Coop International Pte Ltd v Ebel SA

Judgment Date04 March 1998
Date04 March 1998
Docket NumberSuit No 40 of 1997 (Registrar's Appeal Nos 420 and 421 of 1997)
CourtHigh Court (Singapore)
Coop International Pte Ltd
Ebel SA

[1998] SGHC 425

Chan Seng Onn JC

Suit No 40 of 1997 (Registrar's Appeal Nos 420 and 421 of 1997)

High Court

Arbitration–Agreement–International–International Arbitration Act and Model Law automatically applicable–Whether parties might opt out of International Arbitration Act and Model Law without express words to that effect–Section 15 International Arbitration Act (Cap 143A, 1995 Rev Ed)–Arbitration–Agreement–Scope–Distributorship agreement between parties containing arbitration clause–Parties subsequently entering into settlement agreement without arbitration clause–Dispute arising out of settlement agreement–Whether arbitration clause in distributorship agreement applicable to dispute–Arbitration–Stay of court proceedings–International arbitration agreement providing for arbitration outside Singapore–Whether International Arbitration Act and Model Law applicable–Whether stay of proceedings mandatory–Sections 6 and 15 International Arbitration Act (Cap 143A, 1995 Rev Ed)–Civil Procedure–Summary judgment–Distributor of goods claiming payment of full sum stipulated in settlement agreement with watchmaker–Watchmaker alleging existence of oral agreement to vary terms of settlement agreement–Whether any triable issues–Contract–Contractual terms–Parol evidence rule–Respondents alleging written agreement did not incorporate oral agreement to fix exchange rate–Respondent attempting to adduce oral evidence to contradict written terms–Whether respondents ran afoul of s 94 Evidence Act (Cap 97, 1990 Rev Ed)–Contract–Discharge–Parties terminating distributorship agreement and executing subsequent agreement–Whether subsequent agreement independent settlement agreement

The appellant entered into a distributorship agreement with the respondent, a Swiss watchmaker. The distributorship agreement provided for Swiss law as the governing law and for disputes to be resolved by arbitration in Switzerland according to Swiss rules. Subsequently, both parties decided to terminate the distributorship agreement. However, instead of abiding by the termination clause in the distributorship agreement, they entered into a separate termination agreement with different terms. The termination agreement did not include an arbitration clause and stated that the distributorship agreement would lapse after the respondent appointed a new distributor. On 4 September 1996, the parties reached a third agreement (“the 4 September agreement”) which was in the nature of a settlement agreement. By that time, the distributorship agreement had lapsed. The 4 September agreement provided for the respondent to pay the appellant a fixed sum of S$3,911,596.65 net of all charges by 4 October 1996, failing which daily interest of 8% per annum based on 360 days would be imposed on the amount unpaid. On or about 10 October 1996, the respondent remitted Swiss Francs 3,100,000 to the appellant. When converted at the then prevailing exchange rate of 1.1225, the payment came to only S$3,489,050, leaving a shortfall of S$422,546.65.

The appellant claimed for the shortfall including contractual interest and applied for summary judgment. The respondent applied to stay the proceedings, arguing that: (a) the 4 September agreement failed to incorporate an oral agreement that the exchange rate be fixed at 1.18 for payment of the settlement sum; and (b) the dispute was connected with the distributorship agreement and must be referred to arbitration. The appellant opposed the application arguing that: (a) there was no dispute arising out of or in connection with the distributorship agreement; (b) the distributorship agreement had been terminated and the parties' respective rights had been compromised under a fresh agreement; and (c) there was no dispute to be referred to arbitration. The assistant registrar made no order on the appellant's application for summary judgment and stayed all further proceedings pursuant to s 6 International Arbitration Act (Cap 143A, 1995 Rev Ed) (“IAA”). The appellant appealed against the assistant registrar's decision.

Held, allowing the appeal:

(1) The parties had compromised their rights under the distributorship and termination agreements by the 4 September agreement. The distribution agreement that included the arbitration clause had lapsed by agreement, and the parties could not resurrect it and subject the 4 September agreement to it. As a matter of construction, the 4 September agreement was a wholly independent agreement without an arbitration clause. It made no reference whatsoever either to the distributorship agreement or to any of its terms. It was not expressed as a supplemental agreement to vary or add to the distributorship agreement. It stood alone as an independent agreement settling all the various matters between the parties. In fact, the parties decided to dispense with the distributorship agreement totally by agreeing that it would lapse upon the appointment of a new distributor: at [12], [26] to [28], [30], [31] and [33].

(2) The respondent's allegation that the 4 September agreement had not incorporated an oral agreement to fix the exchange rate ran foul of s 94 of the Evidence Act (Cap 97, 1990 Rev Ed) in that the respondent would be attempting to admit oral evidence of prior negotiations to vary or contradict the agreed terms, which had been subsequently reduced into an agreement in writing and signed by the parties and the respondent was precluded from raising it. When such evidence was excluded, there was really nothing much left in the respondent's application for a stay of proceedings: at [43] and [44].

