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); Adjunct Professor, Faculty of Law, National University of Singapore; Adjunct Professor, Faculty of Law, Bond University (Australia). Delphine HO LLB (Hons) (National University of Singapore); FSIArb; FCIArb; Advocate and Solicitor (Singapore); Solicitor (England and Wales). |
| Publication year | 2021 |
| Citation | (2021) 22 SAL Ann Rev 87 |
| Date | 01 December 2021 |
4.1 Despite the continuing effects of the COVID-19 pandemic, international arbitration continued to thrive in 2021. Arbitration institutions like the International Chamber of Commerce International Court of Arbitration (“ICC”), the Singapore International Arbitration Centre (“SIAC”) and the Hong Kong International Arbitration Centre continued to report high caseloads, albeit lower than in 2020.1
4.2 The Singapore courts saw a range of arbitration-related applications filed in 2021, with the majority being applications to set aside arbitration awards under the International Arbitration Act 19942 (“IAA”). In addition, there were three cases relating to the stay of court proceedings, two concerning the enforcement of arbitration awards, and one arising out of an appeal under the Arbitration Act 20013 (“AA”). There were also a number of notable cases in 2021 relating to issues such as jurisdiction, confidentiality and disclosure in investment arbitration, a tribunal's duty to consider corruption, as well as other procedural matters. Overall, the jurisprudence continues to reinforce the pro-arbitration approach taken by the Singapore courts.
4.3 The court's power to order a stay of proceedings in favour of arbitration is enshrined in statute. Both s 6 of the IAA and s 6 of the AA set out the court's power to grant a stay. The key difference between the two provisions is that a stay under the IAA is mandatory (“The court to which an application has been made in accordance with subsection (1) is to make an order”),4 while a stay under the AA is discretionary (“The court to which an application has been made in accordance with subsection (1) may, if the court is satisfied … make an order”).5
4.4 Under s 6(2) of both the IAA and the AA, a court is empowered to grant a stay upon terms that the court thinks fit. Some conditions that have been granted include the imposition of a timeline to commence arbitration, requiring a party to appoint solicitors or ordering parties not to frustrate the appointment of the tribunal.6
4.5 In The Navios Koyo,7 the appellant sought to persuade the Singapore courts to prohibit the respondent from relying on a time-bar defence as a condition to the grant of a stay. The appellant had commenced an admiralty action in Singapore against the respondent for claims arising under a bill of lading. The bill of lading incorporated, on its face, the terms of a charterparty together with an arbitration clause. However, by the time the appellant asked the respondent for a copy of the charterparty, it was the night before a time bar accrued to bar claims under the bill of lading.
4.6 On the basis of the arbitration clause in the charterparty, the respondent obtained an unconditional stay of the admiralty action under s 6 of the IAA. The appellant appealed, arguing that the stay ought to have been conditioned upon the respondent's waiver of the time-bar defence in the London arbitration.
4.7 The Court of Appeal dismissed the appeal as it was not persuaded that a condition should be imposed in this case and the court should be “exceedingly slow to carve out substantive defences, such as a defence of time bar, from the jurisdiction of the arbitral tribunal”.8
4.8 In the Court of Appeal's view, the grant of conditions under s 6(2) of the IAA is a discretionary power to be exercised depending “on the true nature of the condition(s) sought, in the context of the relevant circumstances”,9 and the decision informed by the justice of the case.10 This would involve the court's consideration of whether the party is able to put forward “proper justification” for the imposition of a condition. In determining whether such “proper justification” has been established, the Court of Appeal established the following three-part test:11
(a) “the reasons for the conditions being sought, and whether those reasons could have been obviated by the applicant's own conduct” [emphasis in original omitted];
(b) “whether the need for any of the conditions was contributed to or caused by the conduct of the respondent”; and
(c) “the substantive effect on the parties of any condition that the court may impose” [emphasis in original omitted].
