Arbitration
| Citation | (2003) 4 SAL Ann Rev 48 |
| Author | LAWRENCE G S BOO LLB, LLM (National University of Singapore), FSI Arb, FCI Arb, FAMINZ, Chartered Arbitrator, Solicitor (England and Wales), Advocate and Solicitor (Singapore) |
| Published date | 01 December 2003 |
| Date | 01 December 2003 |
3.1 Actions commenced in a Singapore court in breach of an arbitration agreement may be stayed on the application of a party seeking to proceed with the agreed modality. However the Arbitration Act (Cap 10, 2002 Rev Ed) and the International Arbitration Act (Cap 143A, 2002 Rev Ed) have specific procedural guidelines as to when such applications would be considered. The window specified for the making of such an application is after the entry of appearance but before the delivery of any pleadings or taking any other ‘steps in the proceedings’. The power of the court to grant stay of court proceedings is discretionary in respect of a domestic arbitration agreement whereas in the case of an international arbitration agreement, the court is mandated to order a stay.
3.2 The filing of pleadings and taking of a ‘step in the proceedings’ prior to filing the application for stay are procedural impediments to the application. A step taken in the proceedings would nullify the party”s right to seek a stay under the statutory provision and is not merely a matter for the exercise of the court”s discretion.
3.3 The case of Chong Long Hak Kee Construction Trading Co v IEC Global Pte Ltd[2003] 4 SLR 499, illustrates this point. The plaintiff, which was the defendant”s sub-contractor, had claimed against the defendant for some $400,000 for work done under the sub-contract. Under pressure of a 48-hour notice to file its defence, the defendant filed the defence and counterclaim without prejudice to its right to file an application to stay proceedings on the basis of the arbitration clause under the contract. At the same time it filed the application for stay. On 4 July 2003 the assistant registrar dismissed the application on the ground that the defendant had taken a step in the proceedings. On 8 July 2003, the defendant served a 48-hour notice for the plaintiff to file its defence to the counterclaim. The defence to counterclaim was accordingly filed and served. The defendant subsequently appealed against the assistant registrar”s decision.
3.4 Tay Yong Kwang J held that s 6(1) of the Arbitration Act required an application for stay to be filed before the time for serving a defence had lapsed. The court however accepted that the defendant, while filing the defence under a reservation, managed to preserve its right to apply for a stay. What was fatal to the defendant”s application was the filing of the counterclaim compounded by its own 48-hour call for the plaintiff to file its defence to the same. The learned judge took the view that the 48-hour demand by the defendant in the period between the assistant registrar”s decision and the appeal put beyond doubt its intention to pursue the counterclaim in the arbitration and such demand, the court held (at [14]), was ‘clearly a step in the proceedings within the meaning of s 6(1) Arbitration Act and thereby nullified the defendant”s right to apply for a stay’.
3.5 It should be noted that s 6(1) of the Arbitration Act requires that a party applying for a stay must do so ‘before delivering any pleading or taking any other step in the proceedings’ [emphasis added]. There is no specific reference to the filing of pleadings and the taking of other steps in the proceedings after the application for stay has been made. Arguably in an arbitration under the Arbitration Act, where the grant of stay is discretionary, the court could take into account such a step as an indication that the applicant has failed to show that it ‘still remains, ready and willing to do all things necessary to the proper conduct of the arbitration’ when exercising its discretion to refuse a stay.
3.6 The procedure relating to summary judgment applications under the Rules of Court (Cap 322, R 5, 1997 Rev Ed) was changed in December 2002 requiring the plaintiff to wait for the defence to be filed before making the application. The amended O 14 r 1 of the Rules of Court reads as follows:
Where a statement of claim has been served on a defendant and that defendant has served a defence to the statement of claim, the plaintiff may, on the ground that the defendant has no defence to a claim included in the writ, or to a particular part of such a claim, or has no defence to such a claim or part except as to the amount of any damages claimed, apply to the Court for judgment against that defendant. [amendment in italics]
The amendment is probably intended to enable the court hearing a summary judgment application to know the defence that the defendant wishes to put forward in any given case. This better enables the court to ascertain summarily whether the defendant has in fact a credible defence. This change has however caused some procedural hiccups where the contracts involved contain an arbitration clause and where the defendants wish to apply for a stay of the action in favour of arbitration. Under s 6(1) of the Arbitration Act,
such an application is to be made ‘before delivering any pleading or taking any other step in the proceedings’.
3.7 The amended procedure under O 14 r 1 which requires the filing of the defence by the defendant before a summary judgment application can be filed will mean that a plaintiff may not be able to apply for summary judgment if the defendant opts to apply to stay the action on the basis of the existence of an arbitration agreement, which it would and must do before the service of its defence. The defendant would normally also apply to extend time to file its defence until the final determination of its stay application. If the stay application succeeds, the plaintiff cannot apply for summary judgment. If the stay application fails, the defendant will then be required to file its defence and thereafter the plaintiff may apply under O 14 for summary judgment.
3.8 Singapore courts have developed over the years a practice to hear O 14 summary applications together with applications for stay. This new procedure requiring the filing of the defence before making a summary application will no doubt disturb this practice.
3.9 This procedural hiccup surfaced in Chinese Chamber Realty Pte Ltd v Samsung Corp[2003] 3 SLR 656, where the developer of a 30-storey office building claimed against the defendant, the main contractor, under a delay certificate issued by the project architect. Upon filing the suit, the plaintiff sought leave to apply for summary judgment in respect of the amount due to it under the delay certificate before the defendant”s service of its defence. The defendant, on the other hand, applied for a stay in favour of arbitration and for an extension of time to serve its defence. The assistant registrar granted the plaintiff leave to file the summary judgment application without the defence having been filed and also granted the defendant the time extension for service of the defence. The defendant appealed.
3.10 On appeal, S Rajendran J took the view that the assistant registrar could not properly invoke the inherent jurisdiction of the court to override the clear words of O 14 r 1 and enable the plaintiff to make the O 14 application without the defendant filing its defence. He directed that the defendant to file its defence but deemed that its ‘filing of its defence, its filing of affidavits, and its participation in the O 14 proceedings shall not be construed as steps in the proceedings’ (at [26]) and ordered that the plaintiff”s summary application be heard together with the defendant”s stay application.
3.11...
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