Federal Floor Mills Bhd

- vs -

Fima Palmbulk Services Sdn Bhd

Faiza Tamby Chik, J

1. On November 5, 1999 the applicant, Fima Palmbulk Services Sdn Bhd filed an application by way of Originating Motion No R2-25-116-99 (Encl 1) for the following orders:

   1. An order that the arbitration award made on October 8, 1999 ("the award") by Mr. Sreesanthan Eliathamy, Mr. Toh Pang Huat and Mr. Yap Eng Kwee ("the arbitrators") be set aside;

   2. An order that the applicant be entitled to the storage charges outstanding from December 1, 1998 to the full disposal of the 700 metric tons of crude palm oil stored at the applicant's port tank installation at Tank No 6 at Butterworth;

   3. Alternatively to the aforesaid prayer (1), that the arbitration award be remitted to the arbitrators for their reconsideration with directions;

   4. Such further or other relief which the Honourable court deems fair and fit;

   5. That costs and incidental to this application be forthwith taxed and paid by the respondent to the applicant.

2. The application is supported by the affidavit of Yap Man Chan and Rahayu Abd Ghani affirmed on November 3, 1999 marked as Encls 2 and 3 respectively. For ease of reference, the pleadings filed in this matter are as follows:

   		Dated	Encl No
   (a)	The notice of originating for setting aside of the award ("the motion")	5.11.1999	(1)
   (b)	The affidavit of Yap Man Chan ("the first affidavit-in-support")	3.11.1999	(2)
   (c)	The affidavit of Rahayu Abd Ghani ("the second affidavit-in-support")	3.11.1999	(3)
   (d)	The affidavit of Ng Liang Thong ("Ng's affidavit-in-reply)	3.3.2000	(15)
   (e)	The affidavit of Yap Man Chan ("Yap's affidavit-in-reply")	5.5.2000	(16)

3. I think it is apt firstly to go into the brief background of the trading procedure of the Commodity & Monetary Exchange of Malaysia (COMMEX).

   • The Kuala Lumpur Commodity Exchange (KLCE) was incorporated on July 14, 1980. Subsequently on December 7, 1998 the KLCE merged with the Malaysia Monetary Exchange (MME) and the merged entity is called COMMEX. COMMEX is an exchange company for both commodity and monetary trading, its trading transactions are very much alike our Kuala Lumpur Stock Exchange (KLSE), except that traders who are members of COMMEX trade in crude palm oil (CPO) and more recently KLOFF in futures.

   • When a trader sells CPO at COMMEX, the seller will deliver the CPO to COMMEX's approved delivery point which is at a certain designated port tank installation over the country.

   • These delivery points or port tank installations are authorised and approved by COMMEX to handle and store CPO upon COMMEX's terms and conditions as found in COMMEX's approved standard format letter of undertaking which all appointed port installation owners are required to furnish upon their appointment.

   • Pursuant to the terms of the letter of undertaking, when CPO is delivered by the sellers to the port tank installation, the latter is to appraise the CPO (which includes sampling and testing) in accordance with the terms set out therein.

   • Upon satisfactory completion of the appraisal process by the port tank installation, the seller is issued with negotiable storage receipts (NSR) in multiples of 25 metric tons ("m/t") per NSR as acknowledgement of receipt of the CPO.

   • The seller then proceeds to surrender the NSR the Malaysian Derivatives Clearing House in exchange for payment.

   • The buyer who purchases CPO at COMMEX, upon taking up position, proceeds to obtain the NSR from the clearing house, by paying for the CPO.

   • The buyer having obtained the NSR, then proceeds to surrender the NSR to the port tank installation for taking delivery of the CPO.

4. Briefly the facts are as follows: On August 22, 1992, the applicant was appointed as COMMEX approved point of delivery / port tank installation for COMMEX traded CPO at Butterworth. In consideration for the said appointment the applicant gave a letter of undertaking on standard COMMEX format, wherein the applicant undertook to 'handle and store' CPO traded via the COMMEX upon terms and conditions stated in the letter of undertaking, the said letter of undertaking is marked as an exhibit 'YMC-1' appearing in Yap Man Chan's first affidavit-in-support (Encl2). As per the letter of undertaking, the applicant undertakes with COMMEX to 'handle and store' CPO upon the following terms and conditions, briefly the terms are;

   1. The specifications of CPO are to be in accordance with COMMEX Rule 2409 CONTRACT GRADE which provides:

      The specifications of Crude Palm Oil of tenderable quality are:

      1. The Crude Palm Oil shall be the unbleached Crude Palm Oil of good merchantable quality, in bulk;

      2. The free fatty acid content (as Palmitic molecular weight 256) of Palm Oil delivered into Port Tank Installations shall not exceed 4% and of Palm Oil delivered from Port Tank Installations shall not exceed 5 % and the Moisture and Impurities content shall not exceed 0.25% as per sample(s) drawn and analysed on delivery into or from our port tank installation in accordance with procedures governing sampling and analysis as laid down by the exchange Company."

   2. CPO is to be delivered in multiples of 25 m/t;

   3. The Applicant is to provide port tank installation facilities to 'weigh, sample and analyze' (collectively referred to as 'appraisal');

   4. Upon completion of appraisal of CPO, the applicant is to issue NSR (in a form as approved by COMMEX);

   5. Clause 13 of the Letter of Undertaking provides that 'tariffs and contract term for services performed shall be drawn up with agreement of COMMEX'.

5. Over a period of two (2) weeks, from October 30, 1998 to November 19, 1998, Guan Soon Heng Edible Oil Sdn Bhd ("the sellers") delivered 700 m/t of CPO to the applicant's port tank installation Tank No 6 at Butterworth. Upon delivery, the applicant conducted various sampling and analysis on the CPO at various stages for its free fatty acid ("FFA") and moisture and impurities ("M&I") content as required under the Kuala Lumpur Commodity Exchange Rules for crude Palm Oil Futures Contract ("CPO Rules") in particular Rule 1409 which is pari materia to Clause 2a and b of the applicant's letter of undertaking rendered to COMMEX.

6. Upon receipt of the analysis result which is satisfactory and in compliance with the requirements of the CPO Rules and the letter of undertaking, the applicant issued 28 negotiable storage receipts ("the NSR") (Exh "YMC-7") on COMMEX / KLCE standard format to the sellers, who subsequently surrendered the NSR to the Malaysia Derivatives Clearing House Bhd ("the MDCHB") for payment. During the period between November 2, 1999 to November 18, 1999, the respondent who had bought the CPO through COMMEX made payment to MDCHB for the 28 lots of NSR Nos 0576/98 to 0603/98.

