Security Warehouse & Supply Sdn Bhd (Co. No. 264838-T) v Faac S.P.A dan 1 Lagi (WA-22NCvC-522-10/2017 (Lamp. 21))

FAAC S.p.A

MAGNETIC CONTROL SYSTEMS SDN BHD (Company No.: 339095-P) …RESPONDENTS [IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA CIVIL SUIT NO. : WA-22NCVC-522-10/2017] BETWEEN SECURITY WAREHOUSE & SUPPLY SDN BHD (Company No.: 264838-T) …PLAINTIFF

FAAC S.p.A

MAGNETIC CONTROL SYSTEMS SDN BHD (Company No.: 339095-P) …DEFENDANTS 2 GROUNDS OF JUDGEMENT INTRODUCTION (ENCLOSURE 21) [1] This is an application by the FIRST DEFENDANT pursuant to Order 12 Rule 10 of the Rules of Court 2012 for the following reliefs:

a Declaration that the High Court of Malaya has no jurisdiction to determine the dispute in this Suit;

i. an Order setting aside the Concurrent Writ in this Suit; or in the alternative ii. an Order that all further proceedings herein be stayed pending reference to the Courts of Bologna, Italy;

an Order setting aside the Ex-Parte Order of Court dated 5.10.2017 granting leave to the Plaintiff to issue the Concurrent

that the Injunction Application be dismissed;

that the Ex-Parte Injunction Order dated 5.10.2017 be set aside with damages be assessed; and

costs payable by the Plaintiff to the First Defendant. [2] Reasons for the application: a) Article 22 (“the Governing Law Clause”) and Article 23 (“the Competent Clause”) in the Distributorship Agreement stated 3 that all disputes arising out of and/or in relation to the Distributorship Agreement would be settled by the Courts of Bologna, Italy and Italian law was to be the law governing the Distributorship Agreement; b) The Plaintiff had contractually agreed to submit to the jurisdiction of the Courts of Bologna, Italy; c) The calling of expert witnesses on Italian law to the Malaysian High Court will be costly and time consuming; d) It is advantageous to the Plaintiff to bring their alleged action before the Courts of Bologna as the First Defendant is resident in Italy and any judgment obtained against the First Defendant would have to be enforced in Italy; and e) The Plaintiff has failed to establish any strong or special reasons to justify its commencement of this Suit in Malaysia. BRIEF FACTS OF THE CASE The Plaintiff’s claim [3] The Plaintiff claims against the First Defendant and/or Second Defendant among others are as follows: a) The Distributorship Agreement dated 25.2.2005 is valid; 4 b) Interlocutory injunction to restrain the First Defendant from continuing with the appointment of the Second Defendant as well as from terminating the Distributorship Agreement and interfering with any contracts between the Plaintiffs and its clients and/or customers; c) Interlocutory Injunction to restrain the Second Defendant from representing itself as the sole representative of the First Defendant as well as dealings with the First Defendant’s products and interfering with any contracts between the Plaintiffs and its clients and/or customers and the First Defendant; and d) Damages, interest and costs. [4] The Plaintiff and the First Defendant entered into a Distributorship Agreement dated 25.2.2005 and the Plaintiff was appointed as its sole and exclusive distributor in West & East Malaysia and Brunei, and the First Defendant alleged that it remains valid and enforceable until to date. [5] The Plaintiff has played an active role in establishing the First Defendant’s brand and products in Malaysia and Brunei and has substantially increased the First Defendant’s customer base in 5 Malaysia and Brunei and at all material times complied with its obligations under the Distributorship Agreement. [6] However, in July 2017, the First Defendant’s representative visited the Plaintiff’s office and informed the Plaintiff that the First Defendant intended to allow the Second Defendant to start distributing the First Defendant’s products in Malaysia and on 25.8.2017, the First Defendant had via an e-mail to the Plaintiff confirmed that the Plaintiff would no longer be the First Defendant’s sole and exclusive distributor starting from 1.9.2017 onwards and the First Defendant also advertised in The Star newspaper dated 1.9.2017 that the First Defendant had appointed the Second Defendant as its sole representative for Malaysia and Asia Pacific. [7] The First Defendant’s Export Manager, Mr Arnaldo DI Gregario, in his email dated 28.8.2017 denied the existence of the Distributorship Agreement between the Plaintiff and the First Defendant. [8] It is the Plaintiff’s contention that by reason of the appointment of the Second Defendant, the First Defendant has breached the terms and conditions of the Distributorship Agreement. [9] The Second Defendant despite being aware and having knowledge that the Plaintiff has been the sole and exclusive distributor of the 6 First Defendant’s products, has intentionally and wrongfully induced the First Defendant to breach the Distributorship Agreement by appointing the Second Defendant as the sole representative of the First Defendant. [10] The Second Defendant also approached the Plaintiff’s authorized dealers without the knowledge and permission of the Plaintiff. [11] The First and Second Defendants’ actions have caused the Plaintiff’s authorized dealers to question the Plaintiff’s rights and lose faith and confidence in the Plaintiff and have tarnished the goodwill and reputation of the Plaintiff as well as causing damages and incur loss to the Plaintiff. DECISION OF THE COURT [12] Having perused all the cause papers filed in this application and after considering the submissions by the parties, the Court allows the First Defendant’s application as prayed in paragraphs (a), (b) i, (c), (d) and

with costs of RM3,500.00 to be paid by the Plaintiff to the First Defendant. [13] The issues before the Court are as follows:

