KUALA LUMPUR (Nov 3): Mitrajaya Holdings Bhd's subsidiary Pembinaan Mitrajaya Sdn Bhd and Singapore-listed Raffles Education Corp Ltd's wholly-owned subsidiary Raffles K12 Sdn Bhd have commenced arbitration proceedings against each other at the Asian International Arbitration Centre (AIAC) in Malaysia to seek mediation in a dispute involving Pembinaan Mitrajaya’s role as the contractor for the construction of the Raffles American School within the Nusajaya enclave in Johor Bahru, Johor.

Raffles Education said in a Singapore Exchange (SGX) filing on Wednesday that the arbitration relates to, among others, monetary claims arising from the alleged non-conforming, defective and incomplete works by Pembinaan Mitrajaya as contractor for the construction of the Raffles American School at Lot 189155 in Nusajaya.

"Based on the latest claims and counterclaims filed by Raffles K12 on March 2, 2021, Raffles K12 is claiming for an aggregate amount of approximately RM89.30 million (which includes approximately RM81.33 million in losses and damages to remedy the non-conforming and defective works, to complete the outstanding work, and for liquidated damages). 

"Relatedly and based on the latest claims and counterclaims filed by (Pembinaan) Mitrajaya on March 30, 2021, Mitrajaya is claiming for an aggregate amount of approximately RM64.91 million (which includes approximately RM57.43 million in alleged undervaluation/under-certification of works done and alleged loss and expenses suffered due to the purported prolongation period under the contract),” Raffles Education said.

At the time of writing, it is however unclear why Raffles Education had only announced the Pembinaan Mitrajaya-Raffles K12 arbitration on Wednesday (Nov 3) when the Raffles American School construction dispute is said to date back to March 2021, when Pembinaan Mitrajaya and Raffles K12 initiated monetary claims against each other.

In the SGX filing, Raffles Education did not specify the commencement date of the arbitration at the AIAC along Jalan Sultan Hishamuddin here.

Meanwhile, Bursa Malaysia-listed Mitrajaya Holdings had not made an announcement to the bourse regulator on the arbitration.

According to SGX filing, Raffles Education and Raffles K12 have sought legal advice from the group's Malaysian lawyer and have been advised that Raffles K12 has a reasonably good prospect of success in the arbitration under which Raffles K12’s recovery of its claims and counterclaims is likely to "exceed and extinguish the claims and counterclaims by (Pembinaan) Mitrajaya". 

"In this regard, the company (Raffles Education) would highlight that based on the original contracts, in each case, entered into between Raffles K12 and (Pembinaan) Mitrajaya, the outstanding amount that remains unpaid from Raffles K12 to (Pembinaan) Mitrajaya amounts only to approximately RM6 million, which accounts for less than 10% of the total amount sought by (Pembinaan) Mitrajaya in the counterclaims. 

"The company (Raffles Education) and Raffles K12 intend to take all necessary steps to vigorously pursue the various claims by and against Raffles K12 pursuant to the arbitration proceedings. The arbitration proceedings are ongoing and the company will make further announcements as and when there are material developments on the same,” Raffles Education said.

Raffles Education said it is disclosing the arbitration to shareholders of the company for greater transparency on material legal proceedings undertaken by and against the company in view of the current circumstances.

Meanwhile, Mitrajaya Holdings claimed on its website that the company, through its principal subsidiary Pembinaan Mitrajaya, has created for itself an enviable track record of successful projects in construction and civil engineering related fields. 

According to Mitrajaya Holdings, the group has played a significant role in major Malaysian projects including the Kuala Lumpur International Airport and East Coast Economic Region.

“Mitrajaya (Holdings) has long been a major player in helping Malaysia become a nation with modern infrastructure, as well as providing quality living and working environments. Mitrajaya (Holdings) is now a multi-national conglomerate with businesses in a diverse range of industries, among them, construction, property development and international projects,”  Mitrajaya Holdings said.

At Bursa on Wednesday, Mitrajaya Holdings shares were traded unchanged at 25.5 sen for a market value of about RM213.22 million.

Mitrajaya Holdings’ latest-reported number of issued shares stood at 836.15 million, according to the company’s Bursa filing on Oct 11, 2021.