Facts

In Hamidah Fazilah Sdn Bhd(1) the plaintiff was appointed by the defendant as a contractor for a multi-purpose hall through a design and build contract.

The plaintiff claimed against the defendant for money due in respect of the defendant's failure to pay for additional work in relation to the project.

In response, the defendant's solicitors wrote a letter to the plaintiff's solicitors, requesting further and better particulars of the plaintiff's statement of claim.

Following this, the defendant applied to stay the court proceedings to have the matter referred to arbitration under Section 10 of the Arbitration Act 2005.

Clause 67 of the contract provided for an arbitration agreement. Clause 70 of the contract provided that the parties agreed to submit to the exclusive jurisdiction of the high court.

The plaintiff opposed the defendant's stay application and raised the following key issues:

  • The defendant could not apply for the stay, as it had requested further and better particulars of the plaintiff's June 7 2014 statement of claim.
  • The ambit of the arbitration clause was confined to disputes arising before and during the completion of the work. The contract did not provide for disputes after completion of the work to be referred to arbitration.
  • The exclusive jurisdiction of the high court was provided for in the contract.

Decision

The high court granted the stay and held that the dispute between the parties had to be referred to arbitration pursuant to Section 10 of the Arbitration Act 2005.

The court held the request for further and better particulars did not prevent the defendant from applying for a stay. Among others things, the defendant's request was to obtain a better understanding of the claim. Further, the request for particulars was withdrawn, leaving only the stay application for the court's consideration.

The court held that it was unreasonable to suggest that the parties had not intended for disputes arising after the completion of the works to be referred to arbitration:

"That is an unduly restrictive and rigid interpretation of clause 67.0 on arbitration taken as a whole. When the general agreement in clause 67.1 and 67.3 is worded widely and expansively to cover any dispute or difference arising between the parties out of or in connection with the contract that shall be referred to arbitration, there is no reasonable and cogent excuse to then limit the dispute and difference to that which arises before the completion of the works. To do so would do violence to the language used and indeed would be totally misconceived." (Emphasis added.)

The court further held there was no contradiction between the applicability of the arbitration clause (Clause 67) and the submission to the exclusive jurisdiction of the high court (Clause 70) in the contract; thus, it gave effect to the arbitration clause. The court rationalised the two clauses by construing the exclusive jurisdiction of the court as intended to be availed when there was a need to obtain court relief in aid of arbitration, as well as to set aside and enforce arbitral awards.

Comment

In Hamidah Fazilah Sdn Bhd the court upheld the arbitration clause to give effect to the parties' intentions in the face of ambiguously drafted clauses.

For further information on this topic please contact K Shanti Mogan at Shearn Delamore & Co by telephone (+60 3 2070 0644) or email (shanti@shearndelamore.com). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.

Endnotes

(1) Hamidah Fazilah Sdn Bhd v Universiti Tun Hussein Onn Malaysia (UTHM) [2017] 7 MLJ 274 (HC), November 21 2016.

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