Dyna-Jet Pte Ltd v Wilson Taylor Asia Pacific Pte Ltd

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 31 October 2016
• Neutral Citation: [2016] SGHC 238
• Published date: 13 May 2017
• Date: 31 October 2016
• Year: 2016
• Hearing Date: 25 May 2016,29 February 2016,18 April 2016
• Plaintiff Counsel: Tan Yew Cheng (Leong Partnership)
• Defendant Counsel: S Magintharan and Vineetha Gunasekaran (Essex LLC)
• Court: High Court (Singapore)
• Citation: [2016] SGHC 238
• Docket Number: Suit No 1234 of 2015 (Registrar's Appeal No 43 of 2016)

Vinodh Coomaraswamy J: Introduction

The plaintiff and defendant in this action are parties to a dispute-resolution agreement which confers on the plaintiff – and on the plaintiff alone – the right to elect whether to submit their disputes to arbitration. When a dispute arose in 2015, the plaintiff elected not to refer it to arbitration and commenced this action instead. The defendant has applied to stay this action in favour of arbitration. The plaintiff resists the application on the basis that there is no arbitration agreement between the parties; alternatively that any arbitration agreement they may have is “null and void, inoperative or incapable of being performed”.

The defendant’s application raises two issues. First, does a dispute-resolution agreement which gives only one party the right to elect to arbitrate disputes constitute an “arbitration agreement” within the meaning of our arbitration legislation? Second, what is the meaning of the phrase “null and void, inoperative or incapable of being performed”?

I have dismissed the defendant’s application to stay this action, holding that: (i) the parties do have an arbitration agreement; but (ii) that their arbitration agreement is incapable of being performed. The result of the plaintiff’s election not to arbitrate the dispute which underlies this action is that the contingency which the parties made intrinsic to their arbitration agreement – an election by the plaintiff to arbitrate this dispute – has not been satisfied. Further, on a proper construction of the parties’ arbitration agreement, the plaintiff has now bound itself to litigate this dispute. Therefore, the intrinsic contingency in the parties’ dispute-resolution agreement can now never be satisfied in respect of this dispute. In my view, that makes their arbitration agreement incapable of being performed. I do not, however, think that that makes their arbitration agreement either inoperative or null and void.

The result of my decision is that the parties’ dispute will now be resolved by a court in Singapore rather than by an arbitrator in Singapore.

The defendant has, with my leave, appealed to the Court of Appeal against my decision. I therefore set out my reasons.

Background facts The parties

The plaintiff is Dyna-Jet Pte Ltd (“Dyna-Jet”), a subsidiary of an international group of companies providing specialist engineering services.¹ These engineering services include services carried out underwater by divers.

The defendant is Wilson Taylor Asia Pacific Pte Ltd (“Wilson Taylor”), a subsidiary of an international group of companies specialising in what is known as “cathodic protection technology”.

Both Dyna-Jet and Wilson Taylor are companies incorporated in Singapore and have their place of business in Singapore.² It appears from the evidence, however, that they have clients around the region and, accordingly perform their contracts both in and outside Singapore.

The contract and the dispute resolution agreement

In April 2015, Wilson Taylor engaged Dyna-Jet to install underwater anodes on the island of Diego Garcia in the Indian Ocean.³ The terms of the parties’ contract are set out in a commercial proposal from Dyna-Jet to Wilson Taylor dated 28 April 2015 which Wilson Taylor accepted by a purchase order dated 29 April 2015.⁴

The contract includes Dyna-Jet’s pro forma standard terms and conditions.⁵ One of those standard terms is a dispute-resolution agreement which, in express terms, gives Dyna-Jet a right to elect to arbitrate a dispute:

Resolution of Disputes and Complaints

Dyna-Jet and [Wilson Taylor] agree to cooperate in good faith to resolve any disputes arising in connection with the interpretation, implementation and operation of the Contract. Disputes relating to services performed under the Contract shall be noted to Dyna-Jet within three (3) days of the issue arising, thereafter the period for raising such dispute shall expire.

Any claim or dispute or breach of terms of the Contract shall be settled amicably between the parties by mutual consultation. If no amicable settlement is reached through discussions, at the election of Dyna-Jet, the dispute may be referred to and personally settled by means of arbitration proceedings, which will be conducted under English Law; and held in Singapore.

