Perbadanan Kemajuan Pertanian Negeri Pahang (PKPP) v NADA RIMBA SDN BHD (CB-24NCvC-202-08/2025)

This was an application by the Defendant by way of a Notice of Application dated 22.8.2025 (“Enclosure 6”) for a stay of proceeding of an Originating Summons dated 1.8.2025 (“Enclosure 1”) pursuant to Section 10(1) of the Arbitration Act 2005 and the inherent jurisdiction of this Court.

The Plaintiff in this dispute is Perbadanan Kemajuan Pertanian Negeri Pahang, the registered proprietor of the parcels of land situated in Mukim Bentong, Daerah Bentong, Negeri Pahang Darul S/N hsabueqYUqqpGVCRluzUA Makmur, which form the subject matter of the present proceedings. The Plaintiff commenced these proceedings in its capacity as landowner, seeking the removal of a private caveat lodged against its land pursuant to the provisions of the National Land Code.

The Defendant, Nada Rimba Sdn Bhd, a private limited company incorporated in Malaysia. The Defendant was appointed as the developer under a Joint Venture Agreement dated 28.8.2006 (“Joint Venture Agreement”) entered into with Plaintiff for the development of the said lands.

Following the termination of the Joint Venture Agreement, the Defendant lodged a private caveat over the lands, asserting an interest arising from the agreement.

The Defendant is opposing the Plaintiff’s application for removal of the caveat in Enclosure 1 and is the applicant in the present stay application seeking to refer the dispute to arbitration.

For the purposes of clarity, it is to be noted that the Plaintiff has also filed a similar application in the Temerloh High Court under Civil Suit No. CB-24NCvC-128-06/2025, seeking the same reliefs arising under the termination of the same Joint Venture Agreement, albeit in relation to different land titles. Both applications were heard on the same day on 30.1.2026.

For avoidance of doubt, the following grounds are confined to the following land titles:

Hakmilik No. HS (M) 5189 PT 17651 Mukim Bentong; and S/N hsabueqYUqqpGVCRluzUA

Hakmilik No. PM 3631 Lot 26178 Mukim Bentong. C.

8.

On 5.4.2024, the Plaintiff through its solicitors, purported to unilaterally terminate the Joint Venture Agreement, alleging delay by the Defendant in carrying out the development. The Defendant rejected the termination by letter dated 16.4.2024, disputing that it was in breach of the agreement and asserting that it had obtained the master plan approvals and had consistently paid quit rent and assessment charges over the years.

Following the purported termination, the Defendant lodged a private caveat over the lands on 27.3.2025 to protect what it claimed to be its subsisting contractual and beneficial interests. The Plaintiff subsequently commenced the present Originating Summons seeking, among others, the removal of the private caveat.

The Defendant contends that the dispute between the parties arises directly from and is inextricably linked to the Joint Venture Agreement. In particular, the validity of the Plaintiff’s unilateral termination and the legitimacy of the Defendant’s continued interest in the lands are matters that require interpretation and determination of contractual rights under that agreement.

The Defendant argues that the Plaintiff’s commencement of court proceedings constitutes a breach of the arbitration clause, as the parties had expressly agreed that all disputes connected to the Joint S/N hsabueqYUqqpGVCRluzUA Venture Agreement were to be resolved by arbitration. As such, the High Court proceedings should be stayed pursuant to Section 10 of the Arbitration Act 2005 (“Section 10 AA”).

The Defendant further argues that its private caveat was not wrongfully lodged. The caveat was entered to preserve and protect its interests arising from the Joint Venture Agreement, particularly in light of the Plaintiff’s disputed unilateral termination. Whether the caveat was validly lodged, and whether the Defendant retains a subsisting interest in the lands, are substantive issues that fall squarely within the scope of the arbitration clause and should not be determined by the court at this stage.

The Defendant submits that the court’s role at this juncture is limited to determining whether there is a valid and operative arbitration agreement and whether the dispute falls within its ambit. According to the Defendant, both requirements are satisfied, the arbitration clause is neither null nor inoperative, and there are no exceptional circumstances justifying the court’s intervention.

