Arbitration

Citation(2020) 21 SAL Ann Rev 101
Date01 December 2020
AuthorLawrence BOO LLB (University of Singapore), LLM (National University of Singapore); FSIArb; FCIArb; FAMINZ; Chartered Arbitrator; Solicitor (England and Wales); Advocate and Solicitor (Singapore); Adjunct Professor, Faculty of Law, National University of Singapore; Adjunct Professor, Faculty of Law, Bond University (Australia). Marcus LIEW LLB (Hons) (National University of Singapore); ACIArb; Advocate and Solicitor (Singapore); Tribunal Law Clerk, The Arbitration Chambers.
Publication Date01 December 2020

4.1 Despite the COVID-19 pandemic, the international arbitration scene in 2020 continued to grow and the Singapore courts saw more arbitration-related cases than ever. The vast majority concerned applications to set aside awards under the International Arbitration Act1 (“IAA”), with Singapore being the seat of the arbitration. There were three applications related to the stay of court proceedings and one application for an anti-suit injunction in favour of arbitration. One application concerned an appeal under the Arbitration Act2 (“AA”), and another interesting decision was an application for declaratory relief concerning the obligation of confidentiality in international investment treaty arbitration. The judicial attitude of the Singapore courts continues to be pro-arbitration, with repeated emphasis on minimal curial intervention and the high threshold required to set aside or refuse enforcement of an award. Nevertheless, in 2020, the Singapore courts set aside one award, set aside in part another award, and remitted an issue in yet another award back to the tribunal for consideration, demonstrating that Singapore courts were not afraid to intervene in the right circumstances.

I. Stay of court proceedings
A. Case management stay

4.2 The court's power to order a stay of proceedings in international cases involving arbitration clauses is statutorily enshrined in s 6 of the IAA, which mandates the court to stay the proceedings on the condition that “the proceedings relate to [a matter which is the subject of the

agreement], unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed”.

4.3 Additionally, the court can, in its discretion, grant a stay in favour of arbitration on the basis of the court's “effective case management power” in the fair and efficient administration of justice. This approach was first adopted by the Court of Appeal case in Tomolugen Holdings Ltd v Silica Investors Ltd3 (“Tomolugen”), which spawned similar applications seeking a stay of proceedings, as evidenced by many decisions in the years following.

4.4 In PUBG Corp v Garena International I Pte Ltd,4 the appellant, PUBG Corp, commenced court proceedings alleging the infringement of its intellectual property rights. These proceedings were subsequently suspended, and parties allegedly came to a settlement agreement (“SA”). The respondent contended there was a valid SA and commenced arbitration under the arbitration agreement in the SA to determine the validity of the SA and whether it had been breached. The respondent therefore applied for a case management stay of the court proceedings pending the resolution of the issues on arbitration. The High Court granted the stay subject to a six-month time limit, which decision was appealed.

4.5 The Court of Appeal, in dismissing the appeal, affirmed their decision in Tomolugen and emphasised that the grant of a stay of proceedings on case management grounds was a discretionary power, taking into consideration the unique factual matrix of each case. Specifically, the grant of a case management stay of court proceedings, where a related arbitration was ongoing, was a balance between three imperatives: (a) preserving the plaintiff's right to choose whom to sue and where; (b) upholding the agreement to arbitrate; and (c) preventing abuse of process. Additionally, where related issues involving some or all of the same parties were also subject to an arbitration agreement, such discretion had to be exercised with due sensitivity and regard to the facts, particularly the nature of the overlapping issues.

4.6 The Court of Appeal took the view that the appropriate forum to resolve the validity of the settlement would be the arbitral tribunal as a court, when presented with what appears on its face to be a valid arbitration agreement and a dispute that appears to fall within the scope of that agreement, is bound not to ignore that agreement. Instead, it should allow any such dispute to be determined by the arbitral tribunal,

given the principles of judicial non-intervention in arbitral proceedings and kompetenz-kompetenz. This analysis is not affected by the fact that this case concerned a case management stay rather than a mandatory stay under s 6 of the IAA.

4.7 The Court of Appeal also found that while, superficially, the disputes concern distinct issues (viz, the proceedings in court did not concern the settlement and the arbitration did not concern the infringement claims), the existence or otherwise of a valid settlement must be resolved first. If there was indeed a valid settlement agreement, this would have the effect of compromising the underlying claims and the proceedings would thereby be unnecessary. If there was no valid settlement, only then would court proceedings continue.