…

[emphasis added]

A dispute leads to this action

A dispute arose under the contract in September 2015.⁶ As a result of the dispute, Dyna-Jet suspended work and recalled its divers to Singapore.⁷ That, in turn, led to Wilson Taylor engaging another contractor to replace Dyna-Jet and complete the installation.⁸

In December 2015, after the parties had failed to reach a negotiated settlement of the dispute, Dyna-Jet commenced this action. Dyna-Jet’s claim is that Wilson Taylor has committed repudiatory breaches of the contract which Dyna-Jet has accepted.⁹ Wilson Taylor in due course applied for an order staying this action permanently and compelling Dyna-Jet to arbitrate the underlying dispute.¹⁰ I have no power, on an application under s 6(2) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the IAA”), to order a plaintiff to arbitrate the dispute underlying the action. Indeed, it is questionable whether I would have that power – which amounts to granting specific performance of an arbitration agreement – even on a claim by Wilson Taylor against Dyna-Jet for contractual relief arising from Dyna-Jet’s breach of the arbitration agreement in pursuing this litigation. I therefore treat the application before me as confined to an application for a stay alone, as the arbitration legislation envisages.

Both parties argued this application before me on the basis that the IAA was the controlling statute. However, Wilson Taylor’s application expressly seeks a stay only under s 6 of the Arbitration Act (Cap 10, 2002 Rev Ed) (“the AA”).¹¹ It makes no reference to s 6 of the IAA either alone or in the alternative. Despite that, Wilson Taylor’s written submissions suggest that there is a live issue as to whether it is the AA or the IAA which applies to the contract.¹² To the extent that it is necessary for me to make a finding on this issue, I accept Wilson Taylor’s submission¹³ that it is the IAA which applies. The substantial part of Dyna-Jet’s obligations under the contract were to be performed in Diego Garcia. That is also the place with which the subject-matter of the dispute between the parties is most closely connected. Both parties have their place of business in Singapore, not in Diego Garcia. Any arbitration which may arise from the parties’ contract would, therefore, be an “international arbitration” within the meaning of s 5(2)(b)(ii) of the IAA. All issues before me are therefore governed by the IAA rather than by the AA.

In any event, to the extent that the AA is relevant at all, it is my view that Dyna-Jet has established “sufficient reason” within the meaning of s 6(2)(a) of the AA why the parties’ dispute should not be referred to arbitration. “Sufficient reason” exists for the same reasons which have led to my conclusions on s 6 of the IAA and which I set out in more detail in these grounds.

I should also note that Dyna-Jet, rightly in my view, did not take the technical point that Wilson Taylor’s stay application is defective because the statutory provision cited in it does not match the statutory provision which actually governs its application. The mismatch is a mere irregularity which has caused no prejudice to Dyna-Jet, even in respect of costs. If that technical point were to be taken, I would without hesitation grant Wilson Taylor leave to amend its application in order to cite the correct section, ie, s 6 of the IAA.

The assistant registrar’s decision

Wilson Taylor’s application for a stay was heard, in the usual way, first by an assistant registrar. She dismissed the application. She held that the parties’ dispute-resolution agreement (see [9] above) was an arbitration agreement within the meaning of the IAA even though only Dyna-Jet had a right to elect arbitration. That is because, once Dyna-Jet exercised its election, Wilson Taylor was bound to arbitrate the relevant dispute.¹⁴ But she held that this arbitration agreement, on the facts of this case, was “inoperative” or was “incapable of being performed” because Dyna-Jet had elected not to arbitrate the parties’ dispute in order to resolve it but had elected instead to litigate it.¹⁵

The assistant registrar also observed that staying this action would defeat the parties’ contractual intent manifested in their dispute-resolution agreement. A stay would compel Dyna-Jet to arbitrate the parties’ dispute even though: (i) it had no obligation to do so, being the beneficiary of a contractual right to elect to do so; (ii) had unequivocally indicated its intention not to exercise that right of election; and (iii) had, by commencing this litigation instead, acted positively to crystallise its election not to arbitrate.¹⁶

Dissatisfied with the assistant registrar’s decision, Wilson Taylor appealed to a judge in chambers. That appeal came before me.

The issues The two issues which arise for determination

Wilson Taylor’s application to stay this action and its appeal against the assistant registrar’s decision turns on the proper construction of two key sections of the IAA: s 2A and s 6.

Section 2A defines an “arbitration agreement” as follows:

Definition and form of arbitration agreement

2A.—(1) In this Act, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

Whenever the phrase “arbitration agreement” appears in this judgment, unless the context otherwise requires, I intend that phrase to mean an “arbitration agreement” within the meaning of s 2A...