The Federal Court has reaffirmed Malaysia’s pro-arbitration stance in Universiti Malaya v ESA Jurutera Perunding Sdn Bhd [2026] MLJU 2093.
The decision clarifies that procedural steps such as seeking extensions of time to file a defence or issuing a Notice to Produce Documents do not, without more, amount to “steps in the proceedings” under section 10 of the Arbitration Act 2005. A party will only be taken to have waived its right to arbitrate where its conduct clearly and unequivocally demonstrates an intention to abandon arbitration and submit to the court’s jurisdiction.
Read our latest Legal Alert for a concise overview of the Federal Court’s guidance on preserving the right to arbitrate.
The Appellant, Universiti Malaya (“UM”), appointed the Respondent, ESA Jurutera Perunding Sdn Bhd (“ESA”), as the civil and structural engineering consultant for the construction and completion of a building within UM’s premises. The said agreement contains an arbitration clause.
Following the issuance of the Certificate of Practical Completion, UM commenced court proceedings against ESA, alleging breaches of contractual and statutory duties which purportedly resulted in delays in obtaining the Certificate of Completion and Compliance.
After entering appearance, ESA sought extensions of time to file its Defence through letters (which were also filed in Court) and issued a Notice to Produce Documents pursuant to Order 24 Rule 10 of the Rules of Court 2012 to UM.
Upon receiving the relevant documents from UM, ESA proceeded to issue a Notice of Arbitration and subsequently filed an application to stay the court proceedings pending arbitration pursuant to section 10 of the Arbitration Act 2005. In opposing the stay application, UM contended that ESA had taken steps in the court proceedings and had thereby submitted to the jurisdiction of the Court, as evidenced by the following conduct:
a. ESA has requested at least two (2) extensions of time from UM;
b. ESA has indicated on three (3) occasions that it would file its Defence; and
c. ESA has served the Notice to Produce documents on the UM.
The High Court dismissed the stay application on the basis that ESA had submitted to the jurisdiction of the Court and had thereby abandoned its right to rely on the arbitration agreement.
Dissatisfied with the High Court’s decision, ESA appealed to the Court of Appeal, which allowed the appeal and set aside the decision of the High Court.
Subsequently, UM filed an application for leave to appeal to the Federal Court, which was granted.
The main question of law granted and discussed by the Federal Court is whether ESA’s request for an extension of time to file its Defence, as well as its service of a Notice to Produce Documents, amounted to “steps in the proceedings” under section 10(1) of the Arbitration Act 2005, thereby precluding it from obtaining a stay of the court action in favour of arbitration.
The Federal Court dismissed UM’s appeal and upheld the Court of Appeal’s decision, ruling that ESA’s requests for an extension of time to file a Defence and the issuance of a Notice to Produce Documents do not constitute “steps in the proceedings” under Section 10(1) of the Arbitration Act 2005.
The Federal Court held that to forfeit the right to arbitrate, a party’s action must objectively and unequivocally demonstrate an intention to abandon arbitration and submit to the court’s jurisdiction. In this case, these actions were merely preparatory in nature, undertaken to enable ESA to evaluate the allegations and verify supporting documents before determining its position.
Seeking administrative time or requesting documents for evaluation does not cross the threshold of a waiver. ESA’s prompt issuance of a Notice of Arbitration and its subsequent application for a stay further reinforced its consistent intention to rely on the arbitration clause. Accordingly, the Federal Court dismissed the appeal, reinforcing the judiciary’s supportive stance toward arbitration agreements and granting the stay of court proceedings.
