37.2.4 fourth, the dispute may be referred to arbitration as specified in Clause 36.3 [sic] hereto. Clause 37.2.4 refers incorrectly to cl 36.3. The correct clause to refer to is cl 37.3, which reads: All disputes arising out of this Cooperation Agreement, which cannot be settled by mediation pursuant to Clause 37.2, shall be finally settled by arbitration to be held in Singapore in the English language under the Singapore International Arbitration Centre Rules (‘SIAC Rules’). The arbitration panel shall consist of three (3) arbitrators, each of the Parties has the right to appoint one (1) arbitrator. The two (2) arbitrators will in turn appoint the third arbitrator. Should either Party fail to appoint its respective 24 arbitrator within thirty (30) days from the date of the last appointment of the two arbitrators, the arbitrators not so appointed shall be appointed by the chairman of the SIAC Rules within thirty (30) days from a request by either Party. ... 54 Before both the Tribunal and the High Court, the Plaintiff argued that the preconditions for arbitration in cl 37.2 of the Cooperation Agreement were unenforceable for uncertainty. The Judge held that those preconditions were not uncertain and that cl 37.2 was enforceable (see the Judgment at [92]-[97]). The Plaintiff did not appeal against this finding of the Judge. In our judgment, this was well-advised because we agree with the Judge on this count, assuming that the objection which we have noted above (at [51]) can be overcome. The language or cl 37.2 was clear – it set out in mandatory fashion and with specificity the personnel from, the Plaintiff’s side who were required to meet with Datamat’s designees as part of a series of steps that were to precede the commencement of arbitration; it further specified the purpose of each such meeting, which was to try to resolve any dispute that had arisen between the parties. We also agreed with the Judge’s finding (see the Judgment at [100] that the steps set out in cl 37.2 were conditions precedent to any reference to arbitration pursuant to cl 37.3. Significantly, the arbitration clause itself in cl 37.3 refers only to “disputes ... which cannot be settled by mediation pursuant to Clause 37.2”. 25 55 Finally, we noted that there was no suggestion that the Appellant had waived the preconditions for arbitration in cl 37.2." (emphasis added) [26] There is a clear paradigm and indeed purposeful shift towards enforcing a precondition good faith negotiation and friendly discussion clause or even a mediation clause in resolving a dispute or difference that has arisen between the parties and a fortiori, when the precondition takes the form of a sieving mechanism of a definite reference to the S.O. for a decision before the parties launched into a full-blown Arbitration or Litigation, consuming in its wake much time and financial resources which would doubtless take a toll on the parties. Like all battles fought and won, even the winner is not without its casualties. [27] This approach of the Courts in its readiness to keep the parties to their contractual bargain of a precondition to meet to discuss and negotiate or mediate in good faith can be seen too in the English Courts as illustrated in a more recent judgment of the High Court of England, in Emirates Trading Agency LLC v Prime Mineral Exports Pte Ltd [2014] EWHC 2104 (Comm) at para 42, 47, 50, 54, 57, and 64. The High Court there traced the initial reluctance of the courts to enforce such a clause and now see it additionally as consistent with public interest to uphold it: 26 “42 In United Group Rail Services Ltd v Rail Corpn New South Wales (2009) 127 Con LR 202 a contract for the design and build of rolling stock contained a dispute resolution clause which provided that the parties should “meet and undertake genuine and good faith negotiation with a view to resolving the dispute”; failing such resolution the dispute could be arbitrated. The New South Wales Court of Appeal held that the obligation to negotiate was enforceable. Allsop P carried out an extensive examination of the English and Australian authorities. He accepted that an agreement to agree was unenforceable but said that it did not follow that an agreement to undertake negotiations in good faith to settle a dispute arising under a contract was unenforceable. ... 