THE UPDATE SCOOP (#1/2026) – Tay & Helen Wong Law Practice

THE UPDATE SCOOP (#1 / 2026 )

What Does Not Amount to Taking a Step in the Court Proceedings ? | Arbitration

By TAY & HELEN WONG – May, 2026

Where parties have agreed to arbitrate their dispute and included an arbitration provision in their agreement, a plaintiff nonetheless commences proceedings in courts, the defendant will ordinarily be entitled to seek a stay of the proceedings in favour of arbitration, provided the application is made before delivering any pleadings or taking any other steps in the proceedings. This is the general provision under s.10(1) of the Arbitration Act 2005 (Act 646). The issue that arose for determination of Federal Court in Universiti Malaya v Esa Jurutera Perunding Sdn Bhd [2026] concerns the ambit of the phrase “taking any other steps in the proceedings”.

In that case, upon direction of the court to file its defence, the defendant (D) requested and the plaintiff (P) agreed to grant two extensions of time to file the defence. A week before the extended deadline, D served on P a Notice to Produce Documents Referred to in Pleadings pursuant to O 24 r 10 of the Rules of Court 2012 accompanied by a covering letter expressly stating that all the D’s rights were reserved. On the extended deadline day, D issued a Notice of Arbitration on P pursuant to the relevant clause in the agreement; and on the next day, filed a Notice of Application for a stay of the High Court proceedings pending arbitration.

The High Court dismissed D’s application; and under the compulsion of the court’s direction, D filed its Statement of Defence, expressly reserving its rights to arbitrate in its pleadings. The High Court’s decision was however overturned at the Court of Appeal which resulted in P appealing to the Federal Court. In the final appeal, the apex court dismissed P’s appeal. It was held that D’s requests for extensions of time to file a defence, as well as a mere indication in correspondence of an intention to do so, did not evince an unequivocal intention to proceed with the suit and, consequently, did not amount to taking steps in the proceedings within the meaning of s 10(1) of Act 646. These requests were reasonable, necessary, and made in good faith, particularly as D required time to obtain relevant documents dating back to 2008 that were not in its possession.

Further, the issuance and service of a Notice to Produce Documents referred to in the Pleadings was a necessary but peripheral action that did not touch on the merits of the substantive dispute. Because it was an investigative measure to inspect pleaded documents rather than a pleading itself, serving the Notice could not be construed as a waiver of arbitration rights and did not constitute a step in the proceedings.

Applying a holistic approach, the general reservation of D’s rights in covering letters, Notice of Arbitration and Statement of Defence was sufficiently clear and broad to provide ample notice of D’s position and its reservation of the right to arbitrate.

The Federal Court also took the opportunity to clarify the legal position as propounded in its earlier decision in Sanwell Corporation v Trans Resources Corporation Sdn Bhd & Anor which suggested that a request for an extension of time to file a defence automatically constituted a step in the proceedings. These remarks were obiter dicta and did not establish a binding rule that every request for an extension of time invariably amounts to a step in the proceedings. Whether a party demonstrated a clear and unequivocal intention to submit to the court’s jurisdiction remained a question of fact to be determined holistically, rather than by a rigid or mechanical application of procedural rule.

P’s appeal was consequently dismissed with costs.

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