Usahasama SPNB-LTAT Sdn Bhd v Borneo Synergy (M) Sdn Bhd [2009]

Usahasama SPNB-LTAT Sdn Bhd v Borneo Synergy (M) Sdn Bhd [2009] MLJU 0001

On 6th January 2009 the High Court ruled in Usahasama SPNB-LTAT Sdn Bhd v Borneo Synergy (M) Sdn Bhd. The case dealt with the enforceability of an arbitration clause that formed part of an agreement which had been assigned.

The Usahasama SPNB-LTAT (the employer) and Perbadanan Perwira Harta Malaysia (PPHM) had entered into a contract where PPHM was appointed the main contractor. Borneo Synergy was appointed as a subcontractor to PPHM. During the performance of the works, PPHM purported to withdraw from the main contract existing between Usahasama SPNB-LTAT and PPHM, and recommended that Borneo Synergy be appointed to carry out the remaining piling works. A deed of assignment was executed to give effect to the arrangement.

Thereafter, a dispute arose between Usahasama SPNB-LTAT and Borneo Synergy in respect of the work carried out. Borneo Synergy referred the matter to arbitration, pursuant to Clause 54 of the main contract. Usahasama SPNB-LTAT challenged the jurisdiction of the arbitrator on the following grounds:

There was no binding contract between Usahasama SPNB-LTAT and Borneo Synergy;

The assignment was not an absolute assignment; and

There was no arbitration clause in the assignment.

The court accepted Borneo Synergy’s arguments that there had been a valid assignment of the arbitration clause and upheld the reference to arbitration.