DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANG KUASA RAYUAN) RAYUAN SIVIL NO. W-02-259-2005
DANCOM TELECOMMUNICATION (M) SDN. BHD … PERAYU
UNIASIA GENERAL INSURANCE BERHAD …. RESPONDEN
DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR BAHAGIAN RAYUAN DAN KUASA-KUASA KHAS RAYUAN NO. R2-24-11-2004
DANCOM TELECOMMUNICATION (M) SDN. BHD …. PLAINTIF
UNIASIA GENERAL INSURANCE BERHAD … DEFENDAN
LOW HOP BING, JCA HELILIAH BINTI YUSOF, JCA ABDUL MALIK BIN ISHAK, JCA
JUDGMENT OF LOW HOP BING, JCA
 On 22 February 2005, the Kuala Lumpur High Court dismissed with costs the appellant’s (“the plaintiff’s”) originating summons which sought an order under s.12 of the Arbitration Act 1952 (“s.12”) to appoint an arbitrator to hear and determine the dispute between the plaintiff and the respondent (“the defendant”). This appeal is brought by the plaintiff against that decision.
IL FACTUAL BACKGROUND
 On or about February 2001, the plaintiff purchased from the defendant two insurance policies, the first being Money Insurance Policy with a coverage of RM5million; while the second is Burglary Insurance Policy with a coverage of RM1 million (collectively, “the policies”).
 On or about 4 February 2001 and during the currency of the policies, the plaintiff’s premises at Wisma Dancom, Lot 5, Jalan 51a/227b, 46100 Petaling Jaya, Selangor Darul Ehsan was robbed, and the goods covered under the policies were stolen.
 The defendant then appointed loss adjuster GAB Robins (Malaysia) Sdn. Bhd (“GAB Robins”) to investigate the claim. Subsequently, the defendant appointed a new loss adjuster, Afil Adjuster, in place of GAB Robins to proceed with investigation.
 On 3 October 2001, the defendant wrote to the plaintiff, offering to settle the plaintiff’s claim (“defendant’s offer”).
 However, on 25 October 2001, the defendant appointed solicitors Messrs. Murali B. Pillai & Associates (“defendant’s solicitors”) to look further into the plaintiff’s claim.
 On 9 November 2001, defendant’s solicitors withdrew the defendant’s offer, thereby disclaiming liability (“the disclaimer”).
 Between November 2001 and April 2003, the plaintiff provided various documents in order to enable the loss adjuster to investigate the claim, and requested meetings with the defendant to discuss the claim under the policies.
 On 3 April 2003, defendant’s solicitors wrote to the plaintiff stating, inter alia, that:
(1) The defendant maintained the disclaimer;
(2) The plaintiff had breached the terms and conditions of the policies by failing and/or neglecting:
(a) to exercise reasonable skill and care; and
(b) to produce sufficient documentation to substantiate the claim under the policies.
 On 1 July 2003, plaintiff’s solicitors Messrs Satha & Co. (“plaintiff’s solicitors”) wrote to defendant’s solicitors stating that the plaintiff was invoking clause 14 in both the policies which were identically worded (“clause 14”) in order to refer the dispute to arbitration.
 On 11 July 2003, defendants’ solicitors replied, stating that the plaintiff was precluded from referring the dispute to arbitration as the 12-month time frame for such reference under clause 14 had lapsed and the plaintiff was deemed to have abandoned the claim thereunder.
 Clause 14 reads:
“All differences arising out of this policy shall be referred to the arbitration of some person to be appointed by both parties, or, if they cannot agree upon a single Arbitrator, to the decision of two Arbitrators, one to be appointed in writing by each party, and in case of disagreement between the Arbitrators to the decision of an Umpire who shall have been appointed in writing by the Arbitrators before entering on the reference and an Award shall be a condition precedent to any liability of the company or any right of action against the company. If the
company shall disclaim liability to the Insured for any claim hereunder and such claim shall not within 12 calendar months from the date of such disclaimer have been referred to arbitration under the provisions herein contained then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.”
