Arbitration

Citation(2005) 6 SAL Ann Rev 49
AuthorLawrence BOO LLB (University of Singapore), LLM (National University of Singapore); FSIArb, FCIArb, FAMINZ, Chartered Arbitrator; Solicitor (England and Wales), Advocate and Solicitor (Singapore).
Publication Date01 December 2005
Date01 December 2005
Enforcement of the arbitration agreement
Stay of court proceedings — international and domestic arbitration —‘no dispute referable to arbitration’

3.1 An arbitration agreement is irrevocable and any action commenced in breach of the agreement may be stayed. Stay of such court proceedings is mandated in an arbitration considered as ‘international’ under the International Arbitration Act (Cap 143A, 2002 Rev Ed) (‘IAA’). Where, however, the arbitration agreement falls outside the definition of ‘international’, the court has the discretion to grant or refuse stay under the domestic Arbitration Act (Cap 10, 2002 Rev Ed) (‘AA’). The question of whether a dispute exists has often been canvassed as one of the starting blocks for a party to seek a stay in favour of arbitration. For many years, Singapore courts have treated this question as applicable to both domestic and international arbitration agreements: see Sintal Enterprise Pte Ltd v Multiplex Constructions Pty Ltd[2004] 4 SLR 841; MAE Engineering Ltd v Dragages Singapore Pte Ltd[2002] 3 SLR 45; JDC Corporation v Lightweight Concrete Pte Ltd[1999] 1 SLR 615; Kwan Im Tong Chinese Temple v Fong Choon Hung Construction Pte Ltd[1998] 2 SLR 137; Batshita International (Pte) Ltd v Lim Eng Hock Peter[1997] 1 SLR 241; Aurum Building Services (Pte) Ltd v Greatearth Construction Pte Ltd[1994] 3 SLR 330; and Uni-Navigation Pte Ltd v Wei Loong Shipping Pte Ltd[1993] 1 SLR 876.

3.2 A more enlightened approach appears to have been taken in the decision of Woo Bih Li J in Dalian Hualiang Enterprise Group Co Ltd v Louis Dreyfus Asia Pte Ltd[2005] 4 SLR 646. There, Dalian Hualiang had first contracted to buy from the defendants 55,000mt of soya beans. This contract was subsequently assigned to the second plaintiff, Dalian Jinshi. The contract contained a clause requiring ‘any dispute [arising] between the contracting parties to which no agreement can be reached … [to] be settled by arbitration, which shall take place in London as per FOSFA [Federation of Oils, Seeds and Fats Associations]’. On the basis of this, the defendant applied for a stay of proceedings under s 6 of the IAA. The defendant also sought to set off a claim under a different contract against the plaintiffs”

claims. The plaintiffs resisted the application on several grounds including that there was no dispute capable of arbitration as the debt was admitted by the defendant and that the set-off fell outside the scope of the arbitration clause in the contract. The court found that there was clear admission by the defendant of the debt but nevertheless proceeded to deal with the important question of whether a court could examine the existence of a dispute to be referred to arbitration.

3.3 Singapore courts had hitherto laboured under the impression that the stay provisions under the Singapore legislation were similar to the English Arbitration Act 1950 (c 27). In fact, English courts were able to consider in each case whether there was a dispute before allowing a stay application because of the specific extending words in s 1(1) of the English Arbitration Act 1950: ‘or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred’. These extending words have never been in the Singapore statute. In England, the Arbitration Act 1996 (c 23) has since removed these extending words and with that, English courts have since taken the view that whether or not there is a dispute is a matter to be considered by the arbitral tribunal and not the courts: see s 9 of the English Arbitration Act 1996; Halki Shipping Corporation v Sopex Oils Ltd[1998] 1 Lloyd”s Rep 465; Lord Saville, ‘The Arbitration Act 1996’[1997] LMCLQ 502. This difference has also been pointed out several times in Halsbury”s Laws of Singapore vol 2 (Butterworths Asia, 1998) at para 20.042 and (LexisNexis, 2003 reissue), at para 20.043; and ‘Arbitration’(2004) 5 SAL Ann Rev 53 at paras 3.19—3.22.

3.4 Woo J observed and very rightly clarified that the position in Singapore in relation to international arbitration has indeed been different from the English position prior to 1996. He explained (at [75]) that as regards international arbitration in Singapore:

[O]nce there is a dispute, a stay must be ordered unless the arbitration agreement is null and void, inoperative or incapable of being performed. The court is not to consider if there is in fact a dispute or whether there is a genuine dispute.

