Econ Piling Pte Ltd v NCC International AB
Jurisdiction | Singapore |
Judge | Sundaresh Menon JC |
Judgment Date | 09 February 2007 |
Neutral Citation | [2007] SGHC 17 |
Court | High Court (Singapore) |
Year | 2007 |
Published date | 13 February 2007 |
Plaintiff Counsel | Chiah Kok Khun / Tan Hsuan Boon (Wee Swee Teow & Co) |
Defendant Counsel | Balachandran s/o Ponnampalam (Robert Wang & Woo) |
Subject Matter | Arbitration,Stay of court proceedings,Referral of disputes to arbitration,Whether dispute covered by arbitration clause such that proceedings should be stayed for referral to arbitration,Section 6 Arbitration Act (Cap 10, 2002 Rev Ed),Contract,Contractual terms,Construction,Arbitration clause,Whether joint venture agreement with arbitration clause superseded or varied by subsequent variation agreement with clause for "any dispute" to be referred to Singapore courts,Lack of words limiting effect of subsequent clause to disputes arising only from variation agreement |
Citation | [2007] SGHC 17 |
9 February 2007 |
|
1 With a view to tendering for a construction project of the Land Transport Authority, Econ Piling Pte Ltd (“Econ”), the appellant, and NCC International Aktiebolag (“NCC”), the respondent, entered into a joint venture agreement on 13 May 2002 (“the JVA”) and a joint venture between the two companies was formed (“the Econ-NCC JV”). The JVA contains, among other provisions, cl 22, which prescribes the manner in which the parties are to resolve any dispute that cannot otherwise be amicably resolved. Most relevant to the present appeal is cl 22.5, which is in the following terms:
Any matter which cannot be resolved in the manner provided by the preceding Sub-clauses of this Clause 22, shall be finally settled by arbitration in accordance with the Rules of the Singapore International Arbitration Centre presently in force by one or more arbitrators appointed in accordance with the Rules.
[emphasis added]
2 The Econ-NCC JV was subsequently awarded the contract on 1 August 2002; and two weeks later, on 14 August 2002, Econ and NCC registered themselves as a partnership (“the Partnership”).
3 Less than a year on, Econ began to face financial difficulties. This eventually resulted in Econ and NCC entering into another agreement dated 22 May 2003 (“the Variation Agreement”) in order to restructure their commercial relationship in an attempt to secure the continued viability of their joint venture. The parties saw fit to insert into this agreement a dispute resolution provision vide cl 11 of the Variation Agreement, which patently differs from its counterpart which is found in cl 22.5 of the JVA (supra [1]). The material part of cl 11 of the Variation Agreement reads:
11 In the event of any dispute or difference arising between the parties, they hereby agree:-
11.1 that the same shall be forthwith referred to the exclusive jurisdiction of the Singapore Court and shall be pursued with all expedition by the Referring Party…
4 Problems continued to surface and Econ was eventually placed under interim judicial management on 6 January 2004. A month later, on 6 February 2004, the interim judicial manager informed NCC’s solicitors that it (i.e. Econ) would not be continuing its participation in the Partnership. It was suggested in subsequent discussions that the proper course would be to effect a dissolution of the Partnership, and for its attendant contracts, liabilities and assets to be transferred to NCC. According to Econ, the parties finally agreed (after several rounds of negotiation) to dissolve the Partnership. To bring this agreement into effect, Econ executed a Deed of Dissolution and sent it to NCC for its execution of the same. The upshot of what then transpired is that NCC did not execute or return this Deed to Econ. As a result, Econ filed Originating Summons No. 694 of 2006 (“OS 694/2006”) on 31 March 2006, seeking a declaration that the Partnership had been dissolved or, in the alternative, an order to dissolve the Partnership.
5 NCC responded with an application to stay the proceedings pursuant to s 6 of the Arbitration Act (Cap 10, 2002 Rev Ed).