 On 15 July 2003, plaintiff’s solicitors informed defendant’s solicitors that the plaintiff was entitled to refer the dispute to arbitration, because the 12-month time frame contained in clause 14 was void and unenforceable, being contrary to s.29 of the Contracts Act 1950 (“s.29”) read with s.6 (1)(a) of the Limitation Act 1953 [“s.6(1)(a)”].
 As the defendant still maintained the position that the 12-month time frame under clause 14 is valid and that the dispute could not be referred to arbitration, the plaintiff filed the originating summons seeking the aforesaid order, and costs.
 On 22 February 2005, the High Court dismissed the plaintiff’s originating summons with costs. Hence this appeal.
ML ARBITRATION CLAUSE
 In the instant appeal, learned counsel Dato’ Cecil Abraham (Dato’ Sathaburan and Mr. Sunil Abraham with him) reiterated for the plaintiff that the arbitration clause, clause 14 is void, being contrary to s.29 read with s.6(1)(a) and so plaintiff’s contractual
rights to refer to arbitration after the 12- month time frame remains unaffected. In support thereof, he cited the following authorities:
(1) New Zealand Insurance Co. Ltd v Ong Choon Lin (t/a Syarikat Federal Motor Trading (1992) 1 MLJ. 185
SC (which, he added, the learned High Court judge has misread);
(2) J & Wong Logging Contractor v Arab Malaysia Eagle Assurance Bhd (1993) 1 MLJ 240 HC; and
(3) MBF Insurans Sdn. Bhd v Lembaga Penyatuan Dan Pemulihan Tanah Persekutuan (FELCRA) (2007) 6 CLJ. 639 CA.
 The response of defendant’s learned counsel Mr. Sreether Sundaram is that:
(1) Clause 14 is a valid standard “Scott v Avery clause”, relying on Scott v Avery and others (1843 – 60) All ER 1 H.L; and
(2) The 20 months from 9 November 2001 (the disclaimer date) to 1 July 2003 (the date on which the plaintiff purported to invoke clause 14) had exceeded the 12-month time frame agreed thereunder, and so the
plaintiff is deemed to have abandoned its claim, relying on:
(a) Exceptions 1 and 2 to s.29;
(b) s.28 of the Arbitration Act 1952 (“s.28);
(c) Malaysia National Insurance Sdn. Bhd v Meraslam (1982) 1 MLJ 274 FC; and
(d) Majlis Perbandaran Petaling Jaya v Industrial Products and Supplies Sdn. Bhd (1998) 1 MLJ 441 CA.
 The learned High Court judge held, inter alia, that:
(1) clause 14 is valid, and so the plaintiff was barred by the 12-month time frame agreed thereunder; and
(2) New Zealand Insurance Co. Ltd, supra, is distinguishable as condition 19 therein had restricted “the time to file a matter in court as opposed to a reference to arbitration”.
 In the light of the decision of the High Court and the respective submissions in the instant appeal, the question for determination is:
“Upon a true construction of s.29 of the Contracts Act 1950, Exceptions 1 and 2 thereto, s.6(1)(a) of the Limitatioan Act 1953, and s.28 of the Arbitration Act 1952, is the arbitration clause, clause 14 (which the parties to the insurance policies have agreed to incorporate as a term to prescribe the 12-month time frame within which to refer their dispute to arbitration) void?”.
 At this juncture, it is pertinent to consider the three authorities cited for the plaintiff, viz:
(1) New Zealand Insurance Co. Ltd, supra.