   • On November 20, 1998, the respondent informed the applicant of their intention to collect the CPO and that they were in possession of the NSR.

   • Subsequently on November 23, 1999, the respondent informed the applicant that the CPO was not of contract grade.

   • However, on November 25, 1999 the respondent surrendered the NSR to the applicant for-taking delivery of the CPO. On the same day, the applicant wrote to say that the CPO was within contract specifications.

   • The respondent refused to take delivery of the CPO and the CPO remained uncollected until the final award was published with no directions on the disputed oil.

7. In mitigation the applicant disposed of the disputed oil as CPO by tender through an independent surveyor to the highest bidder on March 3, 2000 at a price of RM885 per tonne as per Yap's affidavit-in-reply (Encl 16) at Exh "YMC-16"). A dispute arose over the contract grade of the 700 m/t of CPO in the applicant's Tank No 6. Pursuant to Clause 10 of the NSR, the parties agreed to refer the matter to arbitration, in accordance with the COMMEX Business Rules. The respondent filed their statement of claim and reply to the counterclaim and the applicant filed their defence and counterclaim. Full details of the parties claim, defence and counterclaim can be found in Exh "YMC-8". The matter was heard on July 8, 1999 and July 14, 1999 and the final award was published on October 11, 1999. A copy of the award can be found in Exh "YMC-9" (Encl 2).

8. In summary, the arbitrators held in favour of the respondent that 700 m/t of oil was not of contract grade required under the CPO Rules in that it was not crude unbleached palm oil of good merchantable quality in bulk. In support of the applicant's application to set aside the award or alternatively remission, the applicant cited six grounds for setting aside the award. Reference is made to the first affidavit-in-support of Yap Man Chan (Encl 2) and the second affidavit-in-support of Rahayu Abd Ghani (Encl 3) both duly affirmed on November 3, 1999 and Yap Man Chan's affidavit-in-reply affirmed on May 5, 2000 (Encl 16). The six grounds for setting aside are:

   1. The arbitrators erred in law on the face of the award in failing to analyse and appraise material and relevant evidence in the construction of Rule 1409 of the CPO Rules;

   2. The arbitrators erred in law in concluding that the 700 metric tons of oil in the applicant's Tank No 6 with an iodine value (IV) of a range below 50 cannot be sold under the description of 'crude unbleached palm oil in bulk' based on total reliance on the scientific inherent characteristics explanation of crude palm oil of a chemist (Mr. Tang Thin Sue) without taking into consideration the COMMEX market practice read in conjunction with Rule 1409 of the CPO Rules;

   3. The arbitrators failed to consider all facts and circumstances in holding that the applicant had not complied with Clause 1 of the NSR Nos 0576/98 to 0603/98 read in conjunction with Rule 1409 of the CPO Rules;

   4. The arbitrators erred in law in failing to hold that "good merchantable quality" (GMQ) be construed in the context of the CPO Rules and in particular Rule 1409 and the COMMEX / KLCE market practice and not in accordance with what the respondent deems acceptable or otherwise and in so doing failed to take into account that the applicant was not the seller of the CPO;

   5. The arbitrators erred in law on the face of the award in concluding that the crude palm oil in the Tank No 6 with an Iodine Value (IV) of below 50 cannot be sold under the description 'crude unbleached palm oil in bulk' based on incomplete and inaccurate COMMEX paraphrased notes of proceedings recorded by COMMEX and in particular the evidence of COMMEX General Manager, Mr. Raghbir Singh Bhart and the cross examination evidence of Mr. Tang Thin Sue, where references to fatty acid composition was recorded as free fatty acid;

   6. The arbitrators erred in law on the face of the award in misconstruing the principles of law pertaining to 'merchantable quality' and ignored the cogent evidence that was before them.

   THE ARBITRATORS ERRED IN LAW ON THE FACE OF THE AWARD

   IN FAILING TO ANALYSE AND APPRIASE MATERIAL AND RELEVANT

   EVIDENCE IN THE CONSTRUCTION OF RULE 1409 OF THE CPO RULES

9. On p 4 of the award, the arbitrators ruled:

   In our view the defendant's contention that the only criteria that need to be satisfied by the defendant in meeting the contract grade is the free fatty acid (FFA) and the moisture and impurities (M&1) content is untenable. In our view, there are two distinct limbs to Rule 1409. The first limb requires the oil delivered under the contract to be crude unheated palm oil of good merchantable quality, in bulk. The second is that the free fatty acid and moisture & impurities contents is within the stipulated levels. To adopt the defendant's contention would require us to render the language in the first limb superfluous and otiose and that is something we cannot do as not only does it fly in the face of accepted canons of interpretation, it is also not consistent with the accepted market practice in the KLCE... therefore, the import of the phrase good merchantable quality must be objectively determined by reference to established practice and generally accepted market expectations.

10. It is observed here that the arbitrators failed to consider at all the established market practice in the COMMEX and did not objectively determine the evidence on market practice brought by the parties. The arbitrators failed to consider the evidence of Mr. Raghbir Singh, the General Manager of COMMEX of 19 years experience, who was in charge of the contractual specifications of the CPO Rules, the evidence of Mr. Khoo Lian Suam, a CPO trader for 21 years and the evidence of respondent's key witnesses, Ms Khoo Yoke Lian and Mr. Richard Tan Kee Hock. Mr. Raghbir Singh was the applicant's first witness. His evidence, can be found in Encl 2, Exh YMC-10, p 10 wherein he testified that he was responsible for the contractual specifications in the CPO Rules which includes Rule 1409 - Contract Grade. He testified that on March 22, 1999 he wrote to all port tank installation owners on the contract specifications of CPO at COMMEX approved port tank installations. The letter which was admitted as evidence and marked as an exhibit at the arbitration proceedings, is exhibited at p 16 of Yap Man Chan's first affidavit-in-support (Encl 2) marked 'YMC-13'. In his letter dated May 22, 1999, which reads as follows he said:

