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    Below is Proton Explanation Press Release about some issue between PROTON, PROTON AUTOMOBILE CHINA AND GOLDSTAR HEAVY INDUSTRIAL.


    We refer to the newspaper article published by THE STAR on 7 May 2009 titled “SUMMONS TO BE SERVED ON PROTON”.

    We note that the article carries comments by the lawyer for Goldstar Heavy Industrial Co Ltd [“Goldstar”], which is engaged in legal proceedings with Proton Automobiles (China) Ltd [“PAC”], a subsidiary of Perusahaan Otomobil Nasional Sdn. Bhd  [“Proton”].

    Goldstar’s assertions are totally contradicted by separate rulings of the arbitral tribunal and the Singapore High Court. Following a substantial hearing on jurisdiction which Goldstar participated in, the arbitral tribunal has on 5 May 2009 issued an award and comprehensively held that the disputes between PAC and Goldstar are properly decided by the arbitral process and not the Chinese courts. 

    In the circumstances, Goldstar’s comments are self-serving and disrespectful of the due legal process between PAC and Goldstar. Those comments also obscure the truth about the breakdown of the joint venture between PAC and Goldstar.

    The joint venture company never commenced business operations due to the failure of Goldstar to meet its contractual obligations including procuring the necessary governmental approvals for the joint venture company to manufacture passenger vehicles in the People’s Republic of China. The joint venture company had been expected to reach full production within 15 months from the incorporation of the joint venture company in the third quarter of 2002, and it was Goldstar’s contractual obligation to obtain the governmental approvals to achieve that purpose, but failed to do so for over 3 years. Some 6 years later, Goldstar is still talking about obtaining a passenger vehicle manufacturing licence but it has conspicuously failed to obtain any licence to date.

    The joint venture contract expressly provides for all disputes to be referred to arbitration and, in pursuance of the arbitration agreement, on 6 July 2007, PAC commenced arbitration proceedings in Singapore against Goldstar. 

    Goldstar has employed various tactics to frustrate and delay the arbitration proceedings. It has sought to ignore the clear terms of the arbitration agreement, and has attempted to challenge the arbitration on spurious grounds.  Indeed, Goldstar has had the temerity to concoct a document to say that the matter should not be arbitrated in Singapore but should instead be heard by the Chinese courts. It is telling that the alleged document was produced at the eleventh hour, months after the arbitration had commenced.

    On 9 July 2008, PAC obtained an anti-suit injunction in the Singapore High Court to restrain Goldstar from commencing or continuing any court proceedings in violation of the arbitration clause. Goldstar has not taken any steps to set aside the anti-suit injunction in the Singapore High Court.

    Despite the arbitration agreement and the Singapore High Court injunction, Goldstar purports to have filed its “court action” in the Intermediate People’s Court of Dongguan City, Guangdong Province in November 2008. It is also interesting that Goldstar is, until now, still saying that “a summons will be served”, but has yet to serve any court papers on PAC. 

    Goldstar’s purported commencement of court proceedings in the Intermediate People’s Court of Dongguan City is in direct contravention of the arbitration agreement, and the anti-suit injunction.

    The pending arbitration is the agreed and proper legal process for the resolution of disputes between PAC and Goldstar. According to internationally-recognized principles, the arbitral tribunal will fully and finally decide all the merits of the case.

    In light of the arbitral tribunal’s ruling that it has jurisdiction to decide the matters in dispute between PAC and Goldstar, it is clear that Goldstar’s extravagant claim of confidence is erroneous and wholly misplaced. 

    Indeed, we are confident that PAC will ultimately prevail on all issues in the arbitration.

    If and when any court papers for the purported Chinese court proceedings are served on PAC, it will present the clear and cogent evidence that the jurisdiction for the matters in dispute properly lies in the arbitral tribunal.

    We also wish to correct several inaccuracies in the reporting of the purported joint venture with “Jianhua Youngman Automobile Manufacturing Co Ltd”.  PAC is not a party to that agreement. As at todate, Proton has entered into a few business transactions with Youngman Automobile Sales Co Ltd and its affiliates [“Youngman Group of Companies”] but none of the agreements for the said transactions is a joint venture agreement. All the agreements pertaining to the said business transactions have been lodged and/or approved by the relevant authorities in the People’s Republic of China.  

    In the circumstances, Proton’s agreement with Youngman is not in breach of the joint venture contract between PAC and Goldstar.

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