Drydocks World-Singapore Pte Ltd (formerly known as Pan-United Shipyard Pte Ltd) v Jurong Port Pte Ltd

• Jurisdiction: Singapore
• Judge: Nathaniel Khng AR
• Judgment Date: 30 June 2010
• Neutral Citation: [2010] SGHC 185
• Court: High Court (Singapore)
• Docket Number: Suit No 757 of 2009 (Summons No 1811 of 2010)
• Year: 2010
• Published date: 01 July 2010
• Hearing Date: 31 May 2010
• Plaintiff Counsel: Lai Yew Fai, Melissa Marie Tan Shu Ling and Teo Guan Kee (Rajah & Tann LLP)
• Defendant Counsel: Jude Philomen Benny and Grace Lin Li'En (Joseph Tan Jude Benny LLP)
• Subject Matter: Arbitration
• Citation: [2010] SGHC 185

Nathaniel Khng AR: Introduction

This is an application (“the Application”) by the defendant, Drydocks World-Singapore Pte Ltd (“Drydocks”) (formerly known as Pan-United Shipyard Pte Ltd), for, inter alia, a stay of Suit No 757 of 2009 (“the Action”) filed by the plaintiff, Jurong Port Pte Ltd (“Jurong Port”), on three alternative grounds, viz, s 6 of the Arbitration Act (Cap 10, 2002 Rev Ed), the inherent jurisdiction of the court, and the pending arbitration proceedings between the parties on the same dispute. Jurong Port resists the Application in its entirety, although its general counsel, Mr Lim Tat Kuan (“Mr Lim”) deposed that Jurong Port is willing to accept a stay if the court should impose a condition on the stay, viz, that Drydocks waives its right to argue any defence based on the Limitation Act (Cap 163, 1996 Rev Ed) that is premised upon a limitation period expiring on or after 4 September 2009 (ie, the date of the commencement of the Action).¹

This judgment contains my decision, as well as brief reasons for my decision. In this judgment, for convenience, the term/condition that the limitation defence be waived in arbitration proceedings will hereafter be referred to as “the Condition” and the term/condition that Jurong Port seeks (see [1] above) will hereafter be referred to as “the Modified Condition”.

Background facts

Jurong Port and Drydocks entered into three separate contracts on 30 June 2000, 14 March 2001 and 29 January 2003. For ease of reference, the three contracts will hereafter be referred to, respectively, as “the 2000 Contract”, “the 2001 Contract” and “the 2003 Contract”, and, collectively, as “the Contracts”. Pursuant to the Contracts, Drydocks was to design, supply, install and commission nine quay cranes (“the Cranes”). The 2000 Contract and 2001 Contract incorporated, inter alia, the July 1999 edition of the Public Sector Standard Conditions of Contract for Construction Works. The 2003 Contract incorporated, inter alia, the May 2001 edition of the Public Sector Standard Conditions of Contract for Design and Build.

The Contracts each contained a number of clauses that dealt with dispute resolution. The pertinent clauses for present purposes (“the Clauses”), which are identical in each of the Contracts, are as follows:

34.1 Reference to the Superintending Officer (1) If a dispute or difference of whatsoever kind shall arise between the Employer [ie, Jurong Port] or the Superintending Officer or the Superintending Officer’s Representative and the Contractor [ie, Drydocks] in connection with or arising out of the Contract or the execution of the Works, whether during the execution of the Works or after their completion and whether before or after any termination of the Contract or the Contractor’s employment, including any dispute or difference as to any opinion, instruction, determination, decision, certificate or valuation of the Superintending Officer or the Superintending Officer’s Representative, it shall in the first place be referred by either party in writing to the Superintending Officer for his decision. Such reference shall state that it is made pursuant to this Clause and a copy shall be sent to the other party to the Contract. (2) No later than the expiry of 30 days after the date upon which the Superintending Officer received such reference, the Superintending Officer shall give notice of his decision in writing to the Employer and to the Contractor and shall for information state therein that it is given pursuant to this Clause. Such decision shall identify the reference pursuant to which it is made and shall be final and binding on the parties to this Contract unless, as hereinafter provided, either party shall require that the decision should be referred to arbitration. …

34.2 Reference to Arbitration If either the Employer or Contractor is dissatisfied with the decision of the Superintending Officer made pursuant to Clause 34.1 hereof, or if the Superintending Officer fails to give notice of his decision on or before the expiry of the 30 day period following the date on which the Superintending Officer received the reference, then the Employer or the Contractor may, within 90 days from the date of receipt of the aforesaid decision of the Superintending Officer, or within 90 days from the date of expiry of the aforesaid 30 day period (as the case may be) give notice to the other party with a copy for information to the Superintending Officer of his intention to refer the decision or the dispute or difference that had not been decided to an arbitrator. … Any such reference shall be deemed to be a submission to arbitration within the meaning of the Arbitration Act or any re-enactment or modification thereof.