    To All Port Installation Owners (13 names were listed) Dear Sirs, CONTRACT SPECIFICATIONS IN RESPECT OF CRUDE OIL TENDERED AT COMMEX APPROVED PORT TANK INSTALLATIONS I refer to the abovementioned. The current contract specifications in respect of Crude Palm Oil tendered at COMMEX approved port tank installations provide as follows: 1409 CONTRACT GRADE the contract shall be for Crude unbleached Palm Oil of good merchantable quality, in bulk, in approved Port Tank Installations; the free fatty acid content (as Palmitic-molecular weight 256) of Palm Oil delivered into Port Tank Installations shall not exceed 4% and of Palm Oil delivered from Port Tank Installation shall not exceed 5% and the moisture and impurities content shall not exceed 0.25% in accordance with sample(s) drawn and analysed on delivery into Part Tank Installations and from Port Tank Installations in accordance with procedures governing sampling and analysis as laid down by the exchange Company. You will note from the abovementioned that the specifications are only in respect of the Free fatty Acid content and the moisture and impurities content and do not cater for iodine value and melting points. In order to discuss in further detail as to the adequacy of the above specifications it is proposed that a meeting be held between COMMEX officials and representatives of all COMMEX Approved Port Tank Installations at 3.00 p.m. on 31st March 1999 at the COMMEX Board Room, 5th Floor, Citypoint, Dayabumi Complex, Jalan Sultan Hishammuddin, Kuala Lumpur. It would be useful opportunity to discuss any other issues / problems in respect of CPO tendered at COMMEX Approved Port Tank Installations. I would be grateful if you could send a representative of your Company to attend the abovementioned meeting. Thank you. Yours faithfully, Signed Raghbir Singh Bhart General Manager.

11. Mr. Raghbir Singh's evidence was not challenged by the respondent and in particular where he testified that COMMEX's current contract specifications did not cater for iodine value test which the arbitrators in its final award concluded was a necessary test for CPO to be sold. Mr. Raghbir further testified that the phrase 'good merchantable quality' is nowhere defined in the CPO Rules (see Yap Man Chan' s first affidavit-in-support (Encl 2), Exh 'YMC-10' p 11 of COMMEX paraphrased notes of proceedings). The COMMEX paraphrased notes of proceedings did not record the evidence in full of Mr. Raghbir Singh and the most pertinent answer as to the approved COMMEX tariff rates charged by the applicant is missing from the paraphrased notes. Reference is made to Rahayu Abd Ghani's second affidavit-in-support affirmed on November 3, 1999 (Encl 3) and in particular paragraph 6, which states:

    Further, Mr. Raghbir Singh also testified in Examination-in-Chief to a question put forth by the Applicant's counsel: Is it true that under the Letter of Undertaking (to Commex) that RM25 for storage charges is based on the Free Fatty Acid and Moisture & Impurities test and not based on Iodine Value and Slip Melting Point test? Mr. Raghbir Singh answered 'Yes'. This question and answer is omitted from the COMMEX paraphrased Notes of Proceedings.

12. It is noted that the arbitrators failed to consider, analyse and appraise the material facts of the market practice of COMMEX read in conjunction with the contractual specifications of Rule 1409 of the CPO Rules. It is dear from the testimony of Mr. Raghbir Singh that the established contract grade in the COMMEX market as per Rule 1409 of the CPO Rules expressly provided for only two quality tests for CPO in limb (b) of the said Rule. The tests are the free fatty acid (FFA) and the moisture and impurities (M&I) tests and the Rules do not expressly provide for the iodine value (IV) test which the respondent attempted to do by importing the requirement of the IV test within the definition of 'good merchantable quality' in limb (a) of the said Rules. If COMMEX intended that the IV test was to be part of the definition of 'good merchantable quality' it ought to have defined it. Nowhere in the CPO Rules was it defined. The respondent's witnesses, Ms Khoo Yoke Lian and Mr. Richard Tan Kee Hong, all confirmed and agreed that 'good merchantable quality' was not defined and that the IV test was never part of Rule 1409 of the CPO Rules. This evidence is further fortified by the admission of the fact by Mr. Raghbir Singh, that the tariff rate of RM25 per m/t approved by COMMEX and charged by the applicant was for the FFA and M&I tests and not for IV test.

13. With reference to Yap Man Chan's first affidavit-in-support (Encl 2) and in particular paragraph 21 a, where he referred to the evidence of Mr. Khoo Lian Suam, a trader for CPO of 21 years experience, Mr. Khoo Lian Suam confirmed that the

    Standard and Quality of oil is usually negotiated between the buyer and seller. If better quality oil is needed, a premium price had to be offered to the seller. (Exh 'YMC-11' Para 27.4, COMMEX paraphrased notes of proceedings)

    Mr. Khoo Liam Suam went on further to give evidence on the general market practice, and made particular reference to the governing contract for domestic sales of CPO. He referred to the Domestic Contract for Malaysian Crude Unbleached Palm Oil in Bulk: issued jointly by the Palm Oil Refiners Association of Malaysia (PORAM) and the Malaysian Oil Palm Grower's Council (MOPGC). Even the standard domestic contract sale and purchase of CPO between CPO refiners and growers made no provision for other product specifications of iodine value (IV) or slip melting point (SMP) other than the minimum quality characteristics of CPO that being free fatty acid (FFA) and moisture & impurities (M&I). His evidence as it appears in the paraphrased notes of proceedings are as per paragraph 27.4 and 27.5 where the standard domestic contract is admitted and marked as an exhibit. The relevant sections are:

    27.4	The document shown under page 131 of DP 2 is the standard format of contract recommended by MOPGC and PORAM;
    27.5	Based on his experience, if the FFA or M&I is out of range a price rebate is negotiated. There will be no rejection of oil due to quality reasons.

14. The respondent's first witness Ms Khoo Yoke Lian (paragraph 201 - Encl 2) confirmed in her testimony that the iodine value (IV) test was not part of the COMMEX contract grade specification (Rule 1409). The following paragraphs in the COMMEX paraphrased notes of proceedings have reference.

    10.1	The specification under COMMEX Rules was only FFA, M&I.
    10.2	There is no IV specification under COMMEX Rules.

15. The respondent's witness, Mr. Richard Tan Kee Hock, under cross-examination confirmed that "good merchantability" was not defined anywhere under the CPO Rules, and admitted that "it is normal trade practice to adjust for price difference through negotiations if IV of oil is not met" (refer to paragraphs 14.4 and 14.5 of the COMMEX paraphrased notes of proceedings, exhibited as 'YMC - 11' in Yap Man Chan's first affidavit-in-support (Encl 2) collaborating the evidence of Mr. Khoo Lian Suam). Therefore it is abundantly dear from the testimonies of the four (4) witnesses stated above, that the arbitrators erred in law in failing to analyse and appraise the material facts of the four (4) witnesses in the construction of Rule 1409 of the CPO Rules and the established or accepted market practice.

