Raffles Education and Mitrajaya enter arbitration over Raffles American School construction disputes

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Raffles Education said Wednesday its wholly owned subsidiary Raffles K12 and Pembinaan Mitrajaya have entered arbitration proceedings against each other at the Asian International Arbitration Centre (AIAC) in Malaysia.

Raffles K12 is claiming Mitrajaya’s works as contractor for the Raffles American School were allegedly non-conforming, defective and incomplete and is seeking 89.3 million ringgit for losses and damages and other items, while Mitrajaya is claiming 64.91 million ringgit in alleged losses and expenses, Raffles Education said in a filing to SGX.

“The company and Raffles K12 have sought legal advice from Malaysian legal counsel, and have been advised that Raffles K12 has a reasonable good prospect of success in respect of the arbitration proceedings (viewed as a whole) and in particular, that Raffles K12’s likely recovery of its claims and counterclaims is likely to exceed and extinguish the claims and counterclaims by Mitrajaya,” Raffles Education said.

Raffles Education said the outstanding amount unpaid by Raffles K12 amounts to around 6 million ringgit.

In a filing to Bursa Malaysia, Mitrajaya Holdings, which wholly owns Pembinaan Mitrajaya, said it has commenced six adjudications against Raffles K12 under the Construction Industry Payment and Adjudication Act 2012, and in January 2019, obtained four adjudication decisions in its favor for 33.13 million ringgit.

But Raffles K12 failed to pay the adjudicated sum in the stipulated period, and subsequently, Raffles K12 issued a notice to set-off on alleged rectification of defective work and/or non-conformance works, according to Mitrajaya Holdings’ statement, which added those allegations had been previously dismissed in the adjudication proceedings.

Mitrajaya Holdings (PMSB) said that in March 2019 it summoned Raffles K12 to the Kuala Lumpur High Court to enforce the adjudication decision, which led to an agreement for Raffles K12 to pay 10 million ringgit and to move the disputes to arbitration.

“PMSB has obtained the views of its legal counsel who considers that PMSB has good prospects of success in defending against Raffles K12’s claim and succeeding in PMSB’s claims,” Mitrajaya Holdings said.

The hearings are set to begin in February 2022, the Malaysian company said.

Read Raffles Education’s filing to SGX and Mitrajaya Holdings’ filing to Bursa Malaysia.