Arbitration
| Author | Lawrence BOO LLB (University of Singapore), LLM (National University of Singapore); FSIArb, FCIArb, FAMINZ, Chartered Arbitrator; Solicitor (England and Wales), Advocate and Solicitor (Singapore); Visiting Professor, School of Law, Wuhan University (China), Adjunct Professor, Faculty of Law, Bond University (Australia), Adjunct Associate Professor, Faculty of Law, National University of Singapore. |
| Date | 01 December 2007 |
| Citation | (2007) 8 SAL Ann Rev 37 |
| Published date | 01 December 2007 |
3.1 Arbitration, like an action in court, must be commenced within the time prescribed by statute or as contractually agreed to by the parties. Contractual time-bar may either bar the claim in its entirety or merely bar the right for a party to make a claim in arbitration. Where a contractual time limit bars only the right to proceed to arbitration, the parties may, nevertheless, proceed to litigate the dispute in the forum where jurisdiction can be established over the parties. The extent and ambit of the contractual time-bar must necessarily depend on the language of and the context in which the limitation provision is found.
3.2 In an arbitration to which the Arbitration Act (Cap 10, 2002 Rev Ed) (‘AA’) applies, the court may, on the ground that undue hardship may otherwise be caused, extend the contractual time limited for commencement of the arbitration: s 10 of the AA). Undue hardship means greater hardship than the circumstances warrant or hardship greater than that which, in justice, the applicant should be called upon to bear. The court may do so even though the time so fixed by agreement had expired. The case of Tay Eng Chuan v Ace Insurance Ltd[2007] SGHC 212 involves the consequences of failing to meet the contractual time set for commencing arbitration
3.3 The plaintiff in Tay Eng Chuan v Ace Insurance Ltd[2007] SGHC 212 had suffered injury to his left eye as a result of an accident that had occurred while carrying a wire mesh in his house on 12 November 2002. He subsequently submitted claims on his policies with several insurance companies including the defendant. Two of the insurers, AXA and UOI, disputed his claims and the disputes were referred to arbitration.
3.4 The plaintiff”s claim against the defendant was for the amount of $300,000 for the loss of sight in his left eye. The defendant admitted liability on 29 July 2003 and paid the plaintiff $3,300 for the 11 days of hospitalisation. The insurance policy issued by the defendant also provided benefits for ‘total loss of lens in one eye’ where 50% of the sum insured was payable. Similarly, for ‘total loss of sight in one eye’, 50% of the sum insured was payable. On 11 December 2003, the defendant paid the plaintiff $300,000 (being 50% of the sum insured and payable for the loss of lens in one eye). The plaintiff acknowledged receipt of a cheque for $300,000 from the defendant but wrote on the acknowledgment that he did not accept that the payment was in full and final settlement of the defendant”s liability under the insurance policy.
3.5 The plaintiff attended another medical examination by an eye specialist on order of the court obtained for the AXA arbitration. The medical report was received on 13 February 2004 which indicated that the plaintiff”s left eye could perceive light and hand movements. On 21 May 2004, the defendant replied that it was maintaining its position that the plaintiff had not suffered a total loss of sight in one eye within the meaning of the insurance policy. On 23 May 2004, the plaintiff proposed that the defendant reconsider the claim after the conclusion of the AXA arbitration and that, if necessary, the dispute be referred to arbitration thereafter. The defendant refused the proposal. The policy contained the following provision on arbitration and right of action:
7 Arbitration
If any dispute or difference arises between the Company and any of the parties hereto concerning any matter arising out of this Policy, such dispute or difference shall be referred to arbitration in accordance with the provisions of the Arbitration Act, Chapter 10 of Singapore and any statutory modification or re-enactment thereof then in force within three (3) months from the day such parties are unable to settle the differences amongst themselves.
3.6 Part 9, cl 3 (‘claims provisions’) states:
3 Terms and Conditions
The due observance and fulfilment of the terms, provisions and conditions of this Policy insofar as they relate to anything to be done or complied with by the Insured Person, the Policyholder and/or the Policy Payer shall be a condition precedent to the liability of the Company to make any payment under this Policy.