47 This cogent reasoning can be applied to the present case as follows. The clause in the present case obliged the parties to seek to resolve a dispute by friendly discussions and provided for four weeks to expire before arbitration could be commenced. Such an agreement is complete in the sense that no essential term is lacking. Since it is an obligation to seek to resolve a dispute arising under the LTC the discussions would concern the rights and obligations arising from the LTC with a view to reaching a compromise of the dispute which reflects the existing bargain between the parties. There would not be an open-ended discussion concerning each party’s commercial interests without regard to the rights and obligations under the LTC. Thus the agreement has sufficient certainty to be 27 enforceable. Whilst it may be difficult in some circumstances to establish a breach of the obligation there will be other circumstances in which a court is likely to be able to identify conduct, if it exists, which departs from the conduct expected of parties who have agreed to seek to resolve contractual disputes by friendly discussions. For example, a party who refused to discuss his claim at all could easily be shown to have breached the obligation to seek to resolve his claim by friendly discussion. Difficulty of proof of breach in some cases does not mean that the clause lacks real content. If a party were to seek damages for breach of the obligation it might be difficult to establish what the outcome of the discussions would have been but in such a case damages could, in appropriate cases be awarded for loss of a chance. Concluding that the obligation was enforceable would be consistent with the public policy of encouraging parties to resolve disputes without the need for expensive arbitration or litigation. ... 50 However, where commercial parties have agreed a dispute resolution clause which purports to prevent them from launching into an expensive arbitration without first seeking to resolve their dispute by friendly discussions the courts should seek to give effect to the parties’ bargain. Moreover, there is a public interest in giving effect to dispute resolution clauses which require the parties to seek to resolve disputes before engaging in arbitration or litigation. ... 54 Recent developments in the law of Singapore support this approach. In International Research Corpn plc v Lufthansa 28 Systems Asia Pacific Pte Ltd [2013] 1 Lloyd’s Rep 24 the High Court of Singapore had to consider whether a clause which referred to arbitration disputes “which cannot be settled by mediation” provided for a condition precedent to arbitration which was too uncertain to be enforceable. The arbitral tribunal had held that it was. But the High Court held that it was enforceable. Reference was made to a decision of the Singapore Court of Appeal in HSBC Institutional Trust Services (Singapore) Ltd v Toshin Development Singapore Pte Ltd [2012] 4 SLR 378 which concerned a contract which obliged parties to endeavour in good faith to agree a new rent. The Walford case [1992] 2 AC 128 was distinguished on the basis that that case concerned a stand alone agreement where there was no other overarching contractual framework which governed the parties’ relationship. ... 57 It is also to be noted that (at least some) International Centre for Settlement of Investment Disputes (“ICSID”) tribunals regard obligations to seek to resolve disputes by negotiation in good faith as binding and enforceable: see, for example, Tulip Real Estate Investment and Development Netherlands BV v Republic of Turkey (ICSID Case No ARB/11/28)(unreported)5 Marche 2012, paras 56-72. ... 64 In my judgment such an agreement is enforceable. My reasons (which largely echo those of Allsop P in the United Group Rail Services case) may be summarised as follows. The agreement is not incomplete; no term is missing. Nor is it uncertain; an obligation to seek to 29 resolve a dispute by friendly discussions in good faith has an identifiable standard, namely, fair, honest and genuine discussions aimed at resolving a dispute. Difficulty of proving a breach in some cases should not be confused with a suggestion that the clause lacks certainty. In the context of a dispute resolution clause pursuant to which the parties have voluntarily accepted a restriction on their freedom not to negotiate it is not appropriate to