Stay-ing Within The Limits Of The Arbitration Clock!

Time, for purposes of the Limitation Act 1953, stops to run upon commencement of a suit or other proceedings in a Court of law. However, what happens if the time bar sets in before the commencement of arbitral proceedings but after the commencement of the suit in Court that is subsequently stayed pending a reference to arbitration. The courts have looked at this issue in several cases.

The recent High Court judgment in SH Builder & Marketing Sdn Bhd v Bongsor Bina Sdn Bhd¹ provides guidance on whether time stops to run on the commencement of the Court proceedings or subsequently upon the initiation of arbitral proceedings.

On 6 August 2019, the plaintiff initiated a civil suit against the defendant in the Sessions Court, claiming for unpaid amounts in the sum of RM430,030.78. The dispute between the parties arose from a construction project, where the plaintiff was appointed as sub-contractor to carry out certain development works in respect of a housing project.