The Putrajaya High Court scored a landmark case when it upheld an order to freeze the assets of six individuals and two companies with exposure to three listed companies in Singapore, which shook the republic's stock market last year.
It was the first time Section 11(3) of the Arbitration Act 2005 has been used to allow a Malaysian court to aid in international arbitration, where the seat of arbitration is not in Malaysia.
It allowed an order yesterday to freeze assets worth S$79.05mil (RM201.79mil) belonging to the six individuals and two companies who were purportedly involved in Singapore’s penny stock selldown last October.
The panel led by Justice Mah Weng Kwai dismissed the appeal by the eight against a Kuala Lumpur High Court decision, ruling that there was a real risk of dissipation of the assets if they were not frozen.
The court found that there had been evidence of a lack of financial propriety, noting that the Singapore Exchange (SGX) had investigated the parties for suspicious trading activity.
The panel which included Justices Badariah Sahamid and Prasad Sandosham Abraham dismissed the appeal with RM30,000 in costs.
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Counsel U. Sashiraj claimed it effectively gave IB two shots at freezing his client’s account, and risked creating inconsistent judgements in different jurisdictions.
IB’s lawyer Lim Chee Wee argued that under Section 11, it was possible to obtain multiple orders in various jurisdictions as long as it aided arbitration.
The court agreed with IB’s stand, ruling that there was no issue of duplicity and that Section 11 should be progressive to aid parties in arbitration.
Lim later told StarBiz that IB had made an application before Malaysian courts because a similar order from Singapore would not have “bite” here, where the defendants’ assets are believed to be located. He confirmed that the arbitration in Singapore was ongoing.
It was the first time Section 11(3) of the Arbitration Act 2005 has been used to allow a Malaysian court to aid in international arbitration, where the seat of arbitration is not in Malaysia.
It allowed an order yesterday to freeze assets worth S$79.05mil (RM201.79mil) belonging to the six individuals and two companies who were purportedly involved in Singapore’s penny stock selldown last October.
The panel led by Justice Mah Weng Kwai dismissed the appeal by the eight against a Kuala Lumpur High Court decision, ruling that there was a real risk of dissipation of the assets if they were not frozen.
The court found that there had been evidence of a lack of financial propriety, noting that the Singapore Exchange (SGX) had investigated the parties for suspicious trading activity.
The six individuals are Neo Kim Hock, Peter Chen Hing Woon, Tan Boon Kiat, Quah Su-Ling, Lee Chai Huat and Kuan Ah Ming – all Malaysian nationals – and the two companies are Sun Spirit Group Ltd and Neptune Capital Group Ltd. All eight jointly filed the appeal.During the hearing before the Court of Appeal yesterday, lawyers for the defendants said it was an abuse of process to have the same application made to courts in two different countries.
Both companies are registered in the British Virgin Islands.
It is believed to be a landmark case as it is the first time Section 11(3) of the Arbitration Act 2005 has been used to allow a Malaysian High Court to aid in international arbitration, where the seat of arbitration is not in Malaysia.
The case started in Singapore last November when global broking giant Interactive Brokers (IB) initiated legal action against at least 10 clients as it sought to recover about US$68mil (RM221.476mil) of losses.
Though the case was filed with the American Arbitration Association, IB was reported to have asked for Singapore to be the seat of arbitration for the 10 cases related to the collapse of the three stocks: Asiasons Capital Ltd, Blumont Group Ltd and LionGold Corp Ltd.
The broker also had obtained a mareva injunction (asset freeze) from the Singaporean court on Nov 11, 2013 against the eight defendants. The mareva injunction prohibits all the defendants from disposing or dissipating their assets within varying thresholds amounting to a total of S$79.05mil (RM202.65mil).
However, part of the order was stayed, with respect to disclosure of assets of two of those clients (Quah and Sun Spirit), under the thinking that once the assets were disclosed, there was no way to “un-disclose” them – even if the original arbitration failed.
IB then filed another application in the KL High Court for a similar injunction, which was allowed by the court on Jan 15 this year.
Counsel U. Sashiraj claimed it effectively gave IB two shots at freezing his client’s account, and risked creating inconsistent judgements in different jurisdictions.
IB’s lawyer Lim Chee Wee argued that under Section 11, it was possible to obtain multiple orders in various jurisdictions as long as it aided arbitration.
The court agreed with IB’s stand, ruling that there was no issue of duplicity and that Section 11 should be progressive to aid parties in arbitration.
Lim later told StarBiz that IB had made an application before Malaysian courts because a similar order from Singapore would not have “bite” here, where the defendants’ assets are believed to be located. He confirmed that the arbitration in Singapore was ongoing.