By about 2004, the Cranes were delivered and put into operation by Jurong Port. In 2007, Jurong Port discovered certain defects in the Cranes, and entered into negotiations with Drydocks for the rectification of the defects. As Drydocks took no steps to rectify the defects, Jurong Port engaged third-party contractors in August 2007 to carry out repair work on the Cranes. Following the completion of the repairs in or around April 2009, Jurong Port entered into negotiations with Drydocks for compensation for the costs of the repairs. Further defects in the Cranes were subsequently discovered. On 4 September 2009, Jurong Port commenced the Action in order to “ensure that it did not fall foul of any limitation periods that may be applicable to its claim”.² The writ was served on 3 March 2010. Drydocks filed its memorandum of appearance on 10 March 2010. In the statement of claim, which was filed on 19 April 2010, Jurong Port pleaded that defects had been discovered in the Cranes in 2007, 2008 and 2009, and claimed damages from Drydocks on the basis of negligence, breach of contract, breach of warranty, as well as misrepresentation.

On 7 December 2009, Jurong Port referred the matter to the respective Superintending Officers under the Contracts – Ms Mao Whey Ying (“Ms Mao”) for the 2000 Contract (Drydocks seemed to question her status in its letter to her dated 8 April 2010 (see, also, [7] below)), Mr Fong Yue Kwong (“Mr Fong”) for the 2001 Contract and Mr Tan Kok Bin (“Mr Tan”) for the 2003 Contract – for their decision (pursuant to the Clauses (see [4] above)). On 19 January 2010, Mr Fong appointed Mr Tan to decide on the issues arising out of the 2001 Contract. Mr Tan rendered his decisions on the issues arising out of the 2001 Contract and the 2003 Contract on 21 January 2010 and 19 January 2010 respectively. In his decisions, he held, inter alia, that Drydocks was to compensate Jurong Port for the sums of $1,191,652 (in relation to the 2001 Contract) and $2,793,266.53 (in relation to the 2003 Contract). In its reply to Mr Tan on his decisions, Drydocks stated, inter alia, that the decisions had not been rendered before the contractual deadline of 30 days for the decisions (found in the Clauses (see [4] above)) had expired and the decisions were therefore not final and binding. On 5 March 2010, Drydocks issued a notice of arbitration (pursuant to the Clauses (see [4] above)) with respect to Mr Tan’s decisions.

Ms Mao, on her part, advised the parties, in a letter dated 5 January 2010 that was addressed to Jurong Port and copied to Drydocks, to jointly appoint an independent assessor for the establishment of the material facts and evidence. The parties subsequently entered into discussions on a joint appointment of an independent assessor. On 8 April 2010, Drydocks wrote to Ms Mao to inform her that the parties could not reach an agreement vis-a-vis the appointment of an independent assessor, and also asked her whether she would be rendering a decision on the issues arising out of the 2000 Contract. Ms Mao failed to reply, and on 22 April 2010, Drydocks wrote to Ms Mao to ask her to render a decision within three days, failing which, it would proceed on the basis that she would not be rendering a decision. On 27 April 2010, Drydocks received a letter dated 22 April 2010 from Ms Mao, which stated that the “opinion and response as expressed in [the] letter dated 5 [January] 2010 to Jurong Port on the same issue remain”. On 29 April 2010, Drydocks issued a notice of arbitration (pursuant to the Clauses (see [4] above)) in regard to the issues arising out of the 2000 Contract.

It was not denied that arbitration proceedings had been commenced with respect to the entire dispute between the parties following the issuance of the two notices of arbitration (“the Notices of Arbitration”) by Drydocks. On each of the two different occasions that Drydocks issued the Notices of Arbitration to Jurong Port, Drydocks concomitantly invited Jurong Port to discontinue the Action. In a letter dated 11 March 2010, Jurong Port offered to discontinue the Action, provided that Drydocks gave its agreement to the Condition. In another letter dated 19 March 2010, Jurong Port offered to discontinue the Action, provided that Drydocks gave its agreement to the Modified Condition. However, Drydocks did not agree to either the Condition or the Modified Condition.

The main submissions of the parties

Drydocks submitted that the Action should be stayed pursuant to s 6 of the Arbitration Act. In support of this submission, Drydocks pointed out that the dispute is subject to valid arbitration agreements between the parties, pleadings had not been delivered and no other step in the proceedings had been taken, it was and still remains ready and willing to proceed with arbitration, and no sufficient reasons exist to show that the dispute should not be referred to arbitration. Drydocks submitted, in the alternative, that the court should exercise its inherent jurisdiction to stay the Action or should stay the Action on the basis of the pending arbitration proceedings on the dispute. Drydocks also submitted that the court should not grant a...