(A) : Whether Malaysian Court has jurisdiction to determine the dispute in this Suit? 7

(B) : Whether the First Defendant is seeking to obtain any advantage in having the case heard in Italy and/or whether the Plaintiff will be prejudiced by bringing this action in Italy The Plaintiff’s claim against the First Defendant is based on the First Defendant’s purported breach of the Distributorship Agreement dated 25 February 2005. [14] Article 22 (“the Governing Law Clause”) and Article 23 (“the Competent Clause”) in the Distributorship Agreement stated that all disputes arising out of and/or in relation to the Distributorship Agreement would be settled by the Courts of Bologna, Italy and Italian law was to be the law governing the Distributorship Agreement thus the Plaintiff had contractually agreed to submit to the jurisdiction of the Courts of Bologna, Italy. [15] In the case of Inter Maritime Management Sdn Bhd v Kai Tai Timber Co Ltd Hong Kong [1995] 1 MLJ 322 the Court of Appeal held: “The relevant law on the subject has, I believe, been settled by the decision of the Federal Court in Globus Shipping & Trading Co (Pte) Ltd v 8 Taiping Textiles Bhd [1976] 2 MLJ 154 where Gill CJ (Malaya), said [at p 155]: As regards the general principles in relation to jurisdiction where parties have agreed to submit exclusively to a foreign jurisdiction, in the case of The Fehmarn [1957] 2 All ER 707, Wilmer J, said at p 710: 'Where there is an express agreement to a foreign tribunal, clearly it requires a strong case to satisfy this court that that agreement should be over-ridden and that the proceedings in this country should be allowed to continue. However, in the end it is, and must necessarily be, a matter for the discretion of the court, having regard to all the circumstances of the particular case.” [16] The FederaI Court in Globus Shipping & Trading Co (Pte) Ltd v Taiping Textiles Bhd [1976] 2 MLJ 154 has adopted the principle laid down in the case of The Eleftheria [1969] 2 All ER 641 at p 645 where Brandon J said: The principles established by the authorities can, I think, be summarized as follows: (1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign court, and the 9 defendants apply for a stay, the English court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such strong cause is on the plaintiffs. (4) In exercising its discretion the court should take into account all the circumstances of the particular case. (5) In particular, but without prejudice to the following matters, where they arise, may properly be regarded: (a) in what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign courts; (b) whether the law of the foreign court applies and, if so, whether it differs from English law in any material respects;

with what country either party is connected, and how closely; (d) whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages; (e) whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not 10 applicable in England; or (iv) for political, racial religious or other reasons be unlikely to get a fair trial.” [17] ART. 23 COMPETENT COURT of the Distribution Agreement dated 25.2.2005 (Exhibit “ST-1”Encl.22) provides: “All disputes and litigation that may arise out of or in relation to this Agreement shall be settled by the Courts of Bologna, Italy. As a partial exception to the foregoing, the Company may, in its discretion, bring an action in any Court having jurisdiction over the Distributor.” In the present Suit, it is not disputed that the Plaintiff’s claim is based on a purported breach of the Distributorship Agreement. [18] Since the Distributorship Agreement states clearly that the Italian Courts of Bologna will have exclusive jurisdiction on any dispute arising from that agreement and that, the Plaintiff had contractually accepted the Italian’s Court jurisdiction when signing the said agreement, the Court is of the opinion that, the Plaintiff should not at this stage be allowed to ignore the provision in the Distributorship Agreement that has been agreed by the parties. [19] Therefore, the issue of the First Defendant is seeking to obtain any advantage in having the case heard in Italy and/or whether the Plaintiff will be prejudiced by bringing this action in Italy should not be 11 an issue at all, since all the parties have agreed to the terms stipulated in the agreement when signing it. It is also not disputed by the Plaintiff that the Distributorship Agreement is governed by Italian law. [20] Furthermore, ART. 23 of the Distributorship Agreement only make provision for the discretion to bring an action in any Court having jurisdiction over the Distributor to the ‘Company’ i.e. the First Defendant and not to the ‘Distributor’ i.e. the Plaintiff. [21] As such, the Court is of the opinion that the Italian Court will be the court to have the jurisdiction over the dispute between the Plaintiff and the First Defendant. Going through the cause papers filed in this application, it is clear that the main dispute is regarding the validity of the Distributorship Agreement dated 25.2.2005 and this Court is satisfied that the evidence on the issues of fact, is situated or more readily be available in Italy. The Court is also of the view that the essential and material witnesses are not within the jurisdiction of this Court. [22] For the reasons stated above, the First Defendant’s application is 12 allowed with costs. Dated 30th January 2018. ………………………..………….. (ROHANI BINTI ISMAIL) JUDICIAL COMMISSIONER CIVIL HIGH COURT (NCVC 8) KUALA LUMPUR.