Quek Peck Keow v Extra Excel (Malaysia) Sdn Bhd (JA-24NCC(ARB)-2-04/2022)

a declaration that there is no arbitration agreement between the Plaintiff and the Defendant;

a declaration that there is no arbitration agreement contained between the Plaintiff and the Defendant for the Defendant to take this claim to an arbitration under the Notice of Arbitration dated 25.11.2021;

further and in the alternative, a declaration that clause 1.3 of the EEPP (November 2015) specially excludes the Defendant from taking any dispute with the Plaintiff to an arbitration;

a declaration that this Court is the proper forum to determine the Defendant’s claim against the Plaintiff under the Notice of Arbitration dated 25.11.2021;

further and in the alternative, a declaration that clause 1.3 and/or 10.2 of the EEPP is null and void, inoperative or incapable of being performed;

an injunction, interlocutory and permanent, to restrain the Defendant and each of them, whether acting by themselves or through their agents, successors and/or assigns, from proceeding with, participating in or taking any steps whatsoever to conduct or participate in the arbitration;

an order that the Defendant forthwith discontinue the arbitration; and

further, that the arbitration be permanently stayed. S/N 4h9cK7y3EmePotjD1CurQ Whether there was an arbitration agreement when the Disciplinary Proceedings and Suspension of Distributorship commenced [15] The Plaintiff submitted that the EEPP which is applicable in this dispute before this Court is the EEPP 2015 and not the Amended EEPP 2021 as advocated by the Defendant. As the Court of Appeal decided that the arbitration agreement in the EEPP 2015 as null and void, inoperative and incapable of being performed, the Plaintiff further submitted that there is no valid arbitration agreement between the parties to be the basis for the Defendant to refer the disputes between them which occurred in 2018 and 2020 to the arbitration. As such, the Plaintiff submitted that the on-going arbitration proceeding which was commenced by the Defendant vide Notice of Arbitration dated 25.11.2021 must be forthwith discontinued or permanently stayed. [16] The Defendant, on the other hand, contended that there is a valid arbitration agreement in the EEPP between the parties to refer their disputes occurred in 2018 and 2020 to the arbitration notwithstanding such agreement is based on the Improvised Arbitration Agreement 2021. Thus, since there is an arbitration agreement, the Defendant submitted that this Court must take a minimalist intervention and let the appointed arbitrator to deal with any challenge to the existence or validity of the arbitration agreement as decided by the Federal Court in Press Metal Sarawak Sdn Bhd v. Etiqa Takaful Bhd [2016] 9 CLJ 1; [2016] 5 MLJ

[17] In this context, I find that the Defendant’s argument that this Court must take a minimum approach and let the arbitrator to deal with any challenge to the existence or validity of the arbitration agreement, is misconceived. My view is fortified by the case of Jaya Sudhir A/L S/N 4h9cK7y3EmePotjD1CurQ Jayaram v. Nautical Supreme Sdn Bhd &Ors [2019] 7 CLJ 395; [2019] 5 MLJ 1 where the Federal Court allowed the appellant’s appeal to injunct an arbitration proceeding when it was clear that the appellant was not even a party to the arbitration agreement. In short, the Court still has the duty to peruse the impugned arbitration agreement before it decides whether the agreement is valid and operative and relevant to the proceedings. [18] In similar veins, in Press Metal Sarawak Sdn Bhd (supra), the Federal Court held that – "[57] The court must see what the matters as found in the proceedings before the court are, and then consider whether they are within the scope of the submissions in the arbitration clause (see Monro v. Bognor Urban District Council [1915] 3 KB 167 per Bankes LJ at p 172). An applicant for a stay under s. 10(1) of the 2005 Act must therefore establish that the matters in question are within the scope of the arbitration submission." [19] Similarly, the Federal Court in Tindak Murni Sdn Bhd v. Juang Setia Sdn Bhd & Another Appeal [2020] 4 CLJ 301 held that – [49] In all these circumstances, it therefore remained incumbent upon the court, notwithstanding the initiation of the civil suit by the contractor, to carry out its function as set out in s. 10, namely to refer the dispute to arbitration unless the arbitration agreement is null, void or inoperative. The court carries out its prescribed statutory duty by ascertaining:

whether there is an agreement to arbitrate the dispute;

