NAVIGATING THE INTERSECTION OF ARBITRATION AND LITIGATION

Legal Updates from YHA Law Firm

1. Illustrative Scenario:

In a recent case, Party X served Party Y with a Writ and Statement of Claim. Subsequently, Y entered a Memorandum of Appearance and, at the first case management hearing, requested an extension of time to file a Defense. Rather than submitting the Defense, Y sought to stay the proceedings under section 10(1) of the Arbitration Act 2005, aiming to refer the dispute to arbitration in line with the contract’s arbitration clause.

2. Legal Issues:

The crux of the issue is whether Party X can object to the stay application, contending that Party Y has estopped from choosing arbitration by seemingly opting for litigation through its actions.

3. Legal Principes & Law:

Section 10 of the Arbitration Act 2005 mandates a stay in proceedings if there is an agreement to arbitrate, unless the stay applicant has actively participated in the court proceedings or the arbitration agreement is deemed null, void, inoperative, or incapable of being performed.
Without a clear, unequivocal, and irrevocable intention to abandon arbitration, the court is inclined to favor staying court proceedings to allow arbitration as per the contract’s stipulations.

4. Application to Scenario:

Merely requesting an extension to file a Defense does not constitute taking steps in the legal proceedings sufficient to imply an abandonment of the arbitration agreement. Such a request, particularly when entry of appearance is necessary to avoid a default judgment, should not be interpreted as a definitive move to engage in litigation over arbitration. The absence of further procedural engagement, such as the submission of pleadings by Party Y, supports this view.

5. Reference cases:

Airbus Helicopters Malaysia Sdn Bhd (formerly known as Eurocopter Malaysia Sdn Bhd) v. Aerial Power Lines Sdn Bhd [2024] 2 MLJ 471
Ranhill E & C Sdn Bhd v. Tioxide (M) Sdn Bhd and other appeals [2015] MLJU 1873; [2015] 1 LNS 1435
Dynaciate Engineering Sdn Bhd v. Punj Lloyd Sdn Bhd [2020] MLJU 2388; [2020] 1 LNS 2252
Dian Kiara Sdn Bhd v. GCH Retail (M) Sdn Bhd [2020] 12 MLJ 570
Federal Court in Sanwell Corp v. Trans Resources Corp Sdn Bhd & Anor [2002] 2 MLJ 625; [2002] 3 CLJ 213

EMPLOYMENT – RETRENCHMENT – INDUSTRIAL COURT UPHOLDS GLOBAL RESTRUCTURING: REDUNDANCY VALID DESPITE ONGOING WORK OVERSEAS

In Sin Leong v BT Systems (M) Sdn Bhd [2025] 4 ILJ 221, the Industrial Court upheld the employer’s retrenchment exercise following a global restructuring, ruling that the claimant was lawfully dismissed due to genuine redundancy. Although the claimant’s functions continued in India, the Court held that the abolition of the entire Malaysian team sufficed to establish redundancy. The company’s profitability did not negate the restructuring, and the LIFO principle did not apply since the whole department was closed. The decision reinforces that courts will respect managerial prerogative, provided the retrenchment is bona fide and not tainted by mala fide or victimisation.

30 March ,2026 尚無留言

DECREE NISI – ADULTERY AND FRAUD – NOT CONCEAL REMARRIAGE – COLLUSION EVIDENCE

In Kanagasingam a/l Kandiah v Shireen a/p Chelliah Thiruchelvam & Anor [2026] 7 MLJ 494, the High Court set aside spousal maintenance and committal orders after finding that the ex-wife had fraudulently concealed her remarriage, which by law extinguished her entitlement under section 82 of the Law Reform (Marriage and Divorce) Act 1976. The Court held that consent orders obtained through non-disclosure were vitiated by fraud and ordered repayment of RM310,000, together with RM400,000 in aggravated damages and RM300,000 in exemplary damages. The decision underscores that fraud unravels all, even in family proceedings, and that courts will not hesitate to impose punitive consequences for abuse of process.

30 March ,2026 尚無留言

FEDERAL COURT SAVES SECTION 233 CMA: ‘OFFENSIVE’ AND ‘ANNOY’ REMAIN CONSTITUTIONAL

In The Government of Malaysia v Heidy Quah Gaik Li [2026] MLJU 384, the Federal Court overturned the Court of Appeal’s ruling that had struck out the words “offensive” and “annoy” from section 233(1)(a) of the Communications and Multimedia Act 1998. The Court held that these terms, when read together with the requirement of intent to annoy, fall within the permissible restrictions on free speech under Article 10(2)(a) of the Federal Constitution. While the impugned words were upheld as constitutional, the respondent’s acquittal was maintained as her Facebook posts criticising immigration detention conditions did not demonstrate the required intent to annoy or harass.

30 March ,2026 尚無留言

HIGH COURT ORDERS TIKTOK VIDEO TAKEN DOWN: ADVICE ON SECRET CONVERSION OF MINORS VIOLATES CONSTITUTION

In Karnan a/l Rajanthiran & Ors v Firdaus Wong Wai Hung [2025] 9 MLJ 14, the High Court granted a mandatory interim injunction ordering the immediate removal of a viral TikTok video advising how underaged non-Muslim children could be secretly converted to Islam without their parents’ knowledge. The Court held that the advice prima facie breached Article 12(4) of the Federal Constitution, which provides that a minor’s religion must be determined by their parent or guardian. Given the risk of irreparable harm to constitutional rights, the Court found the case “unusually strong and clear” and concluded that justice and the balance of convenience favoured the urgent removal of the video pending trial.

30 March ,2026 尚無留言

MARITIME LAW – CLAUSES 28 AND 29 BARECON 2001 – OWNERS CAN’T PICK ANY PORT: COURT LIMITS ‘CONVENIENCE’ IN VESSEL REPOSSESSION CLAUSE

In Songa Product and Chemical Tankers III AS v Kairos Shipping II LLC [2026] 1 Lloyd’s Rep 100, the Court of Appeal held that a clause allowing owners to repossess a vessel at a location “convenient to them” does not entitle them to demand redelivery at any distant port of their choosing. The Court emphasised that repossession must occur as soon as reasonably practicable, and where the vessel is already at a safe and accessible port, owners cannot require charterers to incur the cost and risk of sailing it across the world. The decision clarifies that charterers, as gratuitous bailees post-termination, are only obliged to preserve the vessel – not to undertake burdensome repositioning for the owners’ convenience.

30 March ,2026 尚無留言

MARINE INSURANCE – FRAUD DOESN’T DEFEAT COVER: COURT UPHOLDS MORTGAGEE’S CLAIM UNDER MII POLICY OF MORTGAGEE’S CLAIM

In Oceanus Capital Sarl v Lloyd’s Insurance Co SA (The “Vyssos”) [2026] 1 Lloyd’s Rep 79, the Commercial Court held that a mortgagee was entitled to recover under a Mortgagee’s Interest Insurance (MII) policy despite a forged war risks cover note and a breach of trading warranties by the shipowner. The Court found that the proximate cause of loss was the mine strike, not the forged insurance, and that the mortgagee was not “privy” to the breach, as its consent had been induced by fraud. The decision reinforces that MII policies are designed to protect lenders from owner misconduct and non-recovery under primary insurance, and that fraud will not defeat cover where the mortgagee acted reasonably.

30 March ,2026 尚無留言