Successful Stay of Court Proceedings Pending Arbitration in Shah Alam High Court
The Shah Alam High Court had on today allowed our client’s application to stay court proceedings pursuant to Section 10 of the Arbitration Act 2005, with costs of RM3,000.00 awarded to our client. This decision reinforces Malaysia’s strong judicial policy of respecting arbitration agreements and ensuring that parties honour their contractual dispute resolution mechanisms.
To preserve client confidentiality, the identities of the parties have been omitted.
Background of the Dispute
The dispute arose from a commercial transaction governed by a Share Sale Agreement containing a comprehensive arbitration clause. Despite the parties having agreed that disputes would be resolved through arbitration, one party commenced court proceedings instead of referring the matter to arbitration.
Acting for the defendants, we, JY Ko Advocates & Solicitors filed an application under Section 10 of the Arbitration Act 2005 seeking an order that the court proceedings be stayed in favour of arbitration. The application was premised on the parties’ express agreement to arbitrate disputes arising from the contract.
Our Legal Arguments
Our submissions centred on several important principles under Malaysian arbitration law.
1. The Arbitration Agreement Remained Valid and Enforceable
We argued that the arbitration clause remained fully effective and enforceable. The Plaintiff had not alleged or demonstrated that the arbitration agreement was:
- null and void;
- inoperative; or
- incapable of being performed,
which are the only recognised exceptions permitting the Court to refuse a stay under Section 10 of the Arbitration Act 2005.
2. The Doctrine of Separability Applied
Even where the validity of the underlying contract itself was disputed, we submitted that the arbitration clause survived independently pursuant to Section 18 of the Arbitration Act 2005.
This reflects the internationally recognised doctrine of separability, whereby an arbitration agreement is treated as a distinct agreement independent of the substantive contract. Accordingly, questions concerning the validity of the main agreement are matters for the arbitral tribunal to determine.
3. No Step Had Been Taken in the Proceedings
A significant issue raised was whether the Defendants (our Client) had waived their right to arbitration by filing a Defence before the stay application.
We successfully argued that:
- the Defence expressly reserved the defendants’ right to seek a stay;
- documents filed were merely to comply with court directions and respond to pending applications; and
- the defendants had never demonstrated an unequivocal intention to abandon arbitration.
Accordingly, no “step in the proceedings” had been taken that would deprive the defendants of their statutory right to seek a stay under Section 10.
Shah Alam High Court Allows Stay Application
Following submissions, the Shah Alam High Court allowed the the Defendants’ (our Client) application under Section 10 of the Arbitration Act 2005, ordering that the court proceedings be stayed pending arbitration.
The Court also awarded RM3,000.00 in costs in favour of our client.
The decision reflects the Malaysian courts’ consistent approach and inclination of giving effect to valid arbitration agreements and respecting the parties’ contractual choice of forum.
Why This Decision Matters
Commercial parties frequently include arbitration clauses in:
- Share Sale Agreements;
- Shareholders’ Agreements;
- Joint Venture Agreements;
- Construction Contracts;
- Distribution Agreements; and
- Commercial Supply Contracts.
However, disputes occasionally arise when one party commences litigation despite agreeing to arbitrate.
Section 10 of the Arbitration Act 2005 serves an important function by requiring the courts to stay proceedings where a valid arbitration agreement exists, unless one of the limited statutory exceptions applies.
This promotes commercial certainty and preserves party autonomy.
Arbitration and Commercial Litigation Lawyers in Malaysia
At JY Ko Advocates & Solicitors, we regularly advise businesses, shareholders, directors and commercial entities on:
- Applications to stay court proceedings pending arbitration;
- Enforcement of arbitration agreements;
- Arbitration strategy and representation;
- Commercial litigation;
- Shareholder disputes;
- Contractual disputes;
- Company and corporate disputes; and
- Appeals involving arbitration and jurisdictional issues.
Our recent success before the Shah Alam High Court demonstrates our commitment to protecting our clients’ contractual rights and achieving practical commercial outcomes through strategic advocacy.
If you require advice on arbitration agreements, commercial disputes, or court proceedings involving arbitration clauses, our team would be pleased to assist.
Written on: 20th July 2026
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Disclaimer: The above proposition is subject to actual facts and circumstances and shall never be referred as the actual law without seeking legal advice. Consult us for more information!