Tt Dotcom Sdn Bhd v Ytl Communications Sdn Bhd (WA-22NCvC-226-04/2024)

This is a stay application dated 16-05-2024 [Enclosure 5] filed by the defendant to stay the suit filed by the plaintiff in breach of a dispute resolution process agreed by the parties. The defendant contends a stay should be granted as an appeal by the defendant is pending before the Malaysian Communications and Multimedia Appeal Tribunal.

The issue before me is whether I have jurisdiction to grant a stay in aid of a dispute resolution process agreed by the parties and if I have jurisdiction whether I should exercise my power to grant the stay.

I allowed the stay on 21-08-2024. These are my Grounds of Judgment.

The dispute between the plaintiff and the defendant arises from an Access Agreement dated 30-04-2010 for the defendant’s access to network facilities and services owned and/or provided by the plaintiff, which agreement was amended by way of a Supplemental Agreement dated 31-12-2010 (collectively “Access Agreement”).

The defendant had placed 5 service orders with the plaintiff for the provision of bandwidth services.

Condition 12 of the Access Agreement contains dispute resolution process to be followed by the parties, including an express provision that until the expiry of the dispute resolution procedures set out therein, the plaintiff may not commence court proceedings relating to a dispute.

The English courts have dealt with the same issue before me.

In Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] 1 All ER 664, the House of Lords held that the court had power pursuant to its inherent jurisdiction to grant a stay of an action brought before it in breach of an agreed method of resolving disputes by some other method. Lord Mustill observed (at pages 670 and 678)- I consider that the action can and should be stayed pursuant to the inherent jurisdiction of the court to inhibit proceedings brought in breach of an agreed method of resolving disputes. … This is not the case of a jurisdiction clause, purporting to exclude an ordinary citizen from his access to a court and featuring inconspicuously in a standard printed form of contract. The parties here were large commercial enterprises, negotiating at arm's length in the light of a long experience of construction contracts, of the types of disputes which typically arise under them, and of the various means which can be adopted to resolve such disputes. It is plain that cl 67 was carefully drafted, and equally plain that all concerned must have recognised the potential weaknesses of the two-stage procedure and concluded that despite them there was a balance of practical advantage over the alternative of proceedings before the national courts of England and France. Having made this choice I believe that it is in accordance, 4 not only with the presumption exemplified in the English cases cited above that those who make agreements for the resolution of disputes must show good reasons for departing from them, but also with the interests of the orderly regulation of international commerce, that having promised to take their complaints to the experts and if necessary to the arbitrators, that is where the appellants should go. The fact that the appellants now find their chosen method too slow to suit their purpose, is to my way of thinking quite beside the point. [Emphasis added]

I see no reason why a Malaysian Court should not adopt the same principles to grant a stay.

Further, sections 24 and 29 of the Contracts Act 1950 do not void Condition 12 of the Access Agreement and prevent the stay application. Section 24 of the Contracts Act 1950 reads: Section 24. What considerations and objects are lawful, and what not. The consideration or object of an agreement is lawful, unless-

it is forbidden by a law;

it is of such a nature that, if permitted, it would defeat any law;

it is fraudulent;

it involves or implies injury to the person or property of another; or

the court regards it as immoral, or opposed to public policy. In each of the above cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. [11] Section 29 of the Contracts Act 1950 reads: "Agreements in restraint of legal proceedings void

Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights is void to that extent." [Emphasis added] [12] The scope of sections 24 and 29 of the Contracts Act 1950 were considered fairly recently in the leading judgment of the Federal Court in CIMB Bank Berhad v Anthony Lawrence Bourke & Anor [2019] 1 MLRA 599 FC. [13] In that case, the Federal Court held that while the law recognises the common law concept of freedom of contract, an exclusion clause can be voided on two grounds- i. If it negates the rights of the plaintiffs to a suit for all forms of damages for breach of contract or negligence. This is an absolute restriction. Section 29 of the Contracts Act 1950 prohibits such restriction. (at [37]). ii. If there are unequal bargaining powers between the parties, the exclusion clause is patently unfair and an injustice to the plaintiffs if it is allowed to deny their claim/rights against the defendant or if it unconscionable on the part of the defendant to seek refuge behind the clause such as to constitute an abuse of the freedom of contract. While the law allows for freedom of contract, the Court watches to see that it is not abused. Such a clause will be void by reason of public policy under section 24(c) of the Contracts Act 1950 [at [ 66]]. [14] It is significant that the Federal Court in CIMB Bank Berhad v Anthony Lawrence Bourke & Anor [2019] 1 MLRA 599 FC introduced the concept of unfairness of contracts in the absence of an Unfair Contract Terms Act in Malaysia, unlike in the UK and Singapore. This is what the Federal Court said- [66] In our considered view, this is one instance which merits the application of this principle of public policy. There is the patent unfairness and injustice to the plaintiffs had this cl 12 been allowed to deny their claim/rights against the defendant. It is unconscionable on the part of the bank to seek refuge behind the clause and an abuse of the freedom of contract. As stated by Denning LJ in John Lee & Sons (Grantham) Ltd and Others v. Railway Executive [1949] 2 All ER 581: “Above all, there is the vigilance of the common law while allowing for freedom of contract, watches to see that it is not abused.” [Emphasis added] Application to facts [15] Applying the law to our case, non-absolute limitations placed in a clause will not offend section 29 of the Contracts Act 1950 which speaks of absolute restriction. Mere limitations and/or some restrictions added into a clause are insufficient to invoke section 29. [See CIMB Bank Berhad v Anthony Lawrence Bourke & Anor [2019] 1 MLRA 599 FC]. [16] Condition 12 of the Access Agreement states that that until the expiry of the dispute resolution procedures set out therein, the plaintiff may not commence court proceedings relating to a dispute. It thus does not offend section 29 of the Contracts Act 1950. [17] Condition 12 of the Access Agreement also does not offend public policy under section 24(c) of the Contracts Act 1950 as the parties here are not in an unequal bargaining powers position.

[18] For the reasons above, I allow the application and make the following orders- i. All proceedings in the action herein by the abovenamed plaintiff against the defendant shall be stayed; ii. The time period(s) for filing and/or service of pleadings and/or any other cause paper by the defendant be suspended until further order and/or direction of this Honourable Court; iii. Parties shall be at liberty to apply; and iv. Costs in the cause ………(signed)…………. Leong Wai Hong Judge High Court of Malaya Kuala Lumpur (NCC 6) Dated: 14th November 2024. COUNSEL: 1) Wan Zamrie bin Wan Kassim for plaintiff. (Leong Yeng Kit & Co. (Kuala Lumpur)) 2) Low Weng Tchung for defendant. (Weng & Co. (Petaling Jaya)) CASES REFERRED TO: 1) Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] 1 All ER 664. 2) CIMB Bank Berhad v Anthony Lawrence Bourke & Anor [2019] 1 MLRA 599 FC. 3) John Lee & Sons (Grantham) Ltd and Others v. Railway Executive [1949] 2 All ER 581. LEGISLATION REFERRED TO: 1) Contracts Act 1950, sections 24, 24(c), 25, 26, 27, 28 and 29.