the application must be brought timely; i.e. before the applicant takes a step in the proceeding (Gulf Air Canada Resources Ltd v. Anochem International Ltd ). 20 [69] Although it had been contended that there was no evidence of a dispute and therefore nothing to arbitrate; that the claims procedure had not been followed; the Court of Appeal found that each of these requisites was met. It opined that "it is clear beyond peradventure that there exists a dispute between the parties which involves matters agreed to be submitted to arbitration." [70] The British Columbia Court of Appeal further cited MJ Mustill & SC Boyd, The Law and Practice of Commercial Arbitration in England, 2nd edn. (London, Butterworths, 1989) at pp. 464-465 where the learned authors said: The expression "inoperative" has no accepted meaning in English law, but it would seem apt to describe an agreement which, although not void ab initio, has for some reason ceased to have effect for the future. Three situations can be envisaged in which an arbitration agreement might be said to be "inoperative". First, where the English Court has ordered that the arbitration agreement shall cease to have effect, or a foreign court has made a similar order which the English Court will recognise. Second, as is discussed in Chapter 32, there may be circumstances in which an arbitration agreement might become "inoperative" by virtue of common law doctrines of frustration, discharge by breach, etc. Third, the agreement may have ceased to operate by reason of some further agreement between the parties. But the fact that issues in the arbitration overlap issues in proceedings between parties who are not bound by the arbitration agreement does not make the agreement "inoperative". [71] In relation to the meaning of the phrase "incapable of being performed", the Court of Appeal referred to JB Casey, International and Domestic Commercial Arbitration (Carswell, 1993) at pp. 4- 14 which stated: According to Mustill & Boyd, "incapable of being performed" connotes something more than mere difficulty or inconvenience or delay in performing the arbitration. For example, it is not sufficient to say it is incapable of being performed where one party could not or would not come up with the deposit necessary to pay the arbitrator. The incapacity must come from something beyond the control of the parties; for example, where the arbitration agreement specifies a particular arbitrator must hear the matter, but he or she is not available.” [72] The court went on to say that "the fact that there are multiple parties and multiple issues which are inter-related and some, but not all, defendants are bound by an arbitration clause is not a bar to the right of the defendants who are parties to the arbitration agreement to invoke the clause." The Court of Appeal further disagreed with the first instance decision of the existence of discretion in s. 15. It was the court's view that once the prerequisites were not met, then court should refuse stay. However, "if it was arguable whether the prerequisites have been met, then the stay should be granted and the issue can be resolved in the arbitration." 21 [73] It is therefore quite apparent that the statutory grounds for refusing stay do not encompass the situation claimed by the plaintiffs. I cannot see how the signing off in the statement of final accounts can render the arbitration agreement unenforceable in that it is inoperative and incapable of being performed. [74] In any case, the plaintiffs' acknowledgement is with reservations: This is a Final Account Statement and the valuation may be subject to further deduction for such unfulfilled obligations which may arise or have arisen pursuant to the provisions of the Conditions of Contract. I/We, the undersigned, hereby acknowledge receipt of the above and agree to the valuation shown thereof and hereby confirm that save for any unfulfilled obligations referred to above, we have complied to the Conditions of Contract as at the date stated herein below and declare that we have no further claim under this Contract. [75] The plaintiffs have relied on the decisions of Monro v. Bognor Urban District Council [1915] 3 KB 167, Turnock v. Sartoris (1889) 43 Ch D 150, Young v. Buckett (1882) 51 LJ Ch 504 and Monmouthshire County Council v. Costello & Kemple Ltd [1965] 5 BLR 83 in support of its contention that the arbitration agreement here is "inoperative or incapable of being performed". However, it will be seen that save for the case of Young v. Buckett, the factual matrix of those cases were quite distinctly different. [76] In Monro v. Bognor Urban District Council, the plaintiff claimed to have been induced to enter into the contract with the defendant based on certain representations which the plaintiff found subsequently to be untrue. It then sought damages for fraudulent misrepresentation and to have the contract declared void. On appeal, the Court of Appeal held the claim for misrepresentation was not a dispute "upon or in relation to or in connection with the contract". The claim fell outside the ambit of the arbitration agreement and therefore stay ought to be refused. In Turnock v. Sartoris, the court refused stay where the dispute falls partly outside and partly within the arbitration agreement. [77] Although I agree with the decision in Young v. Buckett where the court refused to grant stay when the time for referring the differences from the two arbitration had expired ("within 40 days next after such dispute, doubt or question shall arise"); it must be noted that the court did not discuss this refusal in the context of whether the arbitration agreement had become "inoperative or incapable of being performed". The court merely looked at the time frame for referring disputes between partners to arbitration. Once it was established that the bulk of the disputes arose more than forty days before the reference to arbitration, the court concluded that there was no agreement to refer to arbitration. 