(a) The insured purchased a fire insurance policy by which the insurance company agreed to indemnify the insured against loss or damage occasioned by fire to the property situated in the premises of the insured. The policy was subsequently renewed. During the renewed currency of the policy, a fire occurred on the premises. Some 17 months after the fire and beyond the 12-month period contained in condition 19 of the policy, the insured filed a suit for contractual indemnity pursuant thereto. The insurance company raised the defence, inter alia, that the insured’s claim was barred by condition 19 which reads: “In no case whatever shall the company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless
the claim is the subject of pending action or arbitration”. Condition 19 therefore gives the insured two options to make a claim under the policy viz either by way of action in court or reference to arbitration. The insured preferred court action. In the High Court, Peh Swee Chin J (later FCJ) agreed with the insured’s contention that condition 19 was rendered void by s.29 and gave judgment for the insured as the suit was filed well within the six years prescribed in s.6(1)(a). On appeal, the Supreme Court in a judgment delivered by L.C. Vohrah J (as he then was) reaffirmed that condition 19 has contravened s.29 and is void, as it clearly limited the time within which the insured could enforce his rights under s.6(1)(a);
(b) It is necessary to ascertain the true ratio decidendi enunciated by the Supreme Court:
(i) In Court, parties to the suit have not pleaded or ventilated the issue of arbitration. The insurance company’s defence at the trial was based on the 12-month bar contained in condition 19. That defence was dismissed by the High Court. In the Supreme Court, the insurance company’s defence under condition 19 re-emerged, inter alia, as a substantive ground of appeal. The
Supreme Court reaffirmed the decision of the High Court and, on the basis of s.29 read with s.6(1)(a), struck down condition 19 as void. While it is true that condition 19 expressly stated “action or arbitration”, the insured did not refer the dispute to arbitration but preferred court action. The parties’ pleadings (by which the parties are bound), the issues raised in counsel’s contentions and the judgment of the Supreme Court conclusively show no trace or iota of any time frame for reference to arbitration at all.
(ii) The crux of the case concerns the commencement of the insured’s suit in an ordinary court of law, and so the Supreme Court naturally applied the general rule embodied in s.29 read with the limitation period of six years under s.6(1)(a).
(iii) Had the Supreme Court judgment been concerned with the time frame for reference to arbitration, such as clause 14 in the instant appeal, the parties’ pleadings and their arguments would certainly have set out this critical issue for specific consideration
and determination by the Supreme Court, in which event, not only the general rule embodied in s.29 but also exceptions 1 and 2 thereto regulating arbitration would undoubtedly have been brought into focus. However, that had not been the case before the Supreme Court. The time frame to refer a dispute to arbitration has never been within the contemplation of the parties, their respective counsel and the Supreme Court. In the circumstances, it is crystal clear that the ratio is in relation to the commencement of an action in an ordinary court of law to which the 6-year limitation period prescribed in s.6(1)(a) applied.
(2) J & Wong Logging Contractor, supra.
(a) The plaintiff had insured two units of tractors with the defendants under an equipment insurance policy. During the currency of the policy, one of the tractors was accidentally damaged. The plaintiff lodged a claim pursuant to the equipment policy, but the defendant rejected the claim, contending, inter alia, that the accident did not come within the terms of the policy. After unsuccessful negotiations between the parties, the plaintiff filed a summons in the Sessions Court for loss or
damage under the policy, and wrote to the defendant asking whether the defendant would agree to waive condition 11 which reads:
“All differences arising out of this policy shall be referred to the decision of an arbitrator to be appointed in writing by the parties in differences or if they cannot agree upon a single arbitrator to the decision of two arbitrators one to be appointed in writing by each of the parties within one calendar month after having been required in writing so to do by either of the parties or in case the arbitrators do not agree of an umpire appointed in writing by the arbitrators before entering upon the reference. The umpire shall sit with the arbitrators and preside at their meetings and the making of an award shall be a condition precedent to any right of action against the company.
If the company shall disclaim liability to the insured for any claim hereunder and such claim shall not within twelve calendar months from the date of such disclaimer have been referred to arbitration under the provisions herein contained then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.”