suggest that the obligation is inconsistent with the position of a negotiating party. Enforcement of such an agreement when found as part of a dispute resolution clause is in the public interest, first, because commercial men expert the court to enforce obligations which they have freely undertaken and, second, because the object of the agreement is to avoid what might otherwise be an expensive and time consuming arbitration.” (emphasis added) [28] The Australian courts too have demonstrated a distinct willingness to enforce preconditions to Arbitration or Litigation via some "genuine and good faith negotiations" clauses. The judgment of the New South Wales Court of Appeal, in United Group Rail Services Limited v Rail Corporation New South Wales [2009] NSWCA 177 at para 70, 73, 78 to 81 is illustrative of this approach: “70 ... The content and context here is a clearly worded dispute resolution clause of an engineering contract. It is to be anticipated at the time of entry into the contract that disputes 30 and differences that may arise will be anchored to a finite body of rights and obligations capable of ascertainment and resolution by the chosen arbitral process (or, indeed, if the parties chose, by the Court). The negotiations (being the course of treaty or discussion) with a view to resolving the dispute will be anticipated not to be open-ended about a myriad of commercial interests to be bargained for from a self-interested perspective (as in Coal Cliff). Rather, they will be anticipated to involve or comprise a discussion of rights, entitlements and obligations said by the parties to arise from a finite and fixed legal framework about acts or omissions that will be said to have happened or not happened. The aim of the negotiations will be anticipated to be to resolve a dispute about an existing bargain and its performance... ... 73 These are not empty obligation; nor do they represent empty rhetoric. An honest and genuine approach to settling a contractual dispute, giving fidelity to the existing bargain, does constrain a party. The constraint arises from the bargain the parties have willingly entered into. It requires the honest and genuine assessment of rights and obligations and it requires that a party negotiate by reference to such. ... 78 This is a dispute resolution clause. To require in such a clause this degree of constraint on the positions of the parties reflects developments in dispute resolution generally. The recognition of the important public policy in the interests of the efficient use of public and private resources and the promotion of the private interests of members of the public and the 31 commercial community in the efficient conduct of dispute resolution in litigation, mediation and arbitration in a fair, speedy and cost efficient manner attends all aspects of dispute resolution: cf “just, quick and cheap resolution of the real issues”: Civil Procedure Act 2005 (NSW), s 56. Parties are expected to co-operate with each other in the isolation of real issues for litigation and to deal with each other in litigation in court in a manner requiring co-operation, clarity and disclosure: see for example Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Limited [2008] NSWCA 243 at [160]-[165] and Bellevarde Constructions Pty Ltd v CPC Energy Pte Ltd [2008] NSWCA 228 at [55]-[56]. As part of its procedure, the Court can order mediation: Civil Procedure Act, s 26. Section 27 of that Act states that it is the duty of each party to the proceedings that have been referred to mediation to participate “in good faith” in the mediation. Costs sanctions can attend this duty cf Capolingua v Phylum Pte Ltd (1991) 5 WAR 137. 79 The contract here is, of course, not one governed by the Civil Procedure Act. It is, however, a modern contract with a sophisticated and detailed dispute resolution clause seeking to employ various tools to resolve disputes. The definition of “Law” in cl 2.2 makes clear that the law of New South Wales (and, implicitly, the common law of Australia) is the proper law of the contract. One of the available tools of dispute resolution is the obligation to engage in negotiations in a manner reflective of modern dispute resolution approaches and techniques – to negotiate genuinely and in good faith, with a fidelity to the bargain and to the rights and obligations it has produced within 32 the framework of the controversy. This is a reflection, or echo, of the duty, if the matter were to be litigated in court, to exercise a degree of co-operation to isolate issues for trial that are genuinely in dispute and to resolve them as speedily and efficiently as possible. 