Pengerang Refining Company Sdn Bhd v Sinopec Engineering (Group) Co Ltd & Anor

Appellant(s): Pengerang Refining Company Sdn Bhd

Respondent(s):

• Sinopec Engineering (Group) Co Ltd
• Sinopec Engineering Group Malaysia Sdn Bhd

• YA Dato' Azmi Bin Ariffin
• YA Datuk Seri Mohd Firuz Bin Jaffril
• YA Tuan Ong Chee Kwan

• The appellant and the respondents entered into an Engineering, Procurement, Construction, and Commissioning (EPCC) Contract, for which the respondents provided a Performance Bond.
• Following a dispute, the respondents commenced arbitration and successfully obtained an interim injunction from the High Court to restrain the appellant from calling on the Performance Bond.
• The appellant subsequently appealed two High Court decisions: the grant of the interim injunction (R7) and the dismissal of its application to set aside the initial ex-parte injunction (R6).

• Whether the appellant's demand on the Performance Bond was unconscionable, thereby justifying the High Court's grant of an interim injunction.
• Whether the High Court erred in granting injunctive relief, particularly considering contractual provisions (Article 5.9) and the potential for interference with the arbitral tribunal's jurisdiction.
• Whether Article 5.9 of the Conditions of Contract, which might restrict injunctive relief, was void under Section 29 of the Contracts Act 1950 or unenforceable under Section 11 of the Arbitration Act 2005.

• The Court of Appeal affirmed that a demand on a performance bond is unconscionable if made after the works are completed, citing established legal precedents.
• The Court found the appellant's demand on the Performance Bond to be unconscionable, noting that the facility was completed and operational, and the appellant had deliberately withheld necessary certifications while earning revenue from the facility.
• The Court further held that the respondents had made full and frank disclosure to the High Court when obtaining the ex-parte injunction, leading to the dismissal of both appeals with costs.