    SOLE RELIANCE ON A SCIENTIFIC EXPLANATION OF CHEMIST EVIDENCE,

    EVIDENCE RELIED ON IS INCOMPLETE AND INACCURATE

16. The arbitrators erred in law in concluding that the CPO in the Tank No 6 with an IV of a range below 50 cannot be sold under the description "crude unbleached palm oil in bulk" based solely on the scientific inherent characteristics explanation of crude palm oil of a chemist (Mr. Tang Thin Sue) having regard to its iodine value (IV) and slip melting point (SMP) without taking into consideration the evidence on the accepted COMMEX / KLCE market practice read in conjunction with Rule 1409 of the CPO Rules. The arbitrators in their final award ruled that the bearers of the negotiable storage receipts (NSR) will accept CPO delivered to them if it met the contract grade set out in Rule 1409 of the CPO Rules. Rule 1409(a) provides for the CPO to be of 'good merchantable quality' which the arbitrators agreed that the CPO Rules did not define the phrase. The arbitrators then proceeded to rule that

    the import of the phrase 'good merchantable quality' must be objectively determined by reference to established practice and generally accepted market expectation.

17. The arbitrators then proceeded to place sole reliance on the scientific explanation of a chemist, Mr. Tang Thin Sue who was attached with the Palm Oil Research Institute of Malaysia (PORIM) for 12 years. Mr. Tang testified mainly on the inherent and variable characteristics of CPO. He testified that the results of the test of the sample oil taken from the applicant's Tank No 6 showed the results of iodine value (IV) of the sample oil has a reading of 49.2 against a Malaysian Standard 814-1994 specification range of 50.1 to 54.9. He testified that

    if the IV was out of range, then it can be said that it is normal Crude Palm Oil for commercial production.

18. Mr. Tang who is a chemist by profession and not a CPO trader gave no evidence on the established market practice, neither did he equate 'good merchantable quality' in the CPO Rules to the IV test as insisted by the respondent. With reference to Mr. Yap Man Chan's first affidavit-in-support (Encl 2) Exh 'YMC-10', where the COMMEX paraphrased notes of proceedings and in particular paragraph 17.3 where Mr. Tang under cross-examination admitted that the test results of the sample oil taken from the applicant's Tank No 6 indicated that the oil was CPO. Paragraph 17.3 reads:

    The results shown in Page 74 of CPI, shows the FFA testing indicates the product was CPO.

19. Page 74 of CP1 is the addendum to the certificate of analysis No 37/98 (certificate of analysis results of SGS Laboratory) issued by PORIM on the sample oil taken from the applicant's tank No 6 which was the disputed oil. The document can be found in Ng Liang Tong's affidavit-in-reply (Encl 15) Exh 'AG-2' at pp 74-75. It is evident from the above that there was no dispute that the oil in the applicant's Tank No 6 was crude unbleached palm oil. In the instant case the arbitrators erred in law by relying solely on the evidence of the chemist, Mr. Tang Thin Sue and to equate iodine value (which is not mentioned in Rule 1409 of the CPO Rules) as 'good merchantable quality'.

    NON-COMPLIANCE WITH CLAUSE 1 OF THE

    NEGOTIABLE STORAGE RECEIPT BY APPLICANT

20. The arbitrators erred in law on the face of the award in failing to consider all the facts and circumstances of the case in holding that the applicant had not complied with Clause I of the negotiable storage receipt (NSR) read in conjunction with Rule 1409 of the CPO Rules. Clause I of the negotiable storage receipt (NSR) referred to in Exh 'YMC-7' of Yap Man Chan's first affidavit-in-support (Encl 2) provides as follows:

    The said Crude Palm Oil has been duly appraised and is hereby certified as regards the weight and quality to be in conformity with the specifications laid down by the Rules and Regulations of the Kuala Lumpur Commodity Exchange (hereinafter referred to 'Exchange Company').

21. It is observed that the applicant had complied with the above clause. The applicant's witness Mr. Lim Ling Sing gave evidence at length on the appraisal procedure which included sampling and testing procedures of the subject oil when delivered by the sellers in lorries. The CPO analysis results 1998/1999 (YMC-2) showed that the oil in Tank No 6 was within the parameters of COMMEX specification. The analysis results on FFA and M&I were within the permitted COMMEX range. There was no co-mingling of oil. (p 5 paragraph 7 of Yap's first affidavit-in-support). The respondent led no evidence to contradict the applicant's analysis results of the CPO, nor did the respondent show that the subject oil was contaminated.

22. The evidence of the respondent's witness chemist, Mr. Tang Thin Sue (referred to above) and the respondent's surveyor, Mr. Ong Hai Ching confirmed that the 700 m/t of oil in Tank No 6 was CPO. With reference to Encl 2 (Yap's first affidavit-in-support) and in particular Clause 20f, reads:

    I verily believe that the evidence given by Mr. Tang Thin Sue that the oil in the Applicant's Tank No. 6 is crude unbleached palm oil is supported by the analysis results of the Respondent's witness, Mr. Ong Hai Ching, a surveyor from SGS Laboratory (M) Sdn. Bhd. appointed by the Respondent to test the oil when the dispute arose. He was called by the Respondent to give evidence at the arbitration proceedings. The Certificate of Analysis (Certificate No 5801/65744/ LPL1/2583/98) issued by SGS was tendered as an exhibit at the arbitration proceedings. Mr. Ong testified that he was involved in the testing of crude palm oil for the past 7 years and that the iodine value sample taken from Tank No. 6 had a reading of 49.2. He further testified that 'if the iodine value did not reach 50, it could still be crude Palm Oil'. Under cross-examination Mr. Ong testified that 'Fatty Acid Composition will determine the identity of the oil and the test on the sample concerned fit the specification of crude Palm Oil' (paragraph 20.1 of the Paraphrased Notes of Proceedings by COMMEX). I now annexed and marked as exhibit YMC-12, the SGS Certified Analysis of Certificate No. 5801/65744 / LPK1/2583/98 showing that the disputed oil has a Fatty Acid Composition and an IV range of 49.2 which fits the specification of Crude Palm Oil.

23. It is observed that the respondent had complied with Clause I of the NSR read in conjunction with the COMMEX specifications as per Rule 1409 of the CPO Rules. There is no requirement neither expressed nor implied under Rule 1409 of the CPO Rules to conduct the test for IV value on the CPO as confirmed by COMMEX very own General Manager, Mr. Raghbir Singh. The applicant had demonstrated and supported by evidence of the respondent's surveyor and chemist that the 700 m/t tons in the applicant's Tank No 6 is crude unbleached palm oil, hence Clause 2 of the NSR is fully complied with and both limbs of the requirement of Rule 1409 have been complied with by the applicant.