Accordingly, the Defendant seeks an order that the court proceedings be stayed pending the resolution of the dispute through arbitration. E. The Plaintiff’s Contentions 16. The Plaintiff’s position is that the Defendant’s application to stay the proceedings in favour of arbitration must fail because the present action concerns the removal of a private caveat under Section 327 S/N hsabueqYUqqpGVCRluzUA of the National Land Code (“Section 327 NLC”), which is a matter falling within the exclusive jurisdiction of the High Court. The Plaintiff emphasises that this is a statutory remedy and not a contractual dispute capable of being determined by an arbitral tribunal.

The Plaintiff submits that proceedings were correctly commenced by way of Originating Summons, as the relief sought arises from a specific power conferred on the Court by written law. Section 327 NLC expressly provides that only the Court or the Registrar may order the removal of a private caveat, and this statutory function cannot be displaced by an arbitration agreement.

Relying on section 4(1) of the Arbitration Act 2005 (“Section 4(1) AA”), the Plaintiff argues that even where parties have agreed to arbitrate, disputes are excluded from arbitration if they are contrary to public policy or are not capable of settlement by arbitration under Malaysian law. The Plaintiff contends that disputes concerning private caveats fall within both exceptions.

The Plaintiff places reliance on the Federal Court decision in Arch Reinsurance Ltd v Akay Holdings Sdn Bhd [2019] 5 MLJ 186, which held that remedies under the National Land Code are not arbitrable because the Code is a complete and comprehensive statutory scheme governing land matters. The Plaintiff submits that the same reasoning applies to private caveats, which, like statutory charges, are creatures of statute and not mere contractual instruments. S/N hsabueqYUqqpGVCRluzUA

It is further argued that statutory rights under the National Land Code cannot be contracted out of by private agreement. Any attempt to allow an arbitrator to determine the removal of a caveat would undermine the statutory powers vested exclusively in the Court and would therefore be contrary to public policy.

The Plaintiff also relies on the governing law and jurisdiction clause in the Joint Venture Agreement, which submits the parties to the jurisdiction of the Malaysian courts. In land matters governed by the National Land Code, this clause is said to prevail over the arbitration clause, as it accords with the statutory framework regulating caveats.

In addition, the Plaintiff criticises the Defendant’s conduct, pointing out that Defendant itself invoked the National Land Code by lodging the private caveat instead of commencing arbitration. Having chosen to rely on a statutory mechanism, the Defendant cannot now insist that the statutory process for removal of the caveat be referred to arbitration.

The Plaintiff further submits that the real issue is whether the Defendant had a caveatable interest at the time the caveat was lodged, which is a question of law to be determined by the Court under the National Land Code and not by reference to the parties’ contractual rights under the Joint Venture Agreement. On this basis, the Plaintiff maintains that the stay application should be dismissed with costs. S/N hsabueqYUqqpGVCRluzUA F. The Applicable Legal Principles 24. Both parties to the proceedings have raised issues in regards to application of Section 4(1) AA and Section 10(1) AA, which are both reproduced below for ease of reference: “4. Arbitrability of Subject-matter 1) 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. 2) 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. …

Arbitration Agreement and Substantive Claim before Court 1) 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.”

Prior to the enactment of the Arbitration Act 2005, the grant of a stay of court proceedings in favour of arbitration lay within the discretion of the Court. That position has since changed. Section 10(1) AA provides that a court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall stay the proceedings and refer the parties to arbitration, unless the court finds that the arbitration agreement is S/N hsabueqYUqqpGVCRluzUA null and void, inoperative, or incapable of being performed. The use of the word “shall” renders the grant of a stay mandatory, subject only to the statutory exceptions.

This principle was affirmed by the Federal Court in Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd (2016) 9 CLJ 1, when it held as follows: “(7) Whether a particular difference or dispute falls within an agreement to arbitrate depends primarily on the proper construction of that agreement. The court should lean more towards granting a stay pending arbitration under s. 10(1) of the 2005 Act, even in cases where the court is in some doubt about the validity of the arbitration clause or where it is arguable whether the subject matter of the claim falls within or outside the ambit of the arbitration clause. A proper approach to construction requires the court to give effect, so far as the language used by the parties in the arbitration clause will permit, to the commercial purpose of the arbitration clause. (paras 88, 91 & 93)”

The High Court in Khong Yoon Loong & 161 Ors v Asia Plantation Capital Pte Ltd & 24 Ors [2024] MLJU 3754 established that the Court must first identify the real issues in dispute between the parties, and thereafter determine whether those issues fall within the ambit of the arbitration clause. The existence of an arbitration clause alone does not automatically warrant a stay. Rather, the Court must examine the nature of the claim and whether the dispute sought to be litigated is one which the parties had agreed to refer to arbitration.