The judge pointed out that the more difficult question was who should determine if a dispute existed. This, he held, could be properly decided by the court without necessarily trespassing into the examination of the validity or merits of the dispute. His Honour illustrated as follows (at [75]):

For example, is there a dispute when the defendant simply refuses to pay or to admit the claim or remains silent? Although there have been statements

that suggest that such conduct is sufficient to constitute a dispute I do not share that view. A defendant may refuse to pay or to admit a debt or remain silent because he has no money to pay or simply because he is intransigent. To my mind that is not a dispute. It is different if the defendant at least makes a positive assertion that he is disputing the claim. If he is prepared to and does assert that, then there is a dispute even though it can be easily demonstrated that he is wrong. However, an admission by a defendant will, generally speaking, be contrary to a dispute but not every admission will necessarily avoid a stay order.

3.5 Woo J also distinguished the approach that could be taken with regard to cases coming within the AA. In those cases, he said (at [35]) that the court retains a residual power under s 7(2) with the words ‘if it is satisfied that there is no sufficient reason’, to ascertain ‘if in fact there is a dispute’ before granting a stay, citing Kwan Im Tong Chinese Temple v Fong Choon Hung Construction Pte Ltd (supra para 3.1) and Uni-Navigation Pte Ltd v Wei Loong Shipping Pte Ltd (supra para 3.1) in support.

3.6 This decision signifies a departure from the long-held belief by some judges that a court can in all cases examine the validity of the defence such as whether there is ‘a genuine dispute’, or ‘no real dispute’, or ‘a case to which there is no defence’, or ‘there is no arguable defence’, or whether it can be said that the claim ‘is indisputably due’ as if it is an application for summary judgment. It is instructive of the correct approach that should be taken in relation to applications for stay under the IAA.

3.7 The court”s view in relation to applications under s 6 of the AA for domestic cases is further supported by the Court of Appeal decision in Multiplex Constructions Pty Ltd v Sintal Enterprise Pte Ltd[2005] 2 SLR 530 where Judith Prakash J reiterated that if there was no real dispute between the parties, then generally, there would not be sufficient reason to allow a stay of court proceedings as there would be nothing to refer to arbitration. There, Sintal, the subcontractor, sued Multiplex over four interim certificates for payment in respect of marble supplied. Although Multiplex had received payment for these, it did not make payment to Sintal as it claimed to set off losses it had allegedly sustained by reason of Sintal”s delay under the subcontract. The judge in chambers refused to grant a stay, reasoning that the contract provided damages to be claimable only if the employer had imposed damages, whether general or liquidated. Multiplex appealed. The Court of Appeal allowed the appeal in part, taking the view that it was arguable that there could still be a right to claim general damages for the delay, and as such, the matter must go to arbitration. It, however, only granted a stay in respect

of the claim in which the notice for set-off complied with the procedural requirements of the contract.

3.8 It is clear from the approach taken by the Court of Appeal that in dealing with a matter under the AA, a Singapore court would go beyond ascertaining whether there was a dispute, to the extent of weighing if there was an arguable case or plausible defence. The court would, as was done here, even go to the extent of considering if the party seeking to rely on a contractual right had actually complied with the procedural requirements set out in the contract.

Arbitration agreements and non-parties

3.9 An arbitration agreement, as with any agreement, is binding only as between the parties. A stranger to the agreement cannot claim any right to arbitrate under the agreement. In the same way, parties cannot claim to include a non-party to the arbitration. Unlike court proceedings where the Rules of Court may compel a third party to participate in the proceedings if the latter is within the court”s jurisdiction, an arbitrator cannot order a third party to be joined or consolidate arbitrations without the consent and agreement of all the parties.

3.10 In Yee Hong Pte Ltd v Tan Chye Hee Andrew[2005] 4 SLR 398, the plaintiff, the main contractor of a condominium project, claimed against the defendant, the architect, in tort for breach of duty to act fairly and impartially in administering the main contract between the contractor and the employer. The employer was added by the defendant as a third party in the proceedings. The contractor alleged that the architect”s issuance of a delay certificate had deprived it of extensions of time which the architect knew the contractor was entitled to. Following the joinder of the employer as third party, the latter applied to stay the proceedings. The relationships between the parties were regulated by two separate contracts: the main contract between the contractor and the employer, and the service contract between the employer and the architect. In each of these, there were arbitration clauses. An earlier action commenced by the contractor against the employer was stayed in favour...

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