    INCOMPLETE AND INACCUIRATE PARAPHRASED

    NOTES OF PROCEEDINGS BY COMMEX

24. The arbitrators erred in law on the face of the award in concluding that the crude palm oil in the Tank No 6 with an iodine value ("IV") of below 50 cannot be sold under the description "crude unbleached palm oil in bulk" based on incomplete and inaccurate paraphrased notes of proceedings recorded by COMMEX and in particular the evidence of COMMEX General Manager, Mr. Raghbir Singh Bhart and the cross-examination evidence of Mr. Tang Thin Sue, where references to fatty acid composition was recorded as free fatty acid.

25. The arbitrators at p 6 of the award, exhibited as 'YMC-9' had ruled:

    ... The most authoritative testimony on what crude unbleached palm oil in bulk is came from the claimant's third witness, Mr. Tang Thin Sue ... A chemist attached to the Palm Oil Research Institute of Malaysia (PORIM) for 12 years ... involved in the palm oil industry for more than 20 years ... if the relevant oil does not have these characteristics then it cannot be sold under the description 'crude unbleached palm oil in bulk ...'. ... in light of the foregoing we are of the view that the oil in Tank No 6 which has been established to have an IV of below 50 cannot be sold under the description 'crude unbleached palm oil in bulk' in the context of the CPO Rules

26. I am of the opinion that the arbitrators' determination is inconsistent and contradictory to the evidence which were before them. Mr. Tang's evidence which the arbitrators relied largely on to arrive at the above conclusion was not truly and accurately reflected. Mr. Tang Thin Sue and Mr. Ong Hei Ching (both witnesses for the respondent) gave evidence that the disputed oil in the applicant's Tank No 6 was crude unbleached palm oil. The arbitrators came to the conclusion that the oil cannot be sold under the description of 'crude unbleached palm oil in bulk' because I think the arbitrators were confused over the distinction between 'free fatty acid' (recorded as 'FFA') and 'fatty acid composition' by relying on inaccurate paraphrased notes of proceedings. Reference is made to paragraph 20e of Yap's first affidavit-in-support - Encl 2, where Mr. Tang Thin Sue confirmed under cross-examination that the disputed oil test results on its fatty acid composition indicated that it was crude unbleached palm oil. Paragraph 20e reads:

    I verily believe that the Arbitrators relied on incomplete and inaccurate evidence of Mr. Tang were the Fatty Acid Composition which is the 'thumbprint' or the test required to test the authencity of CPO was recorded as 'Free Fatty Acid (FFA); which is the quality characteristics of CPO. I set out below the inaccurate recordings: 17.3 The results shown in page 74 of CP1 shows FFA testing indicates the product was CPO; 17.5 As far as the FFA results are concerned the product could be said to be CPO; 17.9 FFA is also important characteristics of CPO and if another oil is tested it is very unlikely to have the same FFA content as CPO.

27. With reference to Mr. Yap Man Chan's first affidavit-in-support (Encl 2) at paragraph 20k in particular to Exh YMC-11 (COMMEX paraphrased notes of proceedings) and to Exh 'YMC-14', wherein Mr. Manoj Devadasan, the legal manager of COMMEX confirmed in writing to the applicant's solicitors that the arbitrators had no objection to the veracity or accuracy of the contents of the COMMEX paraphrased notes of proceedings when asked by the applicant's solicitors on the rewording of minutes by COMMEX.

28. In Tresons Ltd v Stevenage Development Corporation [1963] 1 QB 37, a dispute arose between the contractors and the respondent corporation which were referred to arbitration. A final question arose whether the corporation contended, a substantial part of the transcript of the shorthand notes of the evidence taken at the hearing should have been appended to the special case. In dismissing the appeal, the court held that the duty of an arbitrator was to state the effect of the evidence on which he relied on

    Provided that he does this accurately and without misrepresenting the evidence, he has found the facts necessary to determine the question of law which he has submitted. (per Wilmer LJ) at p 38

29. Wilmer LJ went on further to hold at p 45:

    In my view the motion to remit the award could succeed only if it were shown that the summary of evidence prepared by the arbitrator was unfair in the sense that it was inaccurate so as to amount to a misrepresentation of the evidence. Were that shown, it would, of course, involve a clear case of misconduct on the part of the arbitrator. But, as I have already said, Mr. Dunn shrank from taking any such charge as that. Moreover, it seems to me that the court could act upon such a complaint only if it were supported in detail by an affidavit pointing out specifically the inaccuracies or misrepresentations contained in the summary of evidence. No such material was put before the court, and in those circumstances, it seems to me that the motion to remit the award was rightly dismissed.

30. Upjohn LJ at p 52 said:

    The arbitrator can, in a few simple cases, where it is easy and practicable, set out the evidence in the form of a transcript or his own note, but normally that will not be so. At this state, one word of warning however, must be introduced. It is the duty of the arbitrator, as I have said, to set out the effect of the evidence which supports his conclusion. It is for him to select what evidence he regards as relevant to support his conclusion. It is for him to decide how fully or how summarily it shall be stated. But having selected the evidence upon which he does rely, that must be set out fairly in the sense of setting it out truly and accurately, and the evidence must be credible, that is, such that a reasonable man could accept that evidence as the truth. If a party can successfully challenge those matters then he established misconduct on the part of the arbitrator and the award can be attacked on that ground.

31. Again at p 54 Upjohn LJ said:

    An arbitrator's award is, in my judgment, in the same position, save that the material before the court is not the evidence that was before the jury, but the facts as stated by the arbitrator in his award. If those facts are stated in the award disclose a state of affairs in which it is proper to say there is no evidence to support the arbitrator's determination, or that the evidence is inconsistent with, and contradictory of, the determination or that the determination is one in which the only true and reasonable conclusion contradicts the determination (all of which propound the same test) there is an error of law on the face of the award.

32. It is plain from the evidence in the final award that the arbitrators relied on the COMMEX notes of proceedings which was so inaccurate that there was a serious misrepresentation of the facts which was material to the case before the arbitrators i.e. in reference to fatty acid composition as FFA. In the result the award is clearly bad on the face of it.

    APPLICANT NOT SELLERS OF CPO BUT BAILEES

33. The arbitrators erred in law in failing to hold that "good merchantable quality" be construed in the context of the CPO Rules and in particular Rule 1409 and the COMMEX / KLCE market practice and not in accordance with what the respondent deems acceptable or otherwise and in so doing failed to take into account that the applicant was not the seller of the crude palm oil.

