PENGERANG REFINING COMPANY SDN BHD v 1. ) SINOPEC ENGINEERING (GROUP) CO LTD 2. ) SINOPEC ENGINEERING GROUP MALAYSIA SDN BHD

Case Significance

Illustrates the full-and-frank-disclosure requirement for obtaining an ex parte injunction restraining a call on a performance bond under section 11 of the Arbitration Act 2005, the Court of Appeal upholding the order where the applicants had disclosed all material facts, including matters unfavourable to themselves.

This Court of Appeal decision is one of two related appeals concerning an injunction restraining a call on a performance bond pending arbitration, and this record relates to the appeal against the dismissal of the owner's application to set aside the ex parte order. The respondent contractors had obtained an ex parte order under section 11 of the Arbitration Act 2005 restraining the appellant owner from making or receiving payment on a demand under a performance bond of about USD132.9 million, and the appellant applied to set that order aside, contending among other things that the respondents had failed to make full and frank disclosure when they obtained it ex parte. The court addressed the disclosure obligation that governs an ex parte application. It accepted the High Court's findings that the respondents had disclosed the performance bond and the parent company guarantees, the grounds for their ex parte originating summons, all material facts relating to the incident, and all relevant materials including points that might be unfavourable to them, and had disclosed that there had been no previous similar ex parte application. On that basis the court held that the respondents had made full and frank disclosure at the High Court, so there was no want of candour justifying the setting aside of the ex parte order. Read together with the companion appeal, in which the court found the appellant's demand on the bond to be unconscionable, this reinforced the conclusion that the injunction should stand. Finding no real substance in the appeal, the court dismissed it with costs of RM25,000. The court's approach confirms that the duty of full and frank disclosure on an ex parte application is discharged where the applicant places before the court not only the facts supporting the relief but also the security instruments and any points that might tell against it, and that an order so obtained will not be set aside for want of candour once that duty has been met. The judgment illustrates the full-and-frank-disclosure requirement for an ex parte injunction restraining a call on a performance bond.