Date01 December 2019
Published date01 December 2019
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). Christine ARTERO DEA (University of Paris II Pantheon Assas), DESS (University of Paris II Pantheon Assas); FSIArb; FCIArb; Solicitor (England and Wales); Avocat (France); Adjunct Professor, University of Toulouse 1 (France).
Citation(2019) 20 SAL Ann Rev 59
Publication year2019

4.1 In 2019, Singapore courts continued to deal with a high number of arbitration-related cases. A vast majority dealt with applications to set aside awards in relation to which Singapore was the seat of the arbitration. There were also three applications related to stay of court proceedings and three applications for injunctive relief in favour of arbitration, as well as three applications to review decisions on jurisdiction under s 10(3) of the International Arbitration Act1 (“IAA”). Whilst the courts continued to demonstrate their stance in support of arbitration, the Court of Appeal nonetheless reviewed some decisions taken in first instance, setting aside two awards under the IAA and refusing the enforcement of a foreign award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards2 (“New York Convention”), indicating that such support was not limitless, and in doing so, the Court of Appeal outlined some boundaries. The year also marked the first arbitration-related cases heard and decided by the Singapore International Commercial Court (“SICC”). These cases, although made as the court of first instance, reflect the views of non-Singapore judges sitting within a Singapore regime. Thus far, all these cases were decided by judges from common law jurisdictions, and generally reflect the approaches of Singapore judges. It would indeed be interesting should non-common law judges be empanelled to contribute to the reservoir of legal jurisprudence in Singapore.

I. Stay of court proceedings
A. Case management stay

4.2 The statutory power of the court to order a stay of proceedings in international cases involving arbitration clauses is set out in s 6 of the IAA, which mandates the court to stay the pending proceedings so long as “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 In 2016, the Court of Appeal, in Tomolugen Holdings Ltd v Silica Investors Ltd3 (“Tomolugen”), had granted a stay in favour of arbitration even when there was a party before the court who was not a party to the arbitration agreement, on the basis of the court's “effective case management power” in the fair and efficient administration of justice. That decision has since spawned several attempts by parties to seek similar orders, urging that the courts could use their “case management power” to order stays even when it was unclear whether a party before the court was a party to the arbitration agreement. More recent decisions have clarified that a stay granted under the court's case management power is discretionary and must be distinguished from the statutory power under s 6 of the IAA which obliges the court to grant a stay.

4.4 In Rex International Holding Ltd v Gulf Hibiscus Ltd,4 the Court of Appeal clarified the principles set out in Tomolugen when it comes to the courts' exercise of their case management powers. In that case, Gulf Hibiscus Ltd (“Gulf”) and Rex Middle East Limited (“RME”), together with another, were parties to a shareholders' agreement (“SHA”) entered in relation to a joint venture, LIME Petroleum plc (“LIME”). Gulf commenced action against Rex International Holding Limited and Rex International Investments Pte Ltd, two Singapore companies (“the Rex Companies”), the ultimate and intermediate holding companies of RME, for alleged wrongs committed in connection with LIME. The Rex Companies sought a stay on case management grounds, relying on an arbitration clause found in the SHA.

4.5 The stay was granted by the assistant registrar on the basis of case management, relying on the court's discretion as formulated in Tomolugen. However, the ordering of the stay was conditional, such that the court would lift the stay if none of the parties to the SHA commenced arbitration within three months from the date of judgment. Neither party

commenced arbitration and the stay was subsequently lifted by the High Court judge, which decision was appealed.