34. Reference is made to the award at p 4, 3rd paragraph (see Exh 'YMC-9') where the arbitrators referred to the contractual relationship between applicant and respondent as founded in the negotiable storage receipt. The relationship between the parties (applicant / respondent) was founded in contract, but the contract was a contract of bailment. The arbitrators erred in law in failing to analyse that the capacity of the applicants in this transaction was that of mere bailees for reward, as appointed COMMEX approved delivery point / port tank installation. As per the terms of NSR, the duties of the applicant was to handle and store and appraise the CPO in accordance with COMMEX specifications. The applicants were not duty bound to improve the quality of oil which they received from the sellers.

35. In law, the duty of the bailee is to take reasonable care under the circumstances. The arbitrators made an error of law in assuming and aligning a bailee's position to that of sellers by repeatedly referring to the CPO in Tank No 6 was not CPO and could not be sold by the description of CPO of 'good merchantable quality' in their award. The duties of a bailor / bailee relationship is governed by the Contracts Act 1950. Section 104 provides for "care to be taken by bailee":

    in all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality, and value as the goods bailed.

    Section 105 provides for "Bailee when not liable for loss, etc. of things bailed":

    the bailee, in the absence of any special contract, is not responsible for the loss, destruction, or deterioration of the thing bailed, if he has taken the amount of care of it described in section 104.

36. In Port Swettenham Authority v TW Wu & Co. (M) Sdn Bhd [1978] 2 MLJ 137 the cargo owners / consignee under bill of lading deposited 93 cases of pharmaceutical goods in the custody of the Port Authority. The goods were short delivered. The consignees then brought an action against the Port Authority for breach of contract and for conversion of the lost goods. It was held that the Port Authority was liable as they failed to show that they had exercise due care and diligence. The Port Authority appealed to the Federal Court who dismissed the appeal, the Port Authority subsequently appealed to the Privy Council. The Privy Council in dismissing the appeal held that ss 104 and 105 of the Contracts Act (Malay States) Ordinance 1950 apply to all bailment and makes no distinction between bailments for reward and gratuitous bailment. Lord Salmon in delivering his judgment (at p 139 paragraph D) said:

    It is true that Malaysian law sets a single standard of care for all bailees - whether they are bailees for reward or gratuitous bailees- and it corresponds to the standard required of a gratuitous bailee at common law. This standard, although high, may be a less exacting standard than that which the common law requires of a bailee for reward. But the line between the two standards is a very fine line, difficult to discern and impossible to define. After all, a man of ordinary prudence would presumably take reasonable care of his own goods. However this may be, there is no doubt that under Malaysian law interpreted in the light of the common law, as it always has been by the Malaysian courts and by this Board, the onus is on the bailee to show that he has taken the care required by the law, of the goods entrusted to him.

37. I am of the opinion that taking the evidence of Mr. Lim Ling Sing on the handling and storage of the crude palm oil, the applicant had taken reasonable care of the CPO whilst in its custody thereby discharging the burden required by s 104 and s 105 of the Contracts Act. It is to be noted that the evidence on appraisal of the disputed oil conducted by the applicant pursuant to Rule 1409 of the CPO Rules had been complied with and undisputed by the respondent. No act of negligence on the part of the applicant had been established by the respondent in the arbitration proceedings nor was the breach of duty of care been pleaded by the respondent in their pleadings.

38. The arbitrators made an error in law in failing to appraise the situation that the applicant had discharged their burden of proof and that they had complied with the terms of the contract as evidenced by the negotiable storage receipt. The applicants had no duty at all to improve the quality of the oil that was delivered to them by the sellers. The arbitrators failed to appreciate that the respondent are members of COMMEX and as COMMEX members are aware of the contract grade of the CPO traded at COMMEX. If the respondent had bought CPO traded in COMMEX of which Rule 1409 did not include the iodine value (IV) test, the respondent should not be allowed to insist on the inclusion of the IV test. I think the proper forum for the respondent to address their grievances is to COMMEX and not to the applicant who were mere port tank installation.

    THE ARBITRATORS ERRED IN LAW ON THE FACE OF THE AWARD IN

    MISCONSTRUING THE PRINCIPLES OF LAW PERTAINING TO "MERCHANTABLE

    QUALITY" AND IGNORED THE COGENT EVIDENCE THAT WAS BEFORE THEM

39. The arbitrators distinguished the cases of Cammel Laird & Co v Manganese Bronze Co Ltd [1934] 1 All ER 1 and Hendry Kendall & Sons (a firm) v William Lillico & Sons Ltd [1968] 2 All ER 44, by stating that they were not applicable because they deal with a buyer / seller situation by stating that those cases deal with sale and purchase of goods under the UK Sale of Goods Act 1893 where the parties had the opportunity to negotiate the sale (p 5 - 3rd paragraph - Exh YMC-9) implying that in the instant case the parties did not have such an opportunity, and the arbitrators then in the subsequent paragraph found support in the case of Hendry Kendall & Sons on the issue of 'merchantable quality' and quoted the speech of Lord Morris of Borth-Y-Gest at p 468 paragraph H:

    In Niblett v Confectioners Materials Co Atkin, LJ, used the words "No one who knew the facts would buy them in that state or condition; in other words they were unsaleable and unmerchantable." This passage brings out the point that in deciding whether goods are merchantable it has to be considered whether some buyer or buyers could reasonably be contemplated who would wish to buy goods which were in the actual condition of the goods tendered and who had knowledge of defects in them which might be hidden. The goods must of course comply with the description. If, therefore, goods of the contract description are tendered and if the tendered goods though having certain defects are reasonably capable of being put to a use for which a buyer knowing of the defects would be likely to buy them, then they are of merchantable quality. This, I think, is what was indicated by Lord Wright in his speech in the Cammell Laird case.

40. "Merchantable quality" is defined in s 16 of the Malaysian Sale of Goods Act 1957 which provides:

    16.	(1)	Subject to this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:
    		(a)	Where the buyer, expressly or by implication makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he is the manufacturer or producer or not) there is an implied condition that the goods shall be reasonably fit for such purpose; Provided that, in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose.
    		(b)	Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not) there is an implied condition that the goods shall be of merchantable quality: Provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed.

41. It is noted that the above section is in pari materia with the UK Sale of Goods Act 1893, s 14. In gist s 16(1)(a) above sets out that if the goods are sold on the basis that the purpose is made known to the buyer, there is an implied condition as to its fitness for its purpose. Section 16(1)(b) then sets out that if the goods are sold by the description, it should be merchantable.