4.8 This decision reaffirms the Singapore court's consistent stance that where there is prima facie an arbitration agreement, whether the same stands or falls should first be determined by the tribunal. Notably, the Court of Appeal made clear that where an arbitration agreement came into existence after the commencement of court proceedings (even if its validity was disputed), the court would not strictly be exercising the power to stay under s 6 of the IAA (where the action is commenced in the face of a pre-existing arbitration agreement) but could exercise its inherent case management powers to grant a stay.

4.9 Carlsberg Breweries A/S v CSAPL (Singapore) Holdings Pte Ltd5 likewise concerned an application for a stay under the court's inherent case management powers. The plaintiff commenced the suit seeking repayment of a loan made under an amended loan agreement with the defendant. The amended loan agreement was interconnected with, inter alia, an amended shareholders' agreement containing an arbitration clause and a deed of undertaking. The plaintiff demanded repayment from the defendant's alleged breaches of cll 2(a) and 2(c) of the deed of undertaking, some of which were allegedly constituted by breaches of the amended shareholders' agreement. Consequently, the defendant applied for the suit to be stayed in its entirety, pending the outcome of an ongoing Singapore International Arbitration Centre (“SIAC”) arbitration between them. Both parties agreed that the part of the plaintiff's claim which proceeded on the basis of a breach of cl 2(a) of the deed of undertaking, and which in turn depended upon alleged breaches of the amended shareholders' agreement, should be stayed. However, the plaintiff argued that its claim in respect of a breach of cl 2(c) of the deed of undertaking ought to proceed, as the cl 2(c) issues were independent of any alleged breach of the amended shareholders' agreement.

4.10 The SICC ordered a partial stay for all matters except the cl 2(c) issues. Jeremy Lionel Cooke IJ found that, in the absence of an agreement that the cl 2(c) issues be referred to arbitration, the court's position was that unless there was good reason to consider that the arbitrators' findings would be determinative of the cl 2(c) issues, there could be no good reason for a stay. The court held that the interests of justice would be best served by the court dealing with the cl 2(c) issues expeditiously, which would have the possibility of considerable savings in time and costs. This stemmed from the court's finding that the cl 2(c) issues were discrete and capable of determination by the court, and that there was a likelihood that the cl 2(c) issues could be disposed of earlier as compared to protracted arbitration proceedings. In its view, the cl 2(c) issues had the potential to be determinative of the entire dispute and would probably have to be determined in the court at some stage, and it therefore made sense for them to be dealt with as expeditiously as possible rather than for the suit to be wholly stayed pending the outcome of the arbitration.

4.11 While this decision appears on its face to track the principle set out in earlier decisions that a case management stay is discretionary, the court nevertheless carved out the cl 2(c) issues on the basis that it did not arise out of the amended shareholders' agreement. Although it accepted that there was interconnection in the parties' legal relationships and dealings, the court nevertheless felt that a determination on cl 2(c) could be decided in a shorter time than the “protracted arbitration”. It is unclear how the court came to its view that the cl 2(c) issues could be determinative of the entire dispute and how the judge thought the arbitration would be “protracted”.

B. Conflicting dispute resolution clauses

4.12 Parties may occasionally enter into contractual arrangements with clumsily drafted provisions such as the same contract providing for a choice of jurisdiction and an arbitration clause, or related contracts between related parties containing arbitration clauses providing for different seats of arbitration. As such, it is not unusual for such cut-and—paste policies to give rise to issues of conflicting intentions. Such drafting is ill-advised and should be avoided to save parties the need to seek court intervention.

4.13 Silverlink Resorts Ltd v MS First Capital Insurance Ltd6 (“Silverlink”) is one such case, combining the old concept of Scott v Avery clauses (“no legal action before arbitration”) with the more modern

practice of multi-tiered dispute resolution clauses. In Silverlink, the plaintiff, the ultimate holding company of the Aman Group, was one of the insured parties under an Industrial All Risks Policy (“the Policy”) issued by the defendant. Due to the COVID-19 pandemic, the hotels in Phuket were ordered to close. One of the Silverlink hotels had to be closed as a result. Silverlink made a claim under the Policy based on the hotel closure order and the closure of the Phuket International Airport. The defendant insurer rejected the claim. The plaintiff...

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