(3) The parties eventually settled the outstanding issues between them and concluded the 4 September agreement. The dispute concerned a payment term in the 4 September agreement and did not arise out of or in connection with any of the terms of the distributorship agreement. There was therefore nothing to refer to arbitration: at [14], [63] and [64].

(4) The 4 September agreement was governed by Singapore law because fairly extensive negotiations and stock checking took place in Singapore. Under Singapore law, the respondent failed to raise any triable issues and summary judgment was granted. This was because the 4 September agreement made clear the total amount due and that payment was to be in Singapore dollars. The respondent's allegation of an oral agreement was unlikely to be true and in any event, could not be raised: at [65] to [67], [78], [80] and [88] to [91].

[Observation: Assuming the arbitration clause was applicable, the proceedings had to be stayed because a stay was mandatory under s 6 (2) of the IAA when there was a dispute governed by an arbitration agreement. The fact that there were no triable issues was irrelevant: at [99].

The IAA and Model Law applied to international arbitrations taking place in Singapore unless the parties expressly opted out under s 15 of the IAA. However, when parties chose a foreign country to be the place of arbitration, expressly opting out of the IAA and Model Law was not necessary. Parties could opt out by implication by choosing procedures alien and contrary to the mandatory provisions in the IAA or the Model Law. There would be no lacuna in the law because when the Model Law and the IAA did not apply, the Arbitration Act (Cap 10, 1995 Rev Ed) (“AA”) applied by operation of its s 2, which was wide enough to cover all arbitration agreements whether international or domestic. Under s 7 of the AA, a stay of proceedings was discretionary, save where arbitration was to take place outside Singapore: at [107], [129], [131], [144], [146], [147] and [149].]

Barclays Bank International Ltd v Levin Brothers (Bradford) Ltd [1977] QB 270 (folld)

Batshita International (Pte) Ltd v Lim Eng Hock Peter [1996] 3 SLR (R) 563; [1997] 1 SLR 241 (distd)

Dai Yun Shan, The [1992] 1 SLR (R) 461; [1992] 2 SLR 508 (folld)

Faghirzadeh v Rudolf Wolff (SA) (Pty) Ltd [1977] 1 Lloyd's Rep 630 (distd)

Hayter v Nelson and Home Insurance Co [1990] 2 Lloyd's Rep 265 (folld)

Kianta Osakeyhtio v Britain & Overseas Trading Company, Ltd [1954] 1 Lloyd's Rep 247 (folld)

Koh Siak Poo v Perkayuan OKS Sdn Bhd [1989] 3 MLJ 164 (folld)

Kwan Im Tong Chinese Temple v Fong Choon Hung Construction Pte Ltd [1998] 1 SLR (R) 401; [1998] 2 SLR 137 (folld)

Overseas Union Insurance Ltd v AA Mutual International Insurance Co Ltd [1988] 2 Lloyd's Rep 63 (distd)

Taylor v Warden Insurance Company, Ltd (1933) 45 Ll L Rep 218 (folld)

Tengku Aishah v Wardley Ltd [1992] 3 SLR (R) 503; [1993] 1 SLR 337 (folld)

Uni-Navigation Pte Ltd v Wei Loong Shipping Pte Ltd [1992] 3 SLR (R) 595; [1993] 1 SLR 876 (folld)

Wade-Gery v Morrison (1877) 37 LT 270 (distd)

Wardley Ltd v Tunku Adnan [1991] 1 SLR (R) 661; [1991] SLR 721 (folld)

Wong Kai Chung v Automobile Association of Singapore [1993] 2 SLR (R) 71; [1993] 2 SLR 577 (folld)

Arbitration Act (Cap 10,1985Rev Ed)ss 2, 7

Arbitration (Foreign Awards) Act (Cap 10A, 1985Rev Ed)s 4

Evidence Act (Cap 97,1990 Rev Ed)s 94 (consd)

International Arbitration Act (Cap 143A, 1995 Rev Ed)ss 6, 15 (consd);ss 3 (1),4, 5, 8,9, 10,26

Arbitration Act (Switzerland)Art 176 (2)

Arbitration Act 1950 (c 27) (UK)s 37 (2) (c)

International Arbitration Act1974 (Cth)s 21

Andrew Ong (Rajah & Tann) for the appellant

Jason Chan (Allen & Gledhill) for the respondent.

Chan Seng Onn JC

1 This is an appeal against the decision of the learned assistant registrar making no order on the plaintiffs' application for summary judgment and staying all further proceedings pursuant to s 6 of the International Arbitration Act (Cap 143A, 1995 Ed) (“IAA”).

2 I allowed the appeal and I now give my reasons.

Brief facts

3 The appellants, a Singapore registered company, entered into an exclusive distributorship agreement with the respondents, a Swiss company having its principal place of...

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