42. In the House of Lords case of Hardwick Game Farm v Suffolk Agricultural & Poultry Producers Association Ltd [1968] 1 Lloyd's LR 547 Lord Reid at p 561 gave a meaning to "merchantable". He said:

    Merchantable can only mean commercially saleable. If the description is a familiar one it may be that in practice only one quality of goods answers that description - then that quality and only that quality is merchantable quality. Or it may be that various qualities of goods are commonly sold under that description - then it is not disputed that the lowest quality commonly so sold is what is meant by merchantable quality: it is commercially saleable An under that description.

    At p 563, Lord Reid said:

    If the description in the contract was so limited that goods sold under it would normally be sued for only one purpose then the goods would be unmerchantable under that description if they were of no use for that purpose. But if the description was so general that goods sold under it are normally used for several purposes then goods are merchantable under that description if they are fit for any one of these purposes: if the buyer wanted the goods for one of those several did not happen to be suitable though they were suitable for other purposes for which goods bought under that description are normally bought then he cannot complain. He ought either to have taken the necessary steps to bring sub-section (1) into operation or to have insisted that a more specific description must be inserted in the contract.

43. At p 577 Lord Morris of Borth-Y-Gest said:

    In Niblett, Ltd v Confectioners' Materials Co. Ltd [1921] 3 KB 387, Lord Justice Atkin at p 404 used the words: ... No one who knew the facts would buy them in that state or condition; in other words they were unsaleable and unmerchantable. This passage brings out the point that in deciding whether goods are merchantable it has to be considered whether some buyer or buyers could reasonably be contemplated who would wish to buy goods which were in the actual condition of the goods tendered and who had knowledge of defects in them which might be hidden. The goods must of course comply with the description. If, therefore, goods of the contract description are tendered and if the tendered goods though having certain defects are reasonably capable of being put to a use for which a buyer knowing of the defects would be likely to buy them, then they are of merchantable quality. This I think is what was indicated by Lord Wright in his speech in the Cammell Laird case, supra, at pp 430 and 226 of the respective reports.

44. In a Singapore case of Seng Hin v Arathoon Sons Ltd [1968] 2 MLJ 123, where it was an appeal against the High Court decision which awarded the plaintiffs damages for breach of contract in respect of the sale by the defendants to the plaintiffs of tapioca flour. The Federal Court in allowing the appeal held that:

    Held, allowing the appeal; in order to show that the goods were not of a merchantable quality it had to be shown that the goods were of no use for any purpose for which such goods would normally be used and were therefore not saleable under that description; in this case the plaintiffs had failed to show that the tapioca flour was of unmerchantable quality under English law, as although the flour may not have been in perfect condition it was on the evidence at least unsaleable as starch; nor had it been satisfactorily found that it was unfit for human consumption under the law of Singapore; the learned trial Judge had erred in law in deciding that the tapioca flour was not of a merchantable quality.

45. At p 124 Winslow J delivering judgment of the Federal Court said:

    The question whether goods are of merchantable quality within the meaning of the expression as used in section 14(2) of the Sale of Goods Act, 1893 is to be determined under English law. As Lord Wright said in the House of Lords in the case of Cammell Laird & Co v The Manganese Bronze and Brass Co: What sub-section (2) now means by 'merchantable quality' is that the goods in the form in which they were tendered were of no use for any purpose for which such goods would normally be used and hence were not saleable under that description. Although Willmer LJ in the Court of Appeal in Bradley & Sons. Ltd v Colonial Continental Trading Ltd appreciated that Lord Wright's dictum was clearly obiter and not binding on him he went on to say: It remains to say that that dictum of Lord Wright has recently been followed and applied by Mr. Justice Diplock (as he then was) in Mash & Murrell, Ltd v Joseph L Emanuel Ltd [1961] 1 Lloyd's Rep 46; [1961] 1 WLR 862. We, of course, are not bound by Mr. Justice Diplock's decision or by the dictum of Lord Wright, which was clearly obiter, but as far as I am concerned I see no reason for not accepting the interpretation of the words given by Lord Wright in the passage of which I have referred. More recently. Lord Denning MR. in Bartlett v Sidney Marcus Ltd said: I take the tests as to merchantability stated by Lord Wright in Cammell Laird & Co v Manganese Bronze & Brass Co Ltd and Grant v Australian Knitting Mills Ltd. In the Cammell Laird case. Lord Wright said the goods were unmerchantable if they were "of no use" for any purpose for which such goods would normally be used. In the Grant case he said that merchantable meant that the article, if only meant for one particular use in the ordinary course, is ' fit for that use'. It seems to me that those two tests do not cover the whole ground. There is a considerable territory where on the one hand you cannot say that the article is 'of no use' at all, and on the other hand cannot say that it is entirely 'fit for use'. The article may be of some use though not entirely efficient use for the purpose. It may not be in perfect condition but yet it is a usable condition. It is then, I think, merchantable.

46. In the instant case I come to the conclusion that the applicant has established through the evidence led that the 700 m/t of oil in tank No 6 was CPO within the COMMEX contract grade specifications. The CPO in dispute was in fact saleable by that description as apparent from the fact that despite having remained in the applicant's Tank No 6 for more than 17 months (October 30, 1998 - March 3, 2000), it was sold as unbleached crude palm oil to the highest bidder at RM885 per tonne as against the prevailing market rate at its date of disposal at RM1,050 per tonne (paragraph 5a of Yap's affidavit-in-reply (Encl 16) at Exh 'YMC-16').

47. The applicant's application is made in pursuant to ss 23 and 24(2) of the Arbitration Act 1952 and Order 69 r 4 of the Rules of the High Court 1980.

    Section 23 of the Arbitration Act - Power to remit award provides as follows:

    (1)	in all cases of reference to arbitration, the High Court may from time to time remit the matters referred, or any of them to the reconsideration of the arbitrator of umpire.

    Section 24 of the Arbitration Act - setting aside of award.

    (2)	Where an arbitrator or umpire has misconducted himself or the proceedings, or an arbitration or award has been improperly procured, the High Court may set the award aside.
    (3)	Where an application is made to set aside an award, the High Court may order that any money made payable by the award shall be brought into court or otherwise secured pending the determination of the application.

    Order 69 r 4 of the Rules of the High Court 1980, provides:

    4.	(1)	An application to the Court -
    		(a)	to remit an award under section 23 of the Act; or
    		(b)	to set aside an award under section 24(2) of that Act or otherwise, may be made at any time within 6 weeks after the award has been made and published to the parties.

