Every Step You Take – Stay pending arbitration

This recent High Court decision in CLLS Power System [2015] 11 MLJ 485 emphasised that the mere filing of an appearance would amount to a step in the proceedings. This would be fatal to applying for a stay under section 10 of the Arbitration Act. This is the importance of preserving the right to apply to stay the court proceedings pending arbitration. An application to stay court proceedings could only be made before that applicant had taken a step in the proceedings. Once the applicant took such a step, the Court would treat it as having waived its right to arbitrate and had instead opted for court litigation.

Justice Mary Lim referred to her earlier decision in Winsin Enterprise [2010] 3 CLJ 634 as well as to the Federal Court decision in Sanwell Corp [2002] 2 MLJ 625.

 

step

Nonetheless, I find it hard to reconcile this High Court decision with the Federal Court finding in Sanwell Corp (decided under the 1952 Act) that the filing of an unconditional appearance  did not amount to a step in the proceedings. The Federal Court held that the filing an appearance was a mandatory step in civil proceedings, and was therefore excluded from being treated as being a step in the proceedings to exclude the right to stay proceedings.

Until this point is resolved, it may be safer to actually file the Notice of Application for a stay first, and only thereafter file the Memorandum of Appearance, as strange as that may seem.

It may not be safe enough to even reserve or qualify your right to apply for a stay when filing the Memorandum of Appearance.

But such a qualification or reservation of rights did succeed in the High Court case of Nam Fatt v Petrodar [2010] 9 CLJ 732. In that case, the defendant filed an unconditional appearance and an affidavit to oppose an ad interim injunction, but with a reservation of rights. It was held that due to the reservation of rights to apply for a stay, that did not amount to a step of proceedings and the stay under section 10 was allowed.

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