The limitation on judicial intervention is further reinforced by Section 8 of the Arbitration Act 2005 (“Section 8 AA”), which provides that S/N hsabueqYUqqpGVCRluzUA no court shall intervene in matters governed by the Arbitration Act 2005 except where so provided.

Although Order 69 rule 10(3) of the Rules of Court 2012 (“Order 69 ROC”) permits the Court to decide whether a dispute falls within the terms of an arbitration agreement, the Rules of Court are subsidiary procedural legislation and cannot override the substantive provisions of the Arbitration Act 2005.

It is also settled law that the grant of a stay does not occur automatically. A party seeking to invoke Section 10 AA must apply promptly and before taking any substantive steps in the proceedings. G. Findings of this Court 31. Having considered the affidavits filed, the written submissions of both parties, and the relevant statutory provisions and authorities, this Court finds no merit in the Defendant’s application in Enclosure 6 which is hereby dismissed with costs of RM2,000.00.

The central issue before this Court is whether the dispute in the present proceedings is one that is capable of being referred for arbitration within the meaning of Section 10(1) AA. The proceedings before this Court are brought under Section 327 NLC for the removal of a private caveat lodged by the Defendant. S/N hsabueqYUqqpGVCRluzUA

However, Section 327 NLC expressly vests the power to remove a private caveat in the Court or the Registrar. An arbitrator is not conferred such power under the National Land Code.

It is trite that where a dispute does not fall within the ambit of the arbitration clause, or where the subject matter is incapable of settlement by arbitration, a stay must be refused. As stated by Viscount Simon L.C. in Heyman v Darwins Ltd [1942] AC 356, the Court must examine both the nature of the dispute and the scope of disputes covered by the arbitration clause: “The answer to the question whether a dispute falls within an arbitration clause in a contract must depend on (a) what is the dispute and (b) what disputes the arbitration clause covers.”

In the present case, the dispute concerns whether the Defendant had a caveatable interest and whether the caveat ought to be removed under the National Land Code. These are questions of statutory entitlement and public administration of land, not disputes arising out of contractual rights and obligations under the Joint Venture Agreement.

The Court is guided by the reasoning of the Federal Court in Arch Reinsurance Ltd v Akay Holdings Sdn Bhd [2019] 5 MLJ 186, which held that statutory remedies under the National Land Code are not arbitrable, as the Code is a complete and comprehensive legislative scheme governing land matters. Abu Samah Nordin FCJ held at page 208 as follows: S/N hsabueqYUqqpGVCRluzUA “[67] The NLC is a complete and comprehensive code of law governing the tenure of land in Malaysia and the incidence of it as well as other important matters affecting land: United Malayan Banking Corporation Bhd & Anor v Pemungut Hasil Tanah, Kota Tinggi [1984] 2 MLJ 87. In Kimlin Housing Development Sdn Bhd v Bank Bumiputera (M) Bhd, it was held that the provisions of the NLC setting out the rights and remedies of parties under a statutory charge over land comprised in Part XVI are exhaustive and exclusive and any attempt at contracting out of those rights unless expressly provided for in the Code — would be void as being contrary to public policy. Hence, the dispute triggered by the statutory notice of demand in Form 16D is not arbitrable under s 4(1) of the Arbitration Act 2005.”

Although Ach Reinsurance Ltd concerned a registered charge, the same principle applies with equal force to private caveats, which are likewise statutory creations whose enforcement and removal are governed exclusively by the National Land Code.

More so, when the Defendant itself invoked the statutory machinery of the National Land Code when it lodged the private caveat. Having elected to rely on a statutory mechanism, the Defendant cannot now contend that the statutory process for the removal of that caveat should be determined by arbitration. Such an approach is inconsistent with the statutory scheme and contrary to public policy.

