Federal Court Grants Anti-Arbitration Injunction to a Non-Party to the Arbitration

The Federal Court in its grounds of judgment dated 1 July 2019 reinstated the injunction of a non-party to an arbitration. The anti-arbitration injunction was made against the parties to an ongoing arbitration to restrain them from proceeding and continuing with the arbitration proceedings, pending the parallel Court proceedings.

The Federal Court ruled on the questions of law that sections 8 and 10 of the Arbitration Act 2005 (AA 2005) would not apply to a party litigant who is not a party to the arbitration agreement and/or arbitration proceedings. Section 8 of the AA 2005 essentially states that no court shall intervene in matters governed by the AA 2005. Section 10 of the AA 2005 allows for the court to stay court proceedings and refer parties to arbitration.

In this decision, the Federal Court allowed a non-party to the arbitration to resort to the Court’s inherent jurisdiction to grant an anti-arbitration injunction to restrain the arbitrating parties from proceeding with the arbitration. The test to be applied is the American Cyanamid-like test of a serious issue to be tried (or as applied in Malaysia via the Keet Gerald Francis test) instead of a higher threshold in the English High Court decision in J Jarvis v Blue Circle Dartfort Estates [2007[ EWHC 1262 (TCC).

Where there are parallel court proceedings involving some parties in an arbitration and non-parties to an arbitration, this Federal Court decision appears to favour giving primacy to the court proceedings and to allow an injunction or stay of the arbitration proceedings. Continue reading

Case Update: Federal Court Rules on Scope of An International Arbitration under Malaysia’s Arbitration Act 2005

In its recent grounds of judgment dated 31 October 2018, the Federal Court in the Jan De Nul decision clarified the effect of an international arbitration and the applicability of certain provisions of the Arbitration Act 2005 (AA 2005). The Federal Court also overruled the decision in the Court of Appeal AJWA case. The dispute gave rise to two separate appeals, one in relation to section 42 of the AA 2005 and another relating to the setting aside under section 37 of the AA 2005. This decision only deals with the section 42 aspect.

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A Sea Change: How Hanjin’s Cross-Border Insolvency May Dock in Malaysia

My article published in The Malaysian Reserve on 27 October 2016.

tmr1Background

At the end of August 2016, one of the world’s largest container shipping companies, Hanjin Shipping Co Ltd, filed for rehabilitation proceedings at the Korean Bankruptcy Court. The Korean Bankruptcy Court granted provisional orders to preserve Hanjin’s assets.

There was immediate chaos. Around the world, some of Hanjin’s vessels in ports were seized while other vessels were stranded out at sea for fear of being seized.

To aid the rehabilitation proceedings in South Korea, it has been reported that Hanjin will seek court protection from more than 40 countries to preserve Hanjin’s assets.

Against this backdrop, I set out the ongoing legal developments in such a cross-border insolvency scenario and how these developments may affect Malaysia.

hanjin-small
Credit: Nsandel at English Wikipedia

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