This article first appeared in The Edge Financial Daily on July 6, 2018

KUALA LUMPUR: Tealive owner and franchiser Loob Holding Sdn Bhd, which is in a legal dispute with Chatime bubble tea stores’ principal La Kaffa International Co Ltd, is now appealing to the apex court to reverse a ruling granted to La Kaffa to stop Loob from operating a competing business against Chatime for two years. This came after the Court of Appeal dismissed Loob’s application for a stay of the court’s decision on granting the injunction applied for by La Kaffa.

“The company (Loob) has instructed its lawyers to file for leave to appeal to the Federal Court against the Court of Appeal’s decision given on June 27, 2018, and it has been informed that the application was filed yesterday (Wednesday). Its lawyers have been further instructed to make the necessary application to the Federal Court to maintain [the] status quo and the said application was filed earlier this morning (yesterday),” Loob said in a statement.

La Kaffa, on the other hand, lauded the Court of Appeal’s decision, saying the verdict reflects Malaysia’s justice system on a positive note and would strengthen the confidence of more international franchisers to build trade ties in the country. La Kaffa also said it was mindful of the impact the court’s decision will have on the livelihood of the employees and outlet owners who will be directly affected by the injunction order.

Therefore, Chatime Malaysia managing director Aliza Ali said “within the scope allowed by the relevant law”, the company would welcome the return of former Chatime franchisees and employees.

“Our decision to allow affected outlets to return and re-operate under Chatime was made with regard to the overwhelming request in light of the recent injunction granted by the court. Our doors are open to the employees and outlet owners who have found themselves in this precarious position today. They are our priority at the moment,” said Aliza in a statement.

In his written judgement yesterday, Court of Appeal Judge Datuk Dr Hamid Sultan Abu Backer said the stay was sought pending the disposal of Loob’s application for leave to appeal to the Federal Court against the Court of Appeal’s order.

However, he said Loob’s affidavit did not state if there was an application for leave to appeal to the Federal Court, which was “fatal” to Loob’s stay application as there were no proceedings pending in the Federal Court to grant the stay.

The dismissal was also on the grounds that Loob’s act of changing the name of Chatime to Tealive had breached its contractual obligations to La Kaffa under their franchise agreement, as well as the country’s franchise law. Nevertheless, Hamid said the dismissal yesterday would not bar Loob from seeking a stay in the Federal Court.