispute and allegations of control within the 1st Defendant. These are matters to be determined in the substantive proceedings. They do not, without more, translate into a legal conflict of interest on the part of the solicitors.

34. Fourth, the Plaintiff places significant reliance on the alleged lack of authority to act. In my view, this does not constitute a recognised ground for disqualification. As submitted by the 1st Defendant, the issue of authority is an internal corporate matter concerning compliance with the Shareholders' Agreement and the decision-making processes of the 1st Defendant. It does not **Note : Serial number will be used to verify the originality of this document via eFILING portal 10 engage the duties owed by solicitors or the integrity of the judicial process.

35. Furthermore, the position of law now recognises that not every irregularity or dispute relating to representation justifies disqualification. The focus remains on whether the solicitor's continued involvement creates a real risk to the administration of justice (besides the cases mentioned earlier, see also Ee Soon Guan Sdn Bhd v Leong Wai Har & Anor [2025] MLRHU 1304, Tan Chee Wah v PY Rental Sdn Bhd [2025] MELRU 1028 and Pelaburan Hartanah Berhad v Cosmopolitan Avenue Sdn Bhd [2026] MLRHU 324).

36. In this case, the issue of authority is itself disputed and is the subject of separate proceedings which are presently on appeal. It would not be appropriate for this Court to make definitive findings on that issue within the confines of a disqualification application. More importantly, even if the issue of authority is unresolved, it does not establish conflict, misuse of confidential information, or appearance of impropriety in the legal sense required by the authorities.

37. Finally, I bear in mind that disqualification should not be used as a tactical tool to disrupt proceedings or to deprive a party of its chosen solicitors. The Court must guard against such applications unless the legal threshold is clearly met. **Note : Serial number will be used to verify the originality of this document via eFILING portal 11 38. Taking all these matters into account, I find that the Plaintiff has failed to establish any of the recognised grounds for disqualification. There is no real risk to the administration of justice, no conflict of interest in the legal sense, and no basis to conclude that justice would not be seen to be done.

39. In the circumstances, there is no necessity to invoke the Court's inherent jurisdiction and the Plaintiff's application in Enclosure 28 is therefore dismissed. Enclosure 9 – Stay Pending Arbitration

40. I now turn to the 1st Defendant’s application in Enclosure 9. The 1st Defendant applies for a stay pursuant to section 10 of the Arbitration Act 2005 on the basis that there exists a valid and binding arbitration clause in the Shareholders' Agreement and that the dispute in this suit falls within its scope.

41. The 1st Defendant submits that section 10 is mandatory in nature and that this Court is bound to grant a stay unless the arbitration agreement is shown to be null and void, inoperative, or incapable of being performed. Reliance is placed on Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 5 MLJ 417 (FC).

42. The Plaintiff resists the application on several grounds. The Plaintiff submits that the present suit involves not only the 1st Defendant but also the 2nd and 3rd Defendants, who are not **Note : Serial number will be used to verify the originality of this document via eFILING portal 12 parties to the Shareholders' Agreement. The Plaintiff further submits that the claims include tortious causes of action, namely interference, inducement of breach, and conspiracy, which are directed against all Defendants and arise from the same factual matrix. It is contended that the issues are "closely intertwined" and that granting a stay would result in "split proceedings" and a "real risk of inconsistent findings". Reliance is placed on Jaya Sudhir a/l Jayaram v Nautical Supreme Sdn Bhd & Ors [2019] 5 MLJ 1 (FC) and other authorities, as submitted.

43. I begin with the statutory position.

44. Section 10(1) of the Arbitration Act 2005 uses the word "shall", and the Federal Court in Press Metal has made clear that a stay is mandatory where the requirements are satisfied. However, that principle applies where the dispute is between parties to the arbitration agreement and falls squarely within its scope.

45. However, the present case does not fall within that straightforward category.

46. It is not disputed that the 2nd and 3rd Defendants are not parties to the Shareholders' Agreement and are therefore not parties to the arbitration clause. The law is clear that arbitration is founded on consent and privity of contract. Non-signatories cannot be compelled to arbitrate, nor can they rely on the arbitration **Note : Serial number will be used to verify the originality of this document via eFILING portal 13 agreement as of right. This position is affirmed in Jaya Sudhir, where the Federal Court held that section 10 does not apply to "strangers" to the arbitration agreement.