In these circumstances, this Court finds that although Section 10 AA generally mandates a stay where a valid arbitration agreement exists, the present dispute concerns subject matter that is not capable of being resolved by arbitration. The arbitration clause relied upon by the Defendant is therefore inoperative in relation to the relief sought under Section 327 NLC. S/N hsabueqYUqqpGVCRluzUA

Further, this Court observes that for a stay of proceedings pending arbitration to be allowed, it must first assess which party bears the burden to refer the dispute and/or claim to arbitration and subsequently whether any party has taken a step in proceedings. In present case, the Defendant has not taken any steps in filing a suit concerning the subject matter of the Joint Venture Agreement, insofar as the unilateral termination of the Joint Venture Agreement is concerned.

In relation to the burden of proof, the long-established principle of onus probandi applies, which simply means that he who asserts must prove. In general terms, the burden of proof lies on the party asserting that a particular fact exists. However, the determination of who bears that burden is not always straightforward. It must be clarified that, the reference to the Plaintiff bearing the burden of proof does not merely refer to the party who commenced the action. Rather, it refers to the party advancing a particular proposition of fact or law. Consequently, the burden of proof may shift depending on the nature of the allegation made. In particular, the burden rests on the Defendant when it seeks to rely on a set of facts that are not ordinarily part of the Plaintiff’s case, and which are raised to support its own position.

Here, the burden of proving all the facts actually rests with the Defendant, as the Defendant is the one who disputes the Plaintiff’s decision to unilaterally terminate the joint Venture Agreement. That being the case, it was incumbent on the Defendant to initiate the proceedings for arbitration and to seek the reliefs concerning the S/N hsabueqYUqqpGVCRluzUA unilateral termination of the Joint Venture Agreement in arbitration instead.

As at the date of hearing, no arbitration proceedings have been commenced by the Defendant. Instead, counsel for the Defendant in open court stated that the Plaintiff ought to initiate arbitration, and not the Defendant. This approach would place the Plaintiff in a prejudicial position, as the Plaintiff was the party that had unilaterally terminated the Joint Venture Agreement. If the Plaintiff elects not to commence arbitration, the caveat would remain in a state of indefinite impasse.

The Defendant attempts to rely on the High Court decision of Perspektif Masa Sdn Bhd v China Railway Engineering Corporation (M) Sdn Bhd [2022] MLJU 1723 in which the court allowed the Respondent’s application for stay pending arbitration in respect of a private caveat. However, this court notes that the facts in Perspektif Masa differ greatly from the present case. In Perspektif Masa, the Respondent therein had commenced arbitration proceedings prior to the filing of the stay application in respect of the removal of private caveat. That is not the case here, considering till to-date no arbitration proceedings have been filed by the Defendant.

In the circumstances, the Court finds that the Defendant’s stay application is a tactical attempt to delay the court process and to bring the proceedings to a deadlock. By insisting that the Plaintiff commence arbitration, the Defendant seeks to gain a procedural advantage and places the Plaintiff at a clear disadvantage, which is S/N hsabueqYUqqpGVCRluzUA not the intention of Section 10 AA and therefore this Court is not prepared to sanction such an abuse of court process. Defendant is essentially attempting to compel and impose on the Plaintiff to justify the unilateral termination of the Joint Venture Agreement in arbitration, when in fact it should be the Defendant who should have initiated the matter for arbitration since it is them disputing and challenging the unilateral termination of the Joint Venture Agreement and therefore the burden rests with the Defendant.

It must not be overlooked that a stay pending arbitration is meant to allow the main dispute to be resolved by arbitration, while the courts deal only with interim or interlocutory reliefs, pending the disposal of the main arbitration claim.

This fortifies this Court’s view that the removal of caveat being sought by the Plaintiff cannot be granted by the arbitral tribunal, and are in fact matters to be decided by this Court pursuant to the National Land Code. As such, this Court is bound to apply the decision of the Federal Court in Arch Reinsurance Ltd, which remains good law.

Accordingly, the Defendant’s application for a stay of proceedings pending arbitration in Enclosure 6 is dismissed with costs of RM2,000.00. Dated this 30th day of March 2026. S/N hsabueqYUqqpGVCRluzUA YA Tuan Kuldeep Kumar A/L Jamna Dass Judicial Commissioner High Court Temerloh Solicitors for the Plaintiff: Messrs Abdul Hayyi & Shukri (Mohd Shukri bin Zulkipli) Solicitors for the Defendant: Messrs Arifin & Partners (James Ng Kean Yip & Tay Yeong Hui) S/N hsabueqYUqqpGVCRluzUA