(ii) whether the arbitration agreement is valid or null, void or inoperative; S/N 4h9cK7y3EmePotjD1CurQ Having done so, the following consequences ensue from s. 10:

If there is a valid agreement to arbitrate, then the court must refer the dispute to arbitration;

(ii) If the agreement to arbitrate is null, void or inoperative then the matter/suit need not be referred to arbitration. [20] The above Federal Court decisions underscore that it is incumbent upon the trial judge to scrutinise and inspect the impugned arbitration agreement and the entire factual matrix of the case before making a finding on the validity of such agreement. In short, the Court ought not to close its eyes and simply accept the validity of an impugned arbitration agreement just because there is an arbitration agreement without giving due consideration to other relevant factors. [21] Back to the present action, there are undisputed facts that the Plaintiff’s distributionship was approved by the Defendant in 2011 but the former only received the copy of the EEPP in 2015. Then, the Disciplinary Proceedings and the Suspension of Distributorship were commenced on 5.11.2018 and 11.3.2020 respectively. In light of these facts, I agree with the Plaintiff’s argument that the EEPP which is applicable before this Court is the EEPP 2015 and the Improvised Arbitration Agreement 2021 has yet to come into picture. Thus, the Defendant’s argument that the Plaintiff is still bound by the Improvised Arbitration Agreement 2021, in my view, is not tenable. Just because there is a provision in the EEPP that the Plaintiff is bound by any amendment made to the EEPP from time to time, it is gravely unfair to treat that the Improvised Arbitration Agreement 2021 has the retrospective effect. It is my view that allowing the Defendant’s argument S/N 4h9cK7y3EmePotjD1CurQ would militate against the basic principle of justice as it is clear that the amendment to the EEPP 2021 was done unilterally by the Defendant without good faith when discovering the EEPP 2015 was not in its favour. [22] In the upshot, I find that the EEPP 2015 did not provide that the Defendant may refer its dispute with the Plaintiff to the arbitration. Thus, there was no arbitration agreement between them to authorise the Defendant to refer their dispute happened in 2018 and 2020 to the arbitration. Whether the Plaintiff is entitled for injunction to restrain the on-going arbitration proceedings [23] On 14.4.2022, the Plaintiff vide Enclosure 2 filed an application under O. 29 of the Rules of Court 2012 (“ROC”) for an injunction to restrain the on-going arbitration proceeding which has been commenced by the Defendant vide the Notice of Arbitration dated 25.11.2021 from being proceeded pending the disposal of the present action. [24] On 20.3.2024, I allowed the Plaintiff’s application. The grounds of my judgment allowing the injunction can be seen in Quek Peck Keow (p) v. Extra Excel (Malaysia) Sdn Bhd [2024] CLJU 1968. In short, my reasons were premised on the underlying finding that the Arbitration Agreement 2015 did not authorise the Defendant to refer its dispute with the Plaintiff to the arbitration. [25] In view of the above reason, I also find that the permanent injunction to restrain the on-going arbitration proceeding must be granted. S/N 4h9cK7y3EmePotjD1CurQ Conclusion [26] In conclusion, I allow the Plaintiff’s OS with costs. The date for the assessment of damages will be fixed by this Court in due course. Dated: 17.3.2025 -signed- (SHAMSULBAHRI BIN HAJI IBRAHIM) Judge, High Court of Malaya, Johor Bahru Counsels: For the Plaintiff – Fadhil Ihsan (Syahmi Nawawi with him); Messrs. Azwad Ihsan & Co For the Defendant – Johanan Puthucheary (Thomas Shaun Mathews and Shamelan Lonen with him); Messrs. Mohanadass & Partners S/N 4h9cK7y3EmePotjD1CurQ