47. The effect of this is that any stay granted can only operate, at most, as between the Plaintiff and the 1st Defendant. The proceedings against the 2nd and 3rd Defendants would necessarily continue before this Court.

48. Against that background, I consider the nature of the Plaintiff’s claims. The Plaintiff has pleaded substantive causes of action against the 2nd and 3rd Defendants, including interference with contractual relations, inducement of breach, and conspiracy. These are not peripheral or ancillary claims. They are central to the Plaintiff's case and arise from the same factual matrix as the claims against the 1st Defendant.

49. The evidence and issues relating to the conduct of the 2nd and 3rd Defendants are inextricably linked to the conduct of the 1st Defendant. The determination of whether the 1st Defendant breached the Shareholders' Agreement cannot be divorced from the alleged acts of the 2nd and 3rd Defendants.

50. In such circumstances, granting a stay would result in parallel proceedings, with arbitration determining issues as between the Plaintiff and the 1st Defendant, and the Court determining overlapping issues as against the other two Defendants. **Note : Serial number will be used to verify the originality of this document via eFILING portal 14 51. The courts have consistently cautioned against such fragmentation. The authorities recognise the principle against "split litigation", where claims are "inextricably linked" and should not be divided between different fora or separate forums. This is reflected in decisions such as Khong Yoon Loong & Ors v Asia Plantation Capital Pte Ltd & Ors [2023] MLRHU 1863, where a stay was refused to avoid inconsistent findings in an intertwined dispute.

52. Similarly, in Protasco Bhd v Tey Por Yee & Anor [2018] 6 MLRA 674, the Court recognised that allowing different tribunals to decide overlapping issues may lead to conflicting decisions and undermine the administration of justice.

53. I find that this risk is real in the present case.

54. This leads to the question whether a partial stay is appropriate. While it is open to the Court to grant a stay against the signatory party only, the authorities show that such an approach is increasingly discouraged where the subject matter is common and intertwined. I refer to the case of Nam Cheong International Ltd v Time Liza International Ltd & Ors [2020] MLRHU 2281, where the Court declined to order a partial stay in such circumstances.

55. In the present case, a partial stay would not resolve the difficulty. It would instead create duplicative proceedings and evidence, and a risk of conflicting findings. **Note : Serial number will be used to verify the originality of this document via eFILING portal 15 56. I next consider the Plaintiff’s reliance on Clause 17.2. The Plaintiff relies on this clause to submit that the parties have preserved recourse to the courts. While I accept that this clause does not entirely displace the arbitration clause, it is indicative that arbitration was not intended to be the sole and exclusive forum for all disputes. This supports the conclusion that litigation in this Court is not excluded.

57. Finally, I address the issue of authority. I accept the 1st Defendant's submission that lack of authority does not, by itself, render an arbitration agreement null, void, or inoperative. However, the fact that the issue of authority is disputed, unresolved, and the subject of an appeal forms part of the overall factual matrix. It reinforces the conclusion that this is not a straightforward case for the application of section 10.

58. Taking all these matters into account, I am not satisfied that this is a case where the Court is bound to grant a stay. While section 10 is mandatory in appropriate cases, this is a multi-party dispute involving non-signatories and closely intertwined claims, where the grant of a stay would lead to fragmentation of the proceedings and a real risk of inconsistent findings.

59. In such circumstances, the interests of justice require that the dispute be heard in a single forum.

60. The 1st Defendant's application in Enclosure 9 is dismissed. **Note : Serial number will be used to verify the originality of this document via eFILING portal 16 Conclusion

61. For the reasons set out above, both applications were dismissed, with each party to pay RM8,000 in costs to the winning party, subject to the allocator. Dated this: 7th April 2026 ~signed~ (NOOR HAYATI BINTI HAJI MAT) JUDGE HIGH COURT OF MALAYA SHAH ALAM, SELANGOR Representative: For the Plaintiff : Ong Wei Ying together with Leong Teen Yue and John Rolan Messrs Christopher & Lee Ong For the 1st Defendant : Raneesha Thayalan together with Pang Yi Qing Messrs Zain & Co. **Note : Serial number will be used to verify the originality of this document via eFILING portal