4.6 The Court of Appeal dismissed the appeal. However, it observed that the stay should not have been granted in the first place. The Court of Appeal explained that the question of case management arises where there are overlapping issues that will have to be ventilated before different fora among different parties, some of whom are bound by an arbitration agreement, while others are not (Tomolugen). There must therefore be the existence or at least the imminence of separate legal proceedings giving rise to a real risk of overlapping issues for courts to exercise their case management power and order a stay of proceedings. Before using their case management power, it is therefore critical for the courts to appreciate the nature and extent of the overlaps between the putative arbitration and the court proceedings. In that respect, the Court of Appeal explained that courts ought to consider which are (a) the potential fora for the resolution of the dispute; (b) the different parties before each forum; and (c) the issues to be determined before each such forum. The sort of overlap that would then attract a case management stay is one where the proper ventilation of the issues in the court proceedings depended on the resolution of the related putative arbitration. Only in that case would a case management stay be needed in order to achieve the efficient and fair resolution of the dispute as a whole:5

The authorities discussed above reveal gradations of response to what is in essence the same problem as that in the situation of overlapping court and arbitral proceedings outlined at [140] above. We alluded to this problem in our introduction to this judgment, namely, that of seeking to uphold the statutory mandate and the strong legislative policy in favour of arbitration in circumstances where the dispute which is covered by the arbitration clause in question forms only part of a larger dispute with a broader horizon. The unifying theme amongst the cases is the recognition that the court, as the final arbiter, should take the lead in ensuring the efficient and fair resolution of the dispute as a whole. The precise measures which the court deploys to achieve that end will turn on the facts and the precise contours of the litigation in each case.

4.7 In the present case, the court held that the judge did not sufficiently consider the shape of the putative arbitration and therefore whether the court proceedings depended on that putative arbitration. He should have seen that the putative arbitration was largely illusory, and a completely artificial scenario. The Rex Companies were not party to the arbitration clause which only applied to disputes between Gulf and RME. In addition, Gulf had no claim against RME and had therefore no

intention of commencing any proceedings against RME. On the other hand, it had sued the Rex Companies, but there existed no arbitration clause between the Rex Companies and Gulf. It was therefore improper to stay Gulf's claim against the Rex Companies.

4.8 The Rex Companies had also argued that (a) the effect of the condition of the stay was to force them to move their subsidiary RME to commence arbitration in pursuit of a negative case; and (b) Gulf, as claimant in the arbitration, ought to have commenced the arbitration and that, as it did not, it should not be allowed to lift the stay. The Court of Appeal found that these arguments assumed that there were claims against RME to begin with, when the real mischief of the original case management stay was that it had the effect of preventing Gulf from pursuing its claims against the Rex Companies. If the Rex Companies were correct in their position, it would mean that Gulf would be unable to prosecute its claims against them and would instead have to pursue RME in arbitration, despite the fact that Gulf had no wish to pursue RME at all. The Court of Appeal reiterated that courts should not interfere with the parties' right to choose their cause of action and with the parties they wish to sue in whichever forum they want, subject only to any applicable legal constraint such as an arbitration clause. The Court of Appeal therefore lifted the stay.

4.9 In that decision, the Court of Appeal also held that courts may re-open a decision to grant a stay on case management grounds as such decisions are part of the courts' exercise of their inherent jurisdiction to manage their own internal processes. It is an administrative decision. Courts do not therefore become functus officio after a stay is granted and they have an independent power to lift the stay. This decision makes clear that the power to grant a stay on case management grounds falls outside the ambit of the statutory provision of the IAA and is purely discretionary and should not be extended to encroach upon a party's right to choose the forum competent to adjudicate the matter.

B. Conflicting dispute resolution clauses

4.10 Parties in international transactions may at times enter into different contractual arrangements with each other in the same or interrelated transactions. Such arrangements may sometimes provide for different laws or jurisdictions or contain contradictory provisions when it comes to dispute resolution. Quite common examples would be where the same contract contains both a choice of jurisdiction and an arbitration clause or where related contracts between the parties contain arbitration clauses pursuant to which the arbitration should be seated in different locations or administered by different institutions. Such drafting is ill-advised and should be avoided as they have spawned much litigation, with courts adopting different approaches in reconciling or adopting one of the chosen modalities of dispute resolution.

4.11 In Grains and Industrial Products Trading Pte Ltd v State Bank of India6 (“Grains”), the parties had entered into two...

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