(b) The plaintiff then filed an originating summons under s.28 of the Arbitration Act 1952 (“s.28”) seeking an extension of time beyond the 12 months within which to give notice to appoint an arbitrator(s) pursuant to clause 11. On the preliminary question of whether the High Court has jurisdiction to consider the plaintiff’s originating summons in view of the Supreme Court judgment in New Zealand Insurance Co. Ltd, supra, Steve Shim J (later CJ (S&S) held that :
(i) as the insured has failed to refer the dispute to arbitration, no right of action can arise in the Sessions Court under the policy, and the High Court cannot entertain the merits of the plaintiff’s originating summons as clause 11 requires a reference to arbitration as a condition precedent: and
(ii) the stipulation in clause 11 (that such reference to arbitration shall be done within 12 months from the insurance company’s disclaimer of liability, otherwise the insured’s claim shall be deemed to have been abandoned and shall not be recoverable) is void being in contravention of the relevant portion of s.29 “which limits the time within
which he may enforce his rights”, read with s.6(1)(a).
(3) MBF Insurans Sdn. Bhd, supra.
The relevant endorsement in a guarantee reads: “This guarantee will expire on 14 June 1991. Claims if any, must be received on or before that date.” The guarantee was provided by the appellant insurance company to pay the respondent a sum of RM22,017 on demand by the respondent in respect of the contractor’s works. As the contractor had failed to perform and complete the works, the respondent issued notices to the contractor on 4 June 1991. The respondent then sent a letter of demand to the appellant on 21 June 1991 i.e. seven days after 14 June 1991 (the date of expiry of the guarantee). The appellant rejected the claim on the ground that the claim was late. The respondent then filed an action in the Magistrate’s Court to recover the said sum against the appellant. The Magistrate’s Court dismissed the claim on the ground that it was made out of time, after the expiry of the guarantee. On appeal, the decision of the Magistrate’s Court was reversed by the High Court on the ground that the endorsement contravened s.29, being an attempt to contract out of the Limitation Act 1953. The decision of the High Court was affirmed by the Court of Appeal. Three separate judgments were delivered. Gopal
Sri Ram, JCA, with whom Hasan Lah, JCA, agreed, treated the crux as one of construction and construed the endorsement contra proferentum i.e. against the insurance company while Suriyadi, JCA followed New Zealand Insurance Co. Ltd, supra, and held that the endorsement contravened s.29 and s.6, and hence void.
 From the above analysis, it is abundantly clear to me that the aforesaid three authorities share the following common denominators:
(1) they concern the commencement of actions in ordinary courts of law and have nothing to do with references of disputes to arbitration;
(2) the provisions of exceptions 1 and 2 to s.29 were neither pleaded nor ventilated in all the three authorities and so, these exceptions could not have been and indeed were actually not judicially considered by all the courts there; and
(3) they do not support the contention advanced for the insured.
 The bringing of an action in an ordinary court of law is readily distinguishable from a reference of a dispute to arbitration. A contract which incorporates an arbitration clause, such as clause 14, to
refer the parties’ dispute to arbitration within a specified period as agreed by the parties, is a contract sui generis. The hallmark of arbitration is characterised by the autonomy of the parties. By way of agreement, the parties have an unfettered choice, not only to refer their dispute to arbitration and to choose their own arbitrators or umpires, but also to prescribe the time frame for such reference. Their intention is to sustain the mechanism of alternative dispute resolution by way of arbitration and not court action. Their desire is to place arbitration under their exclusive control. They hope to achieve e.g. speed in the hearing and determination of their dispute. Different considerations would then apply to an arbitration clause prescribing a time frame such as that expressly agreed in clause 14. It is a product of the doctrine of freedom of contract and would attract the application of the specific provisions expressly set out in exceptions 1 and 2 to s.29, so that the general rule embodied in s.29 would give way to these two exceptions.
 The intention of the parties expressed in the arbitration clause merits consideration now. Under clause 14, supra, the parties herein have agreed that:
(1) Any difference ie dispute arising from the policies shall become the subject matter of reference to arbitration wherein the appointment of arbitrator(s) shall be in accordance with the specific provisions expressly contained therein; and
(2) In the event that the insurance company (ie the defendant herein) disclaims liability thereunder, as in the instant appeal, the insured (ie the plaintiff herein) has the contractual obligation to refer the claim to arbitration within 12 calendar months from the date of the disclaimer; otherwise the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable under the policies.