3.7 The defendant having rejected the claim on 21 May 2004, the plaintiff should have commenced arbitration within three months thereafter. While actively pursuing his claim against AXA and UOI in arbitration, the plaintiff took no steps on his claim against the defendant until November 2006 when he applied to the High Court for
an order that the time for commencing arbitration proceedings be extended to three months after the conclusion of the UOI arbitration. The application was dismissed by V K Rajah J (as he then was). The plaintiff then commenced this action to claim against the defendant for the loss of sight under the policy.
3.8 Tay Yong Kwang J dismissed the action holding that cl 7 obliged the plaintiff to commence the arbitration within three months of the dispute having arisen. Compliance with the arbitration clause was a condition precedent to establishing liability on the part of the defendant under Part 9, cl 3 of the insurance policy. As the right to arbitrate was extinguished by the contractual time limitation under cl 7, the plaintiff lost the basis for making a claim for payment under the policy. No alternative route by way of legal action in court was available to him.
3.9 The terms of many insurance policies do contain provisions for arbitration and the corresponding references to obtaining an arbitral award as a condition precedent to liability under the insurance contract. This decision illustrates that it is possible that an arbitration clause which bars only the right to arbitrate when read with other provisions in the contract may effectively extinguish a party”s cause of action altogether if not adhered to.
3.10 Under s 6 of the AA, the power to order a stay of court action and refer the parties to arbitration under the AA is a discretionary one. Before a court does so, the court must first be satisfied that an arbitration agreement exists that covers the subject matter in dispute before the court. Exclusive jurisdiction clauses and arbitration clauses co-existing in contracts are generally ill-advised as they are often inconsistent and engender doubts as to the actual intentions of the parties.
3.11 Similar difficulties would also confront parties who had entered into more than one related agreements with different dispute resolution mechanisms. In Econ Piling Pte Ltd v NCC International AB[2007] SGHC 17, the parties were joint-venture partners under a Joint Venture Agreement (‘the JVA’) dated 13 May 2002 and successfully bid for a construction project on tender by the Land Transport Authority. A year later, Econ faced financial difficulties and the parties entered into a further agreement dated 22 May 2003 (‘the Variation Agreement’) in order to restructure their commercial relationship in an attempt to secure the continued viability of the project. Econ”s financial difficulties
led to the appointment of an interim judicial manager who on 6 February 2004, informed NCC”s solicitors that Econ would not be continuing its participation in the project.
3.12 According to Econ, following discussions between the parties, a decision to dissolve the partnership was reached. However it appeared that NCC did not and was not going to sign the Deed of Resolution. Econ filed an Originating Summons No 694 of 2006 (‘OS 694/2006’) on 31 March 2006, seeking a declaration that the partnership had been dissolved or, in the alternative, an order to dissolve the partnership. NCC applied to stay the action. The assistant registrar granted the application. This decision was, however, reversed on appeal to Sundaresh Menon JC.
3.13 The court had to consider the two dispute resolution clauses, one contained in the JVA and the other in the Variation Agreement, namely:
JVA cl 22.5—
Any matter which cannot be resolved in the manner provided by the preceding Sub-clauses of this Clause 22, shall be finally settled by arbitration in accordance with the Rules of the Singapore International Arbitration Centre presently in force by one or more arbitrators appointed in accordance with the Rules.
Variation Agreement
Cl 11. In the event of any dispute or difference arising between the parties, they hereby agree:—
11.1 that the same shall be forthwith referred to the exclusive jurisdiction of the Singapore Court and shall be pursued with all expedition by the Referring Party…
3.14 NCC had argued that these two clauses could be reconciled in that disputes which had arisen from the JVA would be referred to arbitration and those that were covered by the Variation Agreement would be referred to litigation in the court. NCC also referred to cl 1.3(b) of the Variation Agreement in which it was noted that a party may refer a dispute arising from the decisions on the composition of the management board or the executive committee to arbitration under cl 22 of the JVA.
3.15 In the court”s view, however, in the subsequent Variation Agreement, the parties had decided to have all disputes arising from the JVA as varied by the Variation Agreement to be resolved by the Singapore courts and not to arbitration. The learned judicial commissioner held that the inconsistency between the dispute resolution clauses in the JVA and the Variation Agreement would deem that cl 11.1 in the latter had superseded cl 22.5 of the JVA. The court
also disagreed with the suggestion that the reference in cl 1.3(b) to arbitration under cl 22 of the JVA evidenced that the parties had intended to retain the arbitral process in cl 22 for all disputes under the JVA. His Honour took the view that, at its best, cl 1.3(b) would only preserve for...
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