48. Volume 2 of Halsbury's Laws of England (4th Edn) paragraph 623 reads;

    Error of law on the face of the award. An arbitrator's award may be set aside for error of law appearing on the face of it, though the jurisdiction is not likely to be exercised... in order to be a ground for setting aside the award, an error in law on the face of the award must be such that there can be found in the award, or in a document actually incorporated with it, some legal proposition which is the basis of the award and which is erroneous.

49. In the case of FR Absalom Ltd v Great Western (London) Garden Village Society Ltd [1933] AC 592, at p 607 Lord Russell of Killowen said:

    My Lords, it is, I think, essential to keep the case where disputes are referred to an arbitrator in the decision of which a question of law becomes material distinct from the case in which a specific question of law has been referred to him for decision. I am not sure that the Court of Appeal has done so. The authorities make a clear distinction between these two cases, and, as they appear to me, they decide that in the former case the court can interfere if and when any error of law appears on the face of the award, but that in the latter case no such interference is possible upon the ground that it appears that the decision upon the question of law is an erroneous one.

50. In the case of Government of Kelantan v Duff Development Co. Ltd [1923] AC 395, at p 409 Viscount Cove LC said:

    If this be so, I think it follows that, unless it appears on the face of the award that the arbitrator has proceeded on principles which were wrong in law, his conclusions as to the construction of the deed must be accepted. No doubt an award may be set aside for an error of law appearing on the face of it; and no doubt a question of construction is (generally speaking) a question of law. But where a question of construction is the very thing referred for arbitration, then the decision of the arbitrator upon that point cannot be set aside by the court only because the court would itself have come to a different conclusion. If it appears by the award that the arbitrator has proceeded illegally - for instance, that he has decided on evidence which in law was not admissible or on principles of construction which the law does not countenance, then there is error in law which may be ground for setting aside the award; but the mere dissent of the court from the arbitrator's conclusion on construction is not enough for that purpose.

51. At p 416, Lord Parmoor said:

    It has long been established, as a fundamental principle in the law of arbitration, that, so long as an arbitrator acts within his jurisdiction, and without fraud, or misconduct, an award cannot be set aside by a court, unless there is an error in law which appears on the face of the award, or in some document so closely connected therewith that it must be regarded as part of his award, or unless the umpire states that he has made a mistake of law or fact, leaving it to the court to review his position.

52. At p 421, Lord Trevethin said:

    If your Lordships should be of opinion that the award is bad in law upon its face, it should be set aside, for this is not in my view a submission to arbitration of such a nature that though the law be bad upon the face of the award, the decision cannot be questioned. That happens only when the submission is of a specific question of law, and is such that it can be fairly construed to show that the parties intended to give up their rights to resort to the King's Courts, and in lieu thereof to submit that question to the decision of a tribunal of their own.

53. In the Privy Council case of Attorney General for Manitoba v Kelly [1922] 1 AC 268 at p 283 Lord Parmoor said:

    Where a question of law has not specifically been referred to an umpire, but is material in the decision of matters which have been referred to him, and he makes a mistake, apparent on the face of the award, an award can be set aside on the ground that it contains an error of law apparent on the face of the award, but no such issue arises in the present appeal.

54. In Desa Teck Guan Koko Sdn Bhd v Syarikat Hop Foh Hing [1994] 2 MLJ 246, the applicant's application to set aside an award was allowed on the grounds that the arbitrator had failed to consider all facts and circumstances of the case giving rise to the legal issues of whether or not the claimant had in fact lost their right to termination. It was held inter alia... the arbitrator had misdirected himself by failing to consider whether from the facts it could be inferred that the claimant had elected to keep the extraction agreement alive after its repudiation by the applicant (per curiam). If there is a mistake of law on the face of the award of an arbitrator, that makes the award bad, the courts can interfere and the award can be set aside, but if a specific question of law was submitted to an arbitrator for his decision, and he decides it, the fact that the decision was erroneous does not make the award bad on its face so as to permit its being set aside. On the basis of the above authorities the instant case fell within the ambit where there was a mistake of law on the face of the award of the arbitrators that made the award bad as the question of law became material despite no specific questions of law was referred to the arbitrators for their determination.

55. For the foregoing reasons it is clear that the arbitrators have erred in law and that the award is hereby set aside, that the applicant are entitled to their storage charges calculated from December 1, 1998 to date of disposal of the CPO amounting to RM84.000, that the proceeds of the sale from the disputed CPO which was sold by the applicant in mitigation, amounting to RM619,816.60 be remitted to the respondent and that the costs of and incidental to this application be taxed and paid by the respondent to the applicant forthwith. Accordingly, in view of my findings as stated above, the Saman Pemula No R2-24-74-99 dated November 23, 1999 in Encl (1) by Federal Flour Mills Bhd their application for leave to enforce the arbitrators' award is hereby dismissed with costs.

Att-Gen for Manitoba v Kelly [1922] 1 AC 268; Cammel Laird & Co v Manganese Bronze Co Ltd [1934] 1 All ER 1; Desa Teck Guan Koko Sdn Bhd v Sykt Hap Foh Hing [1994] 2 MLJ 246; FR Absalom Limited v Great Western (London) Garden Village Society Ltd [1933] AC 592; Government of Kelantan v Duff Development Co. Ltd [1923] AC 395; Hardwick Agricultural & Poultry Producers Association Ltd [1968] 1 Lloyd's LR 547; Hendry Kendall & Sons v William Lillico & Sons Ltd [1968] 2 All ER 44; Port Swettenham Authority v TW Wu & Co. (M) Sdn Bhd [1978] 2 MLJ 137; Seng Hin v Arathoon Sons Ltd [1968] 2 MLJ 123; Tresons Ltd v Stevenage Development Corporation [1963] 1 QB 37.

Legislations

Arbitration Act 1952: s.23, s.24(2)

Contracts Act 1950: s.104, s.105

Contracts (Malay States) Ordinance 1950: s.104, s.105

Rules of the High Court 1980: Ord.69 r 4

Sale of Goods Act 1957: s.16

United Kingdom

Sale of Goods Act 1893: s.14

Halsbury's Laws of England, 4th Edn, Vol 2

Originating Motion No R2-25-116-499

Kathryn Leong and Rohayu Abdul Ghani (LY Leong & Partners) for Applicant

DP Naban (Lee Hishamuddin) for Respondent

Originating Summons No R2-24-74-99

DP Naban (Lee Hishamuddin) for Applicant

Kathryn Leong and Rohayu Abdul Ghani (LY Leong & Partners) for Respondent

This decision is also reported at [2001] 1 AMR 825