4.9 In this case, the Court of Appeal was not persuaded that there was any justification for the imposition of a condition. In arriving at its decision, the court took into account a number of factors, including the appellant's failure to protect its own commercial interests and the nature of the condition sought. The court also took into account whether there was any dispute that the matter should have been arbitrated from the outset (the court concluded that “it was not in contention that this dispute ought properly to have proceeded to arbitration from the very outset” [emphasis in original]).12
4.10 In addition to the statutory powers of stay, courts have the inherent power to stay proceedings to ensure a fair and efficient resolution of a dispute. Such a stay may be ordered where the court considers that there are issues in the arbitration proceedings, the determination of which could affect existing issues in the court proceedings. This is referred to as a “case management stay”, and such stays have been ordered in a number of decisions since its first adoption in 2016.13
4.11 The High Court upheld a case management stay ordered by a senior assistant registrar in CJY v CJZ14 (“CJY”), holding that to do so would ensure the efficient and fair resolution of the dispute as a whole. The case involved disputes relating to a construction project. The architects for the project issued a schedule of defects to the contractor, which then led to the employer calling upon the performance guarantees furnished by the contractor.
4.12 The contractor disputed the defects and the calls and commenced arbitration against the employer in 2018, seeking repayment of the amounts paid out under the performance guarantees and interest thereon. The employer disputed the claim on the basis that the calls were justified by the schedule of defects. The employer also counterclaimed for the cost of rectifying outstanding defects, as well as new defects discovered since the schedule of defects was issued.
4.13 In October 2020, while the arbitration between the contractor and the employer was ongoing, the contractor commenced court proceedings based on various tortious claims against five individuals who were involved in the project: the employer's country manager (defendant 1), the project's quantity surveyor and a representative of the quantity surveying firm engaged for the project (defendants 2 and 3), and the project's architect and a representative of the architectural firm engaged for the project (defendants 4 and 5). It was not disputed that no arbitration agreement existed between the contractor and these five individuals.
4.14 The country manager (defendant 1) successfully applied to stay the court proceedings. On appeal, the High Court agreed with the grant of a case management stay, noting that both the arbitration and the court proceedings involved an overlap in parties and in remedies. There were also common issues in both the arbitration and court proceedings in respect of the employer's calls on the performance guarantees, the contractor's liability for the defects in the schedule of defects, and whether the estimated rectification costs were fabricated or inflated. These were all issues falling within the arbitration agreement and their resolution in the arbitration would be crucial to the eventual outcome of the court action. The High Court also observed that the arbitration had been ongoing for more than three years, and the parties to the arbitration (that is, the contractor and the employer) “ought properly to finish the Arbitration, before the [contractor] proceeds any further with the [court action]”.15
4.15 CJY was clearly a case suitable for a case management stay. The contractor was already in the middle of arbitration proceedings when it sought to commence court litigation against individuals with whom it had no contractual relationship with, and in relation to the same project. While not entirely clear in the judgment, this appears to have been a case of strategic satellite litigation, which was swiftly put in its place by the Singapore courts.
4.16 The most fundamental concept in arbitration is that of jurisdiction. This forms the basis of an arbitral tribunal's power to determine the merits of a particular case and also limits the scope of what a tribunal may adjudicate. Jurisdiction is conferred upon an arbitral tribunal through parties' agreement to submit a dispute to arbitration (for example, through an arbitration agreement); unlike national courts, arbitral tribunals do not have inherent jurisdiction to decide a dispute.
4.17 In accordance with the principle of kompetenz-kompetenz, a tribunal is the first arbiter of its own jurisdiction. This principle is enshrined in Art 16(1) of the United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration16 (“Model Law”) and s 21(1) of the AA. A party who is unhappy with a tribunal's decision on jurisdiction may seek recourse to the supervisory courts under s 10 of the IAA or s 21A of the AA.
4.18 The Singapore International Commercial Court (“SICC”) had to consider an appeal against a tribunal's positive jurisdiction ruling in CLQ v CLR.17 The plaintiff (who was the respondent in the arbitration) was the Government of Ruritania, while the defendant (the claimant in the arbitration) was a land developer. The parties had entered into a joint venture agreement (“JVA”) to develop a site in Ruritania; the JVA was executed by Ruritania's finance minister as the authorised representative of the Government, while...
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