Malaysia: Case Update: Court's Jurisdiction Limited To Identifying Whether There Is Prima Facie Existence Of An Arbitration Agreement

CIVIL PROCEDURE
Shipping – Contract – Supply of bunkers – Breach of Contract – Terminated – Arbitration – Stay Application – Anti-Arbitration Injunction – Arbitration Act 2005

Cockett Marine Oil (Asia) Pte Ltd v MISC Berhad
Civil Appeal No. W-02(IM)(ADM)-251-02/2021 | Court of Appeal
- see the grounds of judgment here

Facts Cockett Marine (the "Appellant") is a Singaporean company which supplies bunker fuel for shipping vessels. MISC Berhad (the "Respondent") is a bunker supplier and owner of a vessel ("the Vessel"). The Respondent invited tenders for the supply of bunkers and sent an invitation via email to the Appellant, attaching a copy of its terms and conditions, which amongst others gave exclusive jurisdiction to the Malaysian courts. The Appellant had submitted its tender and entered into negotiations with the Respondent through a series of email correspondences which contained a hyperlink to its website, which contained the Appellant's standard terms and conditions. Subsequently, both parties entered into a contract for the supply of the bunker fuel. Nevertheless, the Vessel and the Appellant's barge were detained by the Malaysian Maritime Enforcement Agency and the Appellant was ordered not to use the bunkers pending completion of an investigation. The Respondent then proceeded to terminate the contract on the grounds that the Appellant had breach its obligations and filed an action in the High Court for the same. However, the Appellant commenced arbitration proceedings in London and a notice of commencement of Arbitration was issued. The Appellant then filed for a stay of proceedings in the High Court pending arbitration which led to the Respondent filing for an anti-arbitration injunction against the Appellant. The Learned Judicial Commissioner ("LCJ") refused the Appellant's application to stay the proceedings and granted the anti-arbitration injunction against the Appellant on the grounds that, amongst others that the Appellant had failed to demonstrate the existence of an arbitration agreement. Hence this appeal.

Issues 1. Whether the LJC had misconstrued the provisions of s.18(1) and (8) of the Arbitration Act 2005?
2. Whether the LJC had in principle proceeded on a correct basis in determining the question of the existence of an arbitration agreement by identifying whether there was prima facie existence of an arbitration agreement?

Held In allowing the Appeal, the Court of Appeal held that, it was an error for the LJC to disregard the impugned link highlighted by the Appellant which was plainly a reference to an arbitration clause. It was the view of the Court of Appeal that the LJC had failed to give serious consideration to this crucial aspect which would have a strong bearing on the question of the existence of an arbitration agreement which was the fact that the Appellant's last email i.e its Confirmation of Supply, was the contractual document between the parties to the supply contract. The Court of Appeal was in agreement with the contention put forth by the Appellant that the agreement jurisdiction of the Court is limited to identifying whether there is prima facie existence of an arbitration agreement and once a prima facie determination is made, the matter is to be stayed and referred to arbitration for a full determination on whether there is in fact a binding arbitration agreement. Hence, the LJC exceeded his jurisdiction by purporting to determine conclusively not only that there was a prima facie case existence of an arbitration agreement but to make a factual determination that the same was not enforceable and did not bind the parties. In conclusion, the Court of Appeal allowed the appeal and granted a stay of proceedings as applied for by the Appellants in the High Court.