Facts
Issues
Decision


Facts

In MISC Bhd v Cockett Marine Oil (Asia) Pte Ltd,(1) the plaintiff was the owner of a vessel and the defendant was a bunker supplier. The plaintiff invited the defendant and several other bunker suppliers to tender for the supply of bunkers to the vessel. The tender was awarded to the defendant. The parties entered into a supply contract and bunkers were supplied by the defendant to the plaintiff's vessel.

On the same day, the vessel was detained by the Malaysian Maritime Enforcement Agency (MMEA) for potential offences against the Malaysian Customs Act 1967 in relation to the bunkers supplied. The vessel's tank was sealed and the plaintiff was ordered not to use the bunkers pending completion of an investigation. The detained bunkers were subsequently released and the parties entered into an agreement that the plaintiff would buy the bunkers at an agreed price.

However, the plaintiff later terminated the supply contract on the grounds that the defendant was in breach of its obligation to deliver the bunkers free of claims and encumbrances.

The plaintiff's solicitor issued a letter of demand to the defendant claiming damages arising from the defendant's breach of contract. The defendant's solicitor responded, denying that the detention of the vessel stemmed from the defendant's negligence or breach of contract.

The plaintiff commenced proceedings against the defendant, while the defendant simultaneously commenced arbitration in England. The defendant applied for a stay of proceedings pending arbitration and the plaintiff applied for an anti-arbitration injunction to restrain the defendant from taking further steps in the arbitration proceedings.

Issues

The issues for the court's determination were whether:

  • the defendant had demonstrated the existence of an arbitration agreement between the parties and that the defendant had not taken a step in the court proceedings; and
  • the anti-arbitration injunction should be granted.

Decision

In the upshot, the defendant's application was dismissed. The plaintiff's application was allowed.

Defendant's application for stay pending arbitration
The plaintiff submitted that there was no arbitration agreement between the parties, as the parties contracted on the plaintiff's terms where the contract was exclusively subject to the jurisdiction of the Malaysian courts.

The defendant submitted that the supply contract was on the defendant's terms, as a hyperlink to the defendant's website with its terms had been included in the defendant's emails concerning the tender. By accepting the bunker supply without any objection, the plaintiff had accepted the supply contract on the defendant's terms expressly, impliedly and/or by conduct.

The court held that the supply contract was on the plaintiff's terms and not the defendant's and that the invitation to tender and the supply contract were based on the plaintiff's terms. The hyperlink was insufficient. In any other situation, it would be odd for the sale of the bunkers in the plaintiff's invitation to tender to be transacted in this way.

Consequently, the court found that the defendant had failed to demonstrate the existence of an arbitration agreement between the parties and thus could not stay the proceedings on that ground.

Had the defendant taken a step in proceedings?
The defendant asserted that asking for an extension to file a defence during case management did not amount to taking a step in the proceedings. For the request of an extension to file a defence to amount to taking a step in the proceedings a formal application must be made to the court.

The court held that the defendant had in fact taken a step in the proceedings. The defendant's request for an extension of time had not been made in reference to the stay pending arbitration. By requesting an extension of time during case management, the defendant had invoked the jurisdiction of the court, thus amounting to a step in the proceedings.

Plaintiff's application for anti-arbitration injunction
The plaintiff claimed that there were serious issues to be tried in the plaintiff's claim premised on the detention of the vessel by the MMEA due to an alleged breach by the defendant under the Customs Act. Damages are inadequate if the plaintiff is prevented from litigating in the forum of its choice pursuant to the supply contract.

The defendant submitted that where an arbitration agreement is incorporated in the correspondence, the anti-arbitration injunction should not be allowed. Further, the plaintiff's claim was a monetary claim that could be adequately compensated by damages.

The court agreed with the plaintiff that there were serious issues to be tried in the plaintiff's claim that had to be resolved at trial. The plaintiff's anti-arbitration injunction was to prevent an abuse of process by the defendant in forcing the plaintiff, which was not a party to an arbitration agreement, to arbitrate in London.

For further information on this topic please contact Rajasingam Gothandapani at Shearn Delamore & Co by telephone (+60 3 2027 2911) or email ([email protected]). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.

Endnotes

(1) [2022] 8 MLJ 786.