Can you change the arbitration rules after a dispute starts?

A company may reserve the right to amend its standard terms from time to time. But can it use that power to change how an existing dispute must be resolved, after the other party has already gone to court?

This question arose in Extra Excel (M) Sdn Bhd v Quek Peck Keow, where the Court of Appeal considered a company’s attempt to rely on an amended arbitration clause against one of its distributors. The written grounds are dated 1 September 2026.

The change concerned the parties’ contractual arbitration clause: who could invoke it and which disputes it could cover. It was not a change to an arbitration institution’s procedural rules.

What happened?

Quek was appointed a distributor of Extra Excel’s health products in August 2011. Their relationship was governed by the company’s standard policies and procedures, which included an arbitration clause and a provision allowing the company to amend the rulebook.

On 11 March 2020, the company suspended her distributorship. She challenged the suspension in the Johor Bahru Sessions Court on 16 December 2020, seeking declarations that it was invalid, reinstatement and damages.

The company applied to pause those court proceedings so that the dispute could proceed to arbitration. It relied on the November 2019 version of its rulebook, which was in force when the suspension occurred.

The Sessions Court rejected that first application. Although the High Court reversed the decision, the Court of Appeal restored the Sessions Court’s order on 20 April 2022, holding the arbitration clause inoperative because of its unlawful 150-day time bar. That earlier appellate decision was not appealed further.

Meanwhile, in June 2021, the company had amended the arbitration clause. It removed the 150-day time bar and expressly added the company as a party entitled to bring disputes to arbitration. In November 2021, it appointed a sole arbitrator and issued a notice of arbitration. Quek participated under protest and disputed the arbitrator’s jurisdiction.

After the April 2022 decision, the company made a second application to pause the court proceedings, this time relying on the amended clause. Quek also sought a declaration that no valid arbitration agreement existed and an injunction restraining the arbitration. The dispute over the company’s ability to compel arbitration eventually returned to the Court of Appeal.

What did the Court of Appeal decide?

The Court dismissed the two appeals addressed in its reasons. The refusal to pause the court proceedings and the order restraining the arbitration remained in place.

First, the Court examined the wording of the original clause. It found that the November 2019 version did not give the company a contractual right to commence arbitration against a distributor. The company had drafted the standard terms, and any genuine ambiguity on that point was to be interpreted against it.

Second, the June 2021 amendment could not supply that missing right retrospectively for this dispute. The suspension had already occurred and Quek had already commenced court proceedings before the amendment was made.

The company’s general power to amend its rulebook did not amount to Quek’s agreement to remove this particular dispute from the court. The Court distinguished a power to change the terms governing an ongoing business relationship from an agreement to submit an existing dispute to arbitration.

Parties can agree to arbitrate after a dispute has arisen, even if litigation has started. However, that requires their agreement. One party could not achieve the same result here simply by rewriting its own standard terms.

Did the arbitrator have to decide first?

The company argued that the question should be left to the arbitrator, who has power under section 18 of the Arbitration Act 2005 to rule on the tribunal’s jurisdiction.

The Court held that this did not remove its own responsibility under section 10(1) to examine whether a valid and operative arbitration agreement covered the dispute. Here, the relevant documents and chronology were undisputed, the earlier clause had already been considered by the courts, and final relief restraining the arbitration was also sought.

This does not mean every challenge to an arbitration clause requires a full court determination before arbitration can proceed. The Court preserved the ordinarily limited approach to an initial application to pause proceedings in favour of arbitration, while explaining why this case justified a final determination.

The Court also declined to endorse the High Court’s finding that the company acted in subjective bad faith. Its conclusion rested on the wording and application of the clause. It did not decide whether the unilateral appointment of the arbitrator or the clause’s restriction on damages was independently invalid.

What does this mean for businesses?

The practical point is that an amendment power should not be treated as a way to repair a dispute-resolution clause for a dispute already underway.

For companies using standard distributor, customer or service agreements, check who may invoke arbitration, what disputes the clause covers and how amendments take effect. These details can determine whether an arbitration clause actually serves its intended purpose.

Once a dispute arises, preserve the version of the agreement then in force, together with amendment notices and relevant correspondence. A later version of the terms may not govern that dispute merely because it is the company’s current version.

If both parties wish to move an existing court dispute into arbitration, record their agreement clearly and identify the dispute it covers. This decision shows why a general right to update a rulebook cannot simply be assumed to replace that consent.

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