The proceedings before the Assistant Registrar
6 NCC’s application to stay OS 694/2006 was heard by the Assistant Registrar below (“the AR”) and the application was granted. The AR appeared to base his decision on the following grounds:
(a) Given that there was no partnership agreement between Econ and NCC, it stood to reason that the JVA should be regarded as the contract that governed their commercial relationship. Therefore, the effect of cl 22.5 was to compel the court to stay the dispute in deference to arbitration;
(b) That notwithstanding cl 11.1 of the Variation Agreement, the right and obligation of the parties to refer the dispute over the dissolution of the Partnership to arbitration was preserved by reading cl 6.2.1(xii) of the JVA in conjunction with cl 1.3(b)(iii) of the Variation Agreement (see [18] and [19] below); and
(c) The court had the power to refer a matter to arbitration even if one of the reliefs sought was for an order to dissolve a partnership.
The appeal
7 Dissatisfied with the AR’s decision, Econ filed this appeal. I heard arguments from both parties on 11 September 2006, and thereafter reserved judgment. On 20 December 2006, I delivered judgment orally in chambers with a brief statement of my reasons, reversing the decision of the AR in favour of Econ. NCC filed an appeal against my judgment on 18 January 2007. When I delivered judgment orally in chambers, I had reserved the right to, and do now, state in full the reasons for my decision.
The analysis of the arguments and contentions
8 Whether a particular dispute is to be referred to arbitration or the courts falls to be determined by the terms of the arbitration agreement. As May LJ held in Ashville Investments Ltd v Elmer Contractors Ltd [1988] 2 Lloyd’s Rep 73, at 75:
It is a principle of law that the scope of an arbitrator’s jurisdiction and powers in a given case depends fundamentally upon the terms of the arbitration agreement, that is to say upon its proper construction in all the circumstances.
9 It is obvious that the starting point in deciding which forum the parties intended disputes arising between them to be referred to is cl 22.5 of the JVA, which in plain language, provides for “any dispute” to be referred to arbitration. It was not disputed that if cl 22.5 was the operative clause, the dispute in OS 694/2006 would have to be referred to arbitration.
10 In my judgment, the critical question is this: how should the JVA be read in the context of the Variation Agreement? In other words, was cl 22.5 of the JVA varied or superceded by cl 11.1 of the Variation Agreement, which states (contrary to the former) that disputes or differences arising between the parties are to be referred exclusively to the Singapore courts?
11 In my judgment, cl 22.5 of the JVA was so varied, and I find that to be so for two reasons.
12 First, it is undisputed that the purpose of the Variation Agreement was to reconstitute, in very significant ways, the commercial relationship between the parties following Econ’s financial woes. One needs to look no further than the recitals to appreciate this. Accordingly, the JVA, which had regulated the parties’ relationship prior to Econ’s financial problems, was varied by the Variation Agreement to the extent of any inconsistency between the former and the latter. Indeed, cl 12 of the Variation Agreement expressly states that:
Save and only as may be expressly varied by this further agreement, all the provisions of the JVA between the parties dated May 13, 2002 shall continue in full force and effect.
Thus, the parties’ manifest intentions were clearly that the Variation Agreement should trump the JVA wherever there was an inconsistency between them but that the JVA would otherwise remain in force.
13 There is simply no gainsaying the inconsistency between the dispute resolution clauses in the JVA and the Variation Agreement and as such, cl 22.5 of the JVA must be deemed to have been superceded by cl 11.1 of the Variation Agreement. I find support for this in cl 11.3 of the Variation Agreement, which specifically articulates the applicability of cl 11.1 to the JVA itself, stating in no uncertain terms that:
The parties shall continue with their obligations under either the JVA or this Agreement, notwithstanding the reference of any issue under either agreement to the Court.
[emphasis added]
14 Consistent with this, cl 11.1 of the Variation Agreement also provides that “any dispute” shall be submitted to the courts and this is not confined to disputes arising under the Variation Agreement (see [3] above).
15 It is trite law that “where words are found to be plain and unambiguous, they must be interpreted according to the plain and unambiguous language without extraneous help. The presumption is that parties have used ordinary words which are written in the document to convey their ordinary meaning”: Citicorp Investment Bank v Wee Ah Kee
16 The second reason I am persuaded that cl 22.5 of the JVA was superceded by cl 11.1 of the Variation Agreement is that it is counterintuitive for two contracts that are meant to be read together to have different dispute resolution regimes. Therefore, unless there is a clear and express indication to the contrary, it may usually be...
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