Thye Hin Enterprise SDN BHD V Daimler Chrysler SDN BHD
Thye Hin Enterprise SDN BHD V Daimler Chrysler SDN BHD
Thye Hin Enterprise SDN BHD V Daimler Chrysler SDN BHD
Judgment
Mohd Ghazali JCA
(delivering the judgment of the court)
1. This appeal is directed against the order of the High Court at Alor
Setar dismissing the appellant‟s application for injunctive relief. The
dispute in this case revolves around a dealership agreement dated
10 January 2003 entered into between the appellant, as dealer and
the respondent, as general distributor (“the said agreement”) wherein
the respondent appointed the appellant to be a non-exclusive dealer
in the State of Kedah and Perlis for the sale and service of new
Mercedes Benz passenger cars, vans and transporters including new
genuine parts and accessories distributed and supplied by the
respondent.
2. It is common ground that the said agreement provides for all disputes
between the parties to be referred for arbitration to the Kuala Lumpur
Regional Centre for Arbitration (“the Centre”). Article 17 of the said
agreement provides –
3. It is not in dispute that steps have already been taken to have the
dispute referred to arbitration at the Centre. Accordingly, section 34
of the Arbitration Act 1952 (“the Act”) applies to the case. That
section reads -
(1) Notwithstanding anything to the contrary in this Act or in any
other written law but subject to subsection (2) in so far as it
relates to the enforcement of an award, the provisions of this
Act or other written law shall not apply to any arbitration held
under the Convention on the Settlement of Investment
Disputes Between States and Nationals of Other States 1965
or under the United Nations Commission on International
Trade Law Arbitration Rules 1976 and the Rules of the
Regional Centre for Arbitration at Kuala Lumpur.
(2) Where an award made in an arbitration held in conformity with
the Convention or the Rules specified in subsection (1) is
sought to be enforced in Malaysia, the enforcement
proceedings in respect thereof shall be taken in accordance
with the provisions of the Convention specified in subsection
(1) or the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards 1958, as may be appropriate.
(3) The competent court for the purpose of such enforcement shall
be the High Court.
7. Before this Court, the only issue is whether the learned judge
adopted the correct approach to the application before him. The
respondent argued the learned judge was right in doing so on the
face of section 34 of the Act. The appellant argued the learned judge
was wrong. We are in agreement with the appellant.
10. On the facts of that case, section 20(1)(g) of the Specific Relief Act
1950 plainly applied. Nevertheless, Abdul Hamid CJ (Malaya) (as he
then was) said:
While we appreciate that these questions are crucial indeed they
are the main grounds upon which the appellant‟s case rests, we do
not, however, see the necessity at that stage for the learned Judge
to decide on these difficult points of law.
Suffice for the learned Judge to decide, and this he did, that there
are serious questions that have arisen for trial. While we agree that
there are serious questions of law we are also of the view that these
questions are relevant for consideration in determining the grant or
otherwise of an interim injunction but the question is should it be the
Court‟s business to resolve these serious and difficult questions of
law at that stage of the litigation? We think not.
11. Thus, in Si Rusa, the statutory provisions did not permit the grant of
injunctive relief but yet the Federal Court held that that very issue
was a serious question to be tried. We are of the opinion that a
similar approach should have been taken in the instant case by the
learned judge. It is to be noted that section 34 of the Act only
excludes interference with the arbitration itself. It has no application
to cases where interim relief is urgently required. In this context it is
useful to quote from the article entitled “Issues Related to Arbitrations
Conducted under the KLRCA Arbitration Rules" by Sundra Rajoo
[2003] 3 MLJ xlix, where the learned writer says (at page lv):
While the decision in Jati Erat [Jati Erat Sdn Bhd v City Land
Sdn Bhd [2002] 1 CLJ 346] is correct on the plain reading of s 34, it
is unfortunate in another way as it extends the principle of non-
interference by the courts in arbitrations conducted under the
KLRCA Rules to situations where the relief sought from the court is
not supervisory in nature but merely for interim preservation. This is
especially so as art 26.3 of the KLRCA Rules specifically provides
that a request for interim measures to a judicial authority shall not
be deemed incompatible with an agreement to arbitrate. It would
seem that the KLRCA rules recognize the need for court
intervention in certain situations, particularly in emergency cases,
and have made suitable provisions in this connection. Court
intervention, by way of ordering interim measures of protection, is
essential in urgent situations particularly when granting relief is
beyond the jurisdiction of the arbitral tribunal or where the arbitral
tribunal has not yet been constituted. The court in Third Chandris
Shipping Corp v Unimarine SA [1979] QB 645 observed that it
only takes a telephone call or telex message which could, within
seconds of the service of the writ, put all liquid assets out of reach
of the creditor.
The object of interim measures of protection is to support the
arbitration by making it effective. This is to say, the court may
intervene in support of arbitration by granting interlocutory
injunctions. In this connection, in Channel Tunnel Group Ltd v
Balfour Beatty Construction Ltd [1993] 1 All ER 664, speaking for
the House of Lords, Lord Mustill candidly stated that „none of the
terms of the Arbitration Act of 1950, apply to foreign arbitrations and
that since these include s 12(6), the power conferred by s 12(6)(h)
to grant an interim injunction is not available to the court in respect
of foreign arbitrations such as the present‟. He then authoritatively
stated the law: „¼ the purpose of interim measures of protection ¼
is not to encroach on the procedural powers of the arbitrators but to
reinforce them, and to render more effective the decision at which
the arbitrators will ultimately arrive on the substance of the dispute.
Provided that this and no more is what such measures aim to do,
there is nothing in them contrary to the spirit of international
arbitration.‟ Their Lordships then upheld the proposition that
interlocutory measures could be taken against a defendant within
the jurisdiction of the English courts to protect the foreign
arbitration.
12. We are entirely in agreement with the views of the learned writer. In
our judgment, the grant of interim relief pending the outcome of an
arbitration held at the KLRCA is not prohibited by section 34 of the
Act. We have read the judgment of this Court in Sarawak Shell Bhd
v PPES Oil & Gas Sdn Bhd [1998] 2 MLJ 20 which was referred to
by learned counsel for the respondent and find that case readily
distinguishable from the facts of the instant case. In that case the
appellant was seeking to invoke section 25(2) of the Act which
empowers the High Court to revoke the authority of an arbitrator or to
restrain arbitration proceedings where the arbitrator is not impartial or
where fraud is involved, something that is clearly prohibited by
section 34.
13. For these reasons, we would allow this appeal, set aside the order
made by the learned judge and remit the application to the High
Court at Alor Setar to be heard on the merits. The respondent must
pay the costs of this appeal and the costs in the court below. The
deposit is to be refunded to the appellant.
Cases
Keet Gerald Francis Noel John v Mohd Noor Abdullah [1995] 1 MLJ 193
Si Rusa Beach Resort Sdn Bhd v Asia Pacific Hotels Management Pte Ltd
[1985] 1 MLJ 132
Sarawak Shell Bhd v PPES Oil & Gas Sdn Bhd [1998] 2 MLJ 20
Legislations
Arbitration Act 1952: s.34
Specific Relief Act 1950: s.20(1)(g), s.54(f)
Authors and other references
Sundra Rajoo, “Issues Related to Arbitrations Conducted under the KLRCA
Arbitration Rules" [2003] 3 MLJ xlix
Representations
Cyrus Das, Shamsul Baharin Manaf & T. Jegadeeson (Messrs Shook Lin &
Bok) for appellant.
D.P. Naban & Bahari Yeow (Messrs Lee Hishamuddin) for respondent.