80 The public policy in promoting efficient dispute resolution, especially commercial dispute resolution, requires that, where possible, real and enforceable content be given to clauses such as cl 3 at para 5.11 and 35.12 to encourage approaches by, and attitudes of, parties conducive to the resolution of disputes without expensive litigation, arbitral or curial. 81 The business people here chose words to describe the kind of negotiations they wanted to undertake, “genuine and good faith negotiations”, meaning here honest and genuine with a fidelity to the bargain. That should be enforced. In my view, subcl 35.11(c) was not uncertain and had identifiable content.” (emphasis added) [29] Thus where there is a sufficiently clear reference to the S.O. for a decision before proceeding to Arbitration as in the nature of a precondition or condition precedent, both the intention of the parties as captured in the clear words of clause 54(a) and (b) as well as public interest would operate to constrain the Courts to enforce such a clause. 33 Whether the various correspondence between the parties and in particular the letter from the Defendant to the Plaintiff dated 3 September 2010 is sufficient substantial fulfillment of the condition precedent before reference to Arbitration as required under Clause 54(a) and (b) of the Contract [30] The reference by the Contractor to the S.O. for a decision of the differences or disputes must be a reference of sufficient particularities addressed to the S.O. such that anyone reading the said reference in writing would know clearly that it is a reference under clause 54(a) of the Contract, calling for a decision in writing within 45 days of the reference. It is a reference with a request for a decision because there is a time frame for the S.O. to revert in writing with his decision, failing which consequences ensue. If the S.O. does not reply in writing within 45 days of the reference, then the Contractor may proceed with Arbitration within 45 days thereafter. If the Arbitrator does reply in writing, then the Contractor may proceed with Arbitration before the expiry of 45 days from the date of receipt of the written decision. Without knowing which letter is a reference under clause 54(a), there will be the corresponding difficulty as to when reference to Arbitration ought to be made. Parties must be deemed to have prized promptness in proceeding with the next stage of dispute resolution via Arbitration by agreeing to the timeline set, 34 quite apart from the fact that such a timeline may or may not be binding on the parties as may be held by the Court. [31] Whilst appreciating that substance must prevail over form, one must ask whether there is a semblance of sufficient compliance with substance in all the circumstances of the case in the correspondence referred to by the Contractor. I can do no better than to reproduce the commentary by the learned author, Lim Chong Fong, now a Judicial Commissioner, in his commentary on the PWD 203 Contract in The Malaysia PWD Form of Construction Contract (2nd edn, Sweet & Maxwell Asia 2011) at p 154 with respect to clause 54 as follows: “The arbitration agreement herein provides a two tier process in that it is a condition precedent that any dispute or difference must be first referred to the Officer Named for a decision before the dispute or difference can be referred to arbitration. Though not expressed, it is submitted that the referral to the Officer Named can be made during the progress or after completion of the Works, or after the termination of the Contract. The referral can be made either by the Contractor or the Government so long as a dispute or difference has arisen between them. A dispute or difference arises when a claim is represented by one party and it is rejected by the other (see Perbadanan Kemajuan Negeri Perak v Asean Security Paper Mill Sdn Bhd [1991] 3 CLJ 2400 and Gadang Engineering (M) Sdn Bhd v Bluwater Developments Bhd [2010] 5 AMR 41; [2010] 6 CLJ 277). 