 The first limb of clause 14 is intended to exclude the jurisdiction of the ordinary courts of law whenever a dispute arises between the contracting parties. It vests in the arbitrator(s) the jurisdiction to hear and determine the dispute by way of reference to arbitration as an alternative dispute resolution. This arbitration clause is commonly known as the “Scott v Avery clause” which is derived from the celebrated case of Scott v Avery, supra. There, the House of Lords propounded the following trite principle:
“Parties cannot by contract agree to oust the jurisdiction of the courts to deal with their rights under a contract, but a term in a contract which provides that, in the event of a dispute arising, it shall be referred to arbitrators whose award shall be a condition precedent to any right of action in respect of the matters agreed to be referred is valid. This is so not only where the provision for arbitration relates merely to the quantum of damages due
from one party to the other, but also where it is stipulated that other matters, e.g. liability, shall be determined in the first instance by arbitrators.”
 The above common law position has found statutory expression in the relevant portions of s.29 and exceptions 1 and 2 thereto, as follows:
“Parties cannot by contract agree to oust the jurisdiction of the courts to deal with their rights under a contract”
“29. Agreements in restraint of legal proceedings void.
Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary
tribunals, … is void to that
extent.” It deserves to be noted that s.29 also renders void any agreement “which limits the time within which he may thus enforce his rights”.
“A term in a contract which provides that, in the event of a dispute arising, it shall be referred to arbitrators…. is valid.”
Saving of contract to refer to arbitration dispute that may arise.
This section shall not render illegal a contract by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration,
Saving of contract to refer questions that have already arisen.
Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, …”.
 As a general rule, s.29 strikes down as void:
(1) any “agreement by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals”; and
(2) any agreement “which limits the time within which he may thus enforce his rights”.
 The two expressions in quotes must be construed in the context in which they appear so as to take colour and precision: noscitur a soccis. They must also be construed conjunctively with the bringing of actions, within six years, under s.6(1)(a) as set out below:
“Limitation of actions of contract…..
6(1) Save as hereinafter provided the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say –
(a) Actions founded on a contract………”.
 In my view, the expression “ordinary tribunals” generally in s.29 means the ordinary courts of law, as s.29 does not render illegal any contract by which parties have agreed to refer their dispute to
arbitration under the exceptions 1 and 2. Actions to be brought under s.6(1)(a) are actions commenced in ordinary courts of law and not by way of reference to arbitration. S.6(1)(a) neither affects nor applies to the freedom of the parties to refer a dispute to arbitration by incorporating an arbitration clause in an agreement for the purpose of vesting jurisdiction in an arbitrator(s) to hear and determine a dispute between contracting parties, as has been done in clause 14. Such an arbitration clause to refer a dispute to arbitration may validly specify a period which abridges or for that matter even enlarges the time bar under s.6(1)(a). This is because s.6(1)(a) must be read with s.29 exception 2 which specifically states that it shall not affect “any law as to references to arbitration”. The law as to references to arbitration is to be found in the Arbitration Act 1952 ( now the Arbitration Act 2005) which I shall proceed to consider now.
]V S.28 ARBITRATION ACT 1952
 The validity of clause 14 is given statutory recognition in s.28 of the Arbitration Act 1952 (“s.28”) which vests the High Court with the power to extend the time for the purpose of referring a dispute to arbitration after the expiry of the prescribed 12-month time frame. S.28 reads:
“Where the terms of an agreement to refer future disputes to arbitration provide that any claims to which the agreement applies shall be barred unless notice to appoint an arbitrator is given, or an arbitrator is appointed, or some other step to
commence arbitration proceedings is taken, within a time fixed by the agreement and a dispute arises to which the agreement applies, the High Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may, on such terms, if any, as the justice of the case may require, but without prejudice to any written law limiting the time for the commencement of arbitration proceedings, extend the time for such period as it thinks proper.”
 It is plain that clause 14 comes within the ambit of the expression “where the terms of an agreement to refer future disputes to arbitration provide that any claims to which the agreement applies shall be barred” in s.28. The time frame stipulated in clause 14 may upon the expiry thereof be extended by the High Court on grounds of undue hardship.
