Malaysian Court Allows Enquiry Into Injunction Damages Pending Arbitration

In Jaks Island Circle Sdn Bhd v Star Media Group Bhd and Another (Originating Summons No. WA-24C(ARB)-11-02/2018), the Malaysian High Court held that a party could apply for an inquiry of damages pursuant to an undertaking as to damages where an injunction was wrongly granted by a court in support of arbitration proceedings, without awaiting the outcome of the arbitration.

The court stated [45]:

“Seeing that the undertaking as to damages from the applicant of an injunction is the “price the applicant must pay” for the granting of such injunction, there is no cogent reason shown as to why the applicant here should not be held to its undertaking. See: SmithKline Beecham plc and others v Apotex Europe Ltd and others [2006] 4 All ER 1078. After all the purpose of the undertaking as explained by the Federal Court in GS Gill Sdn Bhd v Descente Ltd [2010] 4 MLJ 609 is to mitigate the “obvious risk of unfairness to the respondent against whom an interlocutory injunction is ordered at a time when the issues have not been fully determined and when usually all the facts have not been ascertained”.

And [72-73]:

“There is no justification for postponing the assessment of damages until the outcome of the arbitration is realized for to do so would set a dangerous precedent that there is no pain in providing an undertaking to make good losses suffered by the defendant until the final outcome is realized. That can only embolden the party applying for an injunction to painlessly proffer the undertaking knowing that for all practical purposes the Court would buy the argument that the assessment should wait.”

See the review of the case by Herbert Smith Freehills.

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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