35 The referral to the Officer Named must be made in clear terms to invoke the first of the two tier process, preferably quoting this clause in the referral (see Penta Ocean Construction v Penang Development Corporation [2003[ 2 AMR 311).” (emphasis added) [32] Therefore in determining whether the referrals by way of letters written to try to resolve the dispute or difference are sufficient compliance with clause 54(a) and (b), one must be confined to the letters written before the reference to Arbitration via the Notice to Arbitrate. One must bear in mind that what is in issue here is whether a precondition or a condition precedent has been fulfilled and obviously any fulfillment of such a condition must be with reference to actions before the Notice to Arbitrate and not after. Letters after the said Notice to Arbitrate and meetings held pursuant to such letters would not be relevant. [33] In particular, the Defendant through its learned counsel Encik Mohd Irzan Iswatt, referred to its letter dated 3 September 2010 as amounting to a referral of disputes or differences to Dato’ Dr. Sr. Kamarul Rashdan for a decision in accordance with clause 54 of the Contract. See affidavit of Mohd Zahari affirmed on 12 February 2016, paragraphs 14 to 15. The full contents of the Defendant’s letter dated 3 September 2010 are as follows: 36 “Rujukan Kami: AB/Zila/2010/0278 Tarikh: 3hb September 2010 USAHASAMA SPNB-LTAT SDN BHD Tingkat 10, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur U/p: Yg.Bhg. Prof.Dr. Sr. Kamarul Rashdan Hj Salleh CADANGAN PEMBANGUNAN PERUMAHAN UNTUK ANGGOTA-ANGGOTA TENTERA DAN KAKITANGAN AWAM DI LEMBAH KELANG – KEM SUNGAI BESI (PAKEJ 5A) - “Draft of final Account Statement” Dengan hormatnya surat USL/SGBS(5A)/1/35/Jld.5/CAD(25) bertarikh 12hb Ogos 2010 berkenaan perkara di atas adalah dirujuk. Untuk makluman pihak Yg.Bhg. Prof., penamatan kontrak kami adalah tidak sah kerana kelewatan siap kerja adalah berpunca daripada: 1) Masalah Pembayaran Kelewatan siap kerja adalah berpunca daripada masalah pembayaran bukannya disebabkan kegagalan kami menjalankan kerja-kerja kontrak secara gigih dan berterusan. Seperti yang pihak SPNB-LTAT sedia maklum, kami tetap meneruskan kerja-kerja di tapak walaupun aliran tunai projek terjejas berikutan pembayaran yang diterima dari pihak SPNB-LTAT adalah “under payment” iaitu sejak bulan Mac 2006, di mana perbezaan di antara pencapaian fizikal dengan kewangan adalah sebanyak 15% atau RM9.0 juta. Di samping itu juga, aliran tunai projek turut terjejas berikutan kegagalan pihak Yg. Bhg. Prof. menjelaskan bayaran sejak bulan Ogos 2007 sehingga Februari 2008. Perkara ini telah kami maklumkan melalui surat kami ABI/HZ/2008/128 bertarikh 25hb Februari 2008 2) Lanjutan Masa (Extension of Time) Bilangan hari yang diluluskan oleh pihak SPNB-LTAT adalah tidak setara dengan bilangan hari yang dipohon. Pihak SPNB-LTAT juga telah menolak tuntutan Lanjutan Masa No. 5 dan 6 yang dipohon pada Oktober dan November 2007. (Rujuk Lampiran A) Di sini, kami juga ingin menyatakan bahawa kami tidak bersetuju terhadap bayaran muktamad yang diperakukan iaitu berjumlah (RM4,224,317.83). Ini berasaskan kepada faktor-faktor berikut yang tidak diambil kira: a. Kerja-kerja tambahan (Variation Order) Jumlah keseluruhan tuntutan ke atas kerja-kerja tambahan adalah sebanyak RM3,323,978.79. Jumlah yang diperakukan di dalam penyata akaun muktamad hanya RM1,578,250.00. Baki tuntutan berjumlah RM1,745,728.79 tidak dipertimbangkan di dalam penyata akaun muktamad tersebut. 37 b. Kerja-kerja membaikpulih (Rectification Works) Jumlah keseluruhan tuntutan ke atas kerja-kerja membaikpulih adalah sebanyak RM5,979,016.70. Jumlah yang diperakukan di dalam penyata akaun muktamad hanya RM1,756,971.11. Baki tuntutan berjumlah RM4,222,045.59 tidak dipertimbangkan di dalam penyata akaun muktamad tersebut. c. Nilai kerja dilaksanakan (Work Done) Nilai keseluruhan kerja-kerja yang telah dilaksanakan tidak termasuk kerja-kerja tambahan dan membaikpulih adalah sebanyak RM50,322,130.13 (Rujuk Lampiran A). Jumlah yang diperakukan di dalam penyata akaun muktamad hanya RM45,562,801.06. Baki tuntutan berjumlah RM4,759,329.07 tidak dipertimbangkan di dalam penyata akaun muktamad tersebut. d. Wang Jaminan Perlaksanaan (Bank Guarantee) Tuntutan ke atas wang jaminan perlaksanaan berjumlah RM3,240,625.00. Pihak SPNB-LTAT tidak wajar menuntut wang perlaksanaan ini berikutan penamatan kontrak adalah tidak sah.