 S .28 has been successfully invoked by the insured for the purpose of obtaining an extension of time in High Court in both Malaysia National Insurance Sdn. Bhd, supra, and Majlis Perbandaran Petaling Jaya, supra. However, on appeal, the extension in these two cases had subsequently been set aside by the Federal Court and Court of Appeal, respectively. Be that as it may, the proceedings in these courts for extension of time under s.28 is clear evidence of the validity of the arbitration clause such as clause 14.
 S.28 has now been re-enacted and re-worded in 45 of the
Arbitration Act 2005 (“s.45”). In other words, Parliament has
consistently reaffirmed the freedom of the contracting parties to agree in an arbitration agreement for arbitral proceedings to be commenced within the time specified in the agreement, together with the vesting of discretionary power in the High Court to grant extension thereto. For completeness, s.45 provides as follows:
“45. Extension of time for commencing arbitration proceedings.
Where an arbitration agreement provides that arbitral proceedings are to be commenced within the time specified in the agreement, the High Court may, notwithstanding that the specified time has expired, extend the time for such period and on such terms as it thinks fit, if it is of the opinion that in the circumstances of the case undue hardship would otherwise be caused.”
V. “LAW OF LIMITATION” (1995)
 My view that clause 14 has been not rendered illegal by s.29 but instead has been validated by exceptions 1 and 2 thereto may also be found in “Law of Limitation” (1995) by Associate Professor Choong Yeow Choy, where, at p.166, the following passage appears:
“If the terms of an agreement between the parties to a contract contain a condition which provides for reference of a dispute to
arbitration within a specified time period, then such dispute must be referred to arbitration within the time specified. A typical term in an insurance policy would provide that if the insurance company should disclaim liability to the insured for any claim, such a claim must be referred to arbitration within 12 calendar months from the date of such disclaimer. Where such a claim is not referred to arbitration within the specified time period, the claim would then be deemed to have been abandoned and should not thereafter be recoverable.”
 At pp 169 and 170, ibid, the learned author poses an almost identical question: “If a condition of a contract provides that a claim is required to be referred to arbitration within a specified time period failing which such claim will be deemed to have been abandoned and shall not thereafter be recoverable, would such a condition contravene s.29 of the Contracts Act 1950?”. He referred to s.29 and gave the answer in the negative on the basis of exceptions 1 and 2 thereto, thereby viewing the arbitration clause such as clause 14 containing the 12-month time frame as valid.
 The learned High Court judge has not misread the Supreme Court judgment in New Zealand Insurance Co. Ltd, supra, and was correct in holding that clause 14 is valid.
 My answer to the above question for determination is in the negative. Hence, this appeal is dismissed with costs and the
decision of the High Court is affimed. Deposit to the respondent on account of taxed costs.
DATUK WIRA LOW HOP BING
Court of Appeal, Malaysia Putrajaya.
Dated this 1 August 2008
Counsel for Appellant
Dato’ Cecil Abraham (Dato’ Sathaburan and Mr. Sunil Abraham with him) Tetuan Satha & Co.,
Peguambela & Peguamcara.
Counsel for Respondent
Mr. Sreether Sundaram
Tetuan Murali B. Pillai & Associates
Peguambela & Peguamcara.
1. New Zealand Insurance Co. Ltd v Ong Choon Lin (t/a Syarikat Federal Motor Trading (1992) 1 MLJ. 185 SC;
2. J & Wong Logging Contractor v Arab Malaysia Eagle Assurance Bhd (1993) 1 MLJ 240 HC;
3. MBF Insurans Sdn. Bhd v Lembaga Penyatuan Dan Pemulihan Tanah Persekutuan (FELCRA) (2007) 6 CLJ. 639 CA;
4. Scott v Avery and others (1843 – 60) All ER 1 H.L
5. Malaysia National Insurance Sdn. Bhd v Meraslam (1982) 1 MLJ 274 FC; and
6. Majlis Perbandaran Petaling Jaya v Industrial Products and Supplies Sdn. Bhd (1998) 1 MLJ 441 CA.