Digital Dispatch (ITL) Pte Ltd v Citycab Pte Ltd

• Judge: Judith Prakash J
• Judgment Date: 16 January 2003
• Neutral Citation: [2003] SGHC 6
• Citation: [2003] SGHC 6
• Court: High Court (Singapore)
• Plaintiff Counsel: Chan Kia Pheng with Alvin Chang (Khattar Wong & Partners)
• Defendant Counsel: Tan Cheng Yew with Ng Hweelon (Tan JinHwee, Eunice & Lim ChooEng)
• Published date: 07 October 2003

1 This originating motion was filed by Digital Dispatch (ITL) Pte Ltd (‘Digital’) who is the claimant in an arbitration proceeding currently afoot between itself and Citycab Pte Ltd (‘Citycab’). The arbitrator, a senior lawyer, had made an interim award on 25 October 2002 whereby he decided, amongst other things, that he had jurisdiction in the arbitration to hear the claims put forward by Citycab under paragraphs 88(a) and (b) of its counterclaim. Digital filed this motion in order to obtain leave to appeal against that portion of the interim award. I granted the order sought by Digital and Citycab has now appealed.

Background

2 There is a rather complicated contractual relationship between the parties involving 2 contracts: first, a supply agreement dated 19 July 1995 and, secondly, a service agreement dated 19 March 1998. The original parties to the supply agreement were Citycab and Spectronics Micro Systems, which, due to a take-over subsequently became MDSI Mobile Data Solutions Ltd (‘MDSI’). The service agreement was originally made between MDSI and Citycab. Subsequently, MDSI was bought over by a Canadian company and renamed Digital Dispatch (Intl) Ltd (‘DDSUK’). Digital and DDSUK are part of the same group of companies and, accordingly, on 19 July 1999, a novation agreement was signed among DDSUK, Citycab and Digital whereby Digital took over from DDSUK as a party to the service agreement. The current situation is therefore that Citycab and Digital are parties to the service agreement and Citycab and DDSUK are parties to the supply agreement.

3 The arbitration was initiated by Digital pursuant to cl 28.1 of the service agreement which provided that ‘any dispute arising out of or in connection with this contract … shall be referred to arbitration in Singapore’. Digital has claimed arrears of maintenance charges due to it from Citycab and has also claimed damages for an alleged repudiatory breach by Citycab of the service agreement. The arbitration was commenced by way of Digital’s notice of arbitration dated 23 November 2001.

4 Digital filed its points of claim in the arbitration on 8 March 2002. Citycab filed its points of defence and counterclaim on 5 April 2002. It claimed damages for alleged breaches by Digital under the service agreement. In addition, it claimed damages resulting from alleged breaches of the supply agreement. These counterclaims are found at paragraphs 88(a) and (b) of the points of counterclaim.

5 On 5 July 2002, Digital made an application to the arbitrator for an order striking out paragraphs 88(a), (b), (d), (e), (f), (h) and (i) of Citycab’s counterclaim and for further consequential orders. This application was heard on 19 and 20 September 2002. The arbitrator published his interim award on 25 October 2002. In paragraph 7 of his award, the arbitrator noted that:

[Digital’s] application to strike out various claims in paragraph 48 of the counterclaim was essentially premised on the argument that those claims in the said paragraph 88 arose from disputes connected with Supply Agreement and not the Service Agreement. As [Digital] have no obligation under the Supply Agreement, those claims in paragraph 88 of the Respondents’ Counterclaim were misconceived as the Respondents should be making their claims against [DDSUK] pursuant to the Supply Agreement.

Rejecting Digital’s claim, the arbitrator refused to strike out paragraphs 88(a) and (b) on the basis that although those were counterclaims from the supply agreement, they had been transferred over into the service agreement pursuant to cl M of the service agreement.

6 Before me Digital contended that this conclusion was obviously wrong in law and it should be given leave to appeal against it.

Principle governing leave to appeal the decision of an arbitrator

7 The application is made pursuant to s 28(2) of the Arbitration Act (Cap 10) (‘the Act’) which governs domestic arbitrations. This section states that provided that either all other parties to the reference have consented, or leave of the court has been granted, an appeal shall lie to the court on any question of law arising out of an award made on an arbitration agreement. In this case, Citycab did not consent to an appeal being made to the court against the interim award and, accordingly, Digital had to apply for leave of court before it could lodge its appeal.

8 It should be noted that by s 28 of the Act, the court cannot grant leave to appeal unless it considers the determination of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration. In this case it was common ground that this requirement was satisfied as whether Citycab was entitled to prosecute certain of its counterclaims against Digital obviously had a substantial effect on the rights of both of them.

9 It is well known that the court has a discretion whether or not to grant leave. How this discretion should be exercised in a case involving the construction of a contractual term was established as long ago as 1982 in the case of The Nema: Pioneer Shipping Ltd v B.T.P. Tioxide Ltd [1982] 3 All ER 777. Lord Diplock there stated:

Where, as in the instant case, the question of law involved is the construction of a ‘one-off’ clause, the application of which to the particular facts of the case is an issue in the arbitration, leave should not normally be given unless it is apparent to the judge upon a mere perusal of the reasoned award itself without the benefit of adversarial argument, that the meaning ascribed to the clause by the arbitrator is obviously wrong. (at p 742)

That dictum was applied by the House of Lords in the later case of The Antaios [1984] 3 All ER 229 which restated the guidelines to be followed by courts hearing such applications. Our Court of Appeal in American Home Assurance Co v Hong Lam Marine Pte Ltd [1999] 3 SLR 682, endorsed these guidelines.

10 Thus, the principle which I had to apply was that where the construction of a ‘one-off’ contract or clause was in issue, the discretion was to be strictly exercised and leave to appeal normally refused unless the judge was satisfied that the construction given by the arbitrator was obviously wrong.

The arbitrator’s decision

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