22 [78] As for the decision in Monmouthshire County Council, the prerequisite to a valid reference to arbitration was a decision of the engineer. Since there was none, the court found that any arbitration would be null and void. [79] Again, this decision must be appreciated in its proper context. The question before the court was not about an application for stay pending arbitration. Instead, the dispute between the parties had proceeded to arbitration and the appellant was in court seeking a declaration as to the validity of the appointment of the arbitrator and the operation of cl. 66 of the ICE Conditions of Contract. The appellant maintained that the arbitrator's appointment was null and void and that he had no jurisdiction to act. [80] The Court of Appeal agreed. The decision of Harman LJ gives some indication as to why the Court of Appeal took that particular approach. At p. 91, His Lordship said: The other consideration which moves me is this. This is a process by which the defendants can be deprived of their general rights at law and therefore one must construe it with some strictness as having a forfeiting effect. It is not a penal clause, but must be construed against any person putting it forward who is, after all, trying to shut out the ordinary citizen's right to go to the courts to have his grievances ventilated. Therefore, I think it would require very clear words and a very clear decision by the appropriate person, namely the engineer, to shut the defendants out of their rights...” (emphasis added) [26] On the facts disclosed here, I am not satisfied that the Plaintiff has demonstrated that the arbitration agreement is null and void, inoperative or incapable of performance. The root problem to the impasse between the parties which led to the filing of this suit concerns the fulfilment of clause 20.2 of the Contract which is one of the conditions precedent to the commencement of arbitration. The Defendants steadfastly took the position that the Plaintiff had not given a notice pursuant to clause 20.2 of the Contract and/or show that the senior representatives of both parties, each having the mandate to settle the dispute, personally met and negotiated in good faith to resolve the dispute. However, the Plaintiff took the opposite position that clause 20.2 of the Contract has already been fulfilled. 23 [27] In my view, the aforesaid impasse between the parties neither made the arbitration agreement inoperative nor incapable of performance. This is because the impasse has not been due to or caused by a supervening event beyond the control of the parties. [28] Furthermore in Cosmos Infratech Sdn Bhd v Melati Evergreen Sdn Bhd Zelan Construction Sdn Bhd (Third Party) [2019] 1 LNS 1685, I have held as follows: “[20] From my reading of s. 10(1) of the Arbitration Act 2005, I find and hold that the critical consideration is merely the existence of an arbitration agreement which is not null and void, inoperative or incapable of being performed. In other words, there must be a valid arbitration agreement which is not void or voidable due to the usual vitiating factors that destroy a contract. [21] There is plainly an arbitration agreement here between the Third Party and the Defendant in terms of clause 31 of the LOA. There is no challenge by any party whatsoever that the arbitration agreement is void or voidable. It is a two tier dispute resolution clause incorporating an arbitration agreement similar to that as seen in the Federal Court case of Juara Serata Sdn Bhd v. Alpharich Sdn Bhd [2015] 9 CLJ 37. [22] Consequently and since there is a valid arbitration agreement, I find and hold that it is immaterial if the right to commence immediate arbitration has not yet accrued due to the non-fulfilment of a condition precedent to arbitration such as having prior mediated the dispute or referred to an independent expert for advise and resolution of the dispute as provided in clause 31 of the LOA here.” [29] Likewise, I find that the present non fulfilment of the conditions precedent to the commencement of arbitration (if any) in a multi-tier dispute resolution as seen in clause 20 of the Contract is not an impediment to the grant of a stay under s.10 of the Arbitration Act 2005 24 too. The consequence of the non fulfilment of any condition precedent only affects the jurisdiction of the appointed arbitrator. [30] In the circumstances, I therefore find and hold that the Defendants have made out a meritorious application. Conclusion [31] It is for the foregoing reasons that I allowed the Application as so ordered. Dated this 26 November 2020 t.t. LIM CHONG FONG JUDGE CONSTRUCTION COURT HIGH COURT KUALA LUMPUR 25 COUNSEL FOR THE PLAINTIFF: SANJAY MOHANASUNDRAM (ADAM LEE LEONG SOON, KOOY WEI NEE AND MAK KIT TENG WITH HIM) SOLICITORS FOR THE PLAINTIFF: SANJAY MOHAN COUNSEL FOR THE DEFENDANTS: CHAN SOCK MUN (LIM SHUK KIM WITH HER) SOLICITORS FOR THE DEFENDANTS: TAN CHUAN YONG & S.M. CHAN