Albon (t/a N A Carriage Co) v Naza Motor Trading SDN BHD & Anor

On an application for a stay under section 9 of the Arbitration Act 1996, the applicant must establish that an arbitration agreement was concluded and that the dispute falls within its scope. The court cannot grant a statutory stay while the agreement’s conclusion remains unresolved. The tribunal’s power to rule on its own jurisdiction does not exclude the court’s jurisdiction to decide that issue.

The court retains an inherent jurisdiction to stay proceedings so that arbitrators may decide whether an arbitration agreement was concluded, but that power should be exercised only exceptionally, and with particular caution where conclusion is disputed. Where the evidence cannot resolve the issue summarily, the ordinary course is an expedited trial by the court.

The claimant brought proceedings against Naza Motor Trading Sdn Bhd concerning a UK agreement for agency services and disputed the existence of a Malaysian joint venture agreement (the JVA) containing an arbitration clause. Naza Motors sought a stay under section 9 of the Arbitration Act 1996, contending that the arbitrators should determine whether the JVA was genuine.

The claimant alleged that the JVA was forged and had not been signed by him. The written evidence left that issue open and required cross-examination and expert evidence. The central questions were whether the court had jurisdiction to determine the JVA’s conclusion before granting a statutory stay and whether it should instead exercise its inherent jurisdiction to refer that issue to the arbitrators.

1. Statutory stay. The application for a stay under section 9 could not presently succeed. Section 9(1) contains two threshold requirements: a concluded arbitration agreement and a dispute falling within its scope. Both must be established before the court can grant a stay. Section 9(4) concerns an agreement that has been concluded but is legally ineffective. It does not address an agreement that was never concluded.
2. Competence of the tribunal. The doctrine of Kompetenz-Kompetenz, reflected in section 30 of the Arbitration Act 1996, gives the arbitral tribunal jurisdiction to rule on whether an arbitration agreement was concluded. It does not prevent the court from determining that question. The rule of law requires that access to the court should not be barred by an alleged arbitration agreement unless its conclusion is established.
3. Authorities and procedure. The guidelines approved in Al Naimi identify four possible courses where conclusion is disputed: decide the issue on the evidence and grant a stay; direct a trial by the court; stay for the arbitrators to decide; or dismiss the stay application if the agreement was not made. The third course is available only through the court’s inherent jurisdiction, not section 9. The court may also direct a trial under CPR rule 62.8(3).
4. Inherent jurisdiction. The inherent jurisdiction to stay proceedings pending arbitration should be exercised only in exceptional circumstances. Where conclusion is disputed, the circumstances must be particularly compelling, such as near certainty that the agreement was concluded. The present case did not meet that standard. The English proceedings had begun first, England was the proper forum for the related contractual claim, and the position concerning review by the Malaysian courts was uncertain.
5. Orders. The court directed that authenticity of the JVA be decided by the court, invited agreed directions for an expedited trial, and stayed the proceedings pending that decision.