JUDICIAL ASSISTANCE IN MARITIME ARBITRATION: A SINGAPORE PERSPECTIVE

• Date: 01 December 2006
• Published date: 01 December 2006
• Author: TOH Kian Sing LLB (Hons) (National University of Singapore), BCL (Oxford); Senior Counsel, Advocate & Solicitor (Singapore).

This article examines the ways in which the Singapore courts have in recent years provided curial assistance to maritime arbitration. It focuses on the arrest of ships as a means of obtaining security for a potential arbitration award or for the enforcement of an arbitration award that has been obtained as well as the granting of Mareva injunctions in aid of maritime arbitrations.

I. Introduction

1 It has often been said of arbitration that there should be minimum interference from the courts and that arbitrators should be allowed to conduct their hearing with the necessary degree of autonomy. However, it has also long been recognised that courts do have a role to play in facilitating and enhancing the process of arbitration, whether or not the arbitration be conducted in the same country as the courts from which curial support is sought. This is particularly so with maritime arbitration where the need to arrest a vessel or otherwise attach the respondent’s assets to secure an arbitration award is often of critical importance.

2 This article examines curial assistance provided by the Singapore courts in the following ways:

(a) arrest of ships to secure a potential arbitration award;

(b) arrest of ships to obtain security for the enforcement of an arbitration award;

(c) Mareva injunction to aid maritime arbitration.

II. The statutory framework

3 The legislation governing international arbitration is the International Arbitration Act of Singapore (“IAA”).1 International arbitration is defined in s 5(2) of the IAA as follows:

Notwithstanding Art 1(3) of the Model Law, an arbitration is international if —

(a) at least one of the parties to an arbitration agreement, at the time of the conclusion of the agreement, has its place of business in any State other than Singapore; or

(b) one of the following places is situated outside the State in which the parties have their places of business;

(i) the place of arbitration if determined in, or pursuant to, the arbitration agreement;

(ii) any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected; or

(c) the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country.

4 By virtue of s 5(1) of the IAA, Pt II of the IAA applies to international arbitration as defined above. It should be noted that in considering whether or not an arbitration is an “international arbitration” for purposes of the IAA, the relevant criteria are in essence the places of business of the parties, place of performance of underlying commercial relationship and the place of the arbitration. The fact that an “international arbitration” is not to take place in Singapore does not render it any less of an “international arbitration”, for the purposes of s 5(2) of the IAA. This is because, inter alia, the definition of “international arbitration” covers the situation where the place of arbitration is not in the same jurisdiction as the place of business of either party. There is nothing in the language of s 5(2) which mandates that the place of arbitration must be in Singapore. The relevance of this comment will be elaborated below.

5 Part II of the IAA includes ss 6 and 7, which deal with mandatory stay of proceedings commenced in defiance of arbitration agreements

and the powers of the court to attach orders and conditions to a stay order. In particular, s 6(3) as well as s 7(1) of the IAA empower the court, in staying proceedings in favour of arbitration to attach terms or conditions to any such stay order which relate to the preservation of property which is the subject matter of the dispute, retention of ships or any property arrested or security furnished in admiralty action or the provision of substitute security for the satisfaction of any arbitration award. For ease of exposition, these provisions are set out as follows:

Enforcement of international arbitration agreement

6.—(1) Notwithstanding Article 8 of the Model Law, where any party to an arbitration agreement to which this Act applies institutes any proceedings in any court against any other party to the agreement in respect of any matter which is the subject of the agreement, any party to the agreement may, at any time after appearance and before delivering any pleading or taking any other step in the proceedings, apply to that court to stay the proceedings so far as the proceedings relate to that matter.

(2) The court to which an application has been made in accordance with subsection (1) shall make an order, upon such terms or conditions as it may think fit,2 staying the proceedings so far as the proceedings relate to the matter, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed.

(3) Where a court makes an order under subsection (2), the court may, for the purpose of preserving the rights of parties, make such interim or supplementary orders as it may think fit in relation to any property which is the subject of the dispute to which the order under that subsection relates.

(4) Where no party to the proceedings has taken any further step in the proceedings for a period of not less than 2 years after an order staying the proceedings has been made, the court may, on its own motion, make an order discontinuing the proceedings without prejudice to the right of any of the parties to apply for the discontinued proceedings to be reinstated.

(5) For the purposes of this section and sections 7 and 11A —

(a) a reference to a party shall include a reference to any person claiming through or under such party;

(b) “court” means the High Court, District Court, Magistrate’s Court or any other court in which proceedings are instituted.

Court’s powers on stay of proceedings

7.—(1) Where a court stays proceedings under section 6, the court may, if in those proceedings property has been arrested or bail or other security has been given to prevent or obtain release from arrest, order —

(a) that the property arrested be retained as security for the satisfaction of any award made on the arbitration; or

(b) that the stay be conditional on the provision of equivalent security for the satisfaction of any such award.

(2) Subject to Rules of Court and to any necessary modification, the same law and practice shall apply in relation to property retained in pursuance of an order under this section as would apply if it were held for the purposes of proceedings in the court which made the order.

6 Another relevant provision to the discussion at hand is s 12, which is also within Pt II of the IAA. Section 12(7) read with s 12(1) of the IAA spells out the powers of the Singapore court in relation to an international arbitration to which Pt II of the IAA applies. Sections 12(1) and 12(7) provide as follows:

12.—(1) Without prejudice to the powers set out in any other provision of this Act and in the Model Law, an arbitral tribunal shall have powers to make orders or give directions to any party for —

(a) security for costs;

(b) discovery of documents and interrogatories;

(c) giving of evidence by affidavit;

(d) the preservation, interim custody or sale of any property which is or forms part of the subject-matter of the dispute;

(e) samples to be taken from, or any observation to be made of or experiment conducted upon, any property which is or forms part of the subject-matter of the dispute;

(f) the preservation and interim custody of any evidence for the purposes of the proceedings;

(g) securing the amount in dispute;

(h) ensuring that any award which may be made in the arbitral proceedings is not rendered ineffectual by the dissipation of assets by a party; and

(i) an interim injunction or any other interim measure.

…

(7) The High Court or a Judge thereof shall have, for the purpose of and in relation to an arbitration to which this Part applies, the same power of making orders in respect of any of the matters set out in subsection (1) as it has for the purpose of and in relation to an action or matter in the court.

7 On a plain reading of ss 5, 6, 7 and 12(1) as well as 12(7), the powers of the Singapore court to make orders in relation to arbitration would not be limited to international arbitration where the venue of arbitration is in Singapore. Indeed, this was the conclusion reached by Belinda Ang Saw Ean J in Front Carriers Ltd v Atlantic & Orient Shipping Corp.3 In stark contrast is the slightly earlier decision of Swift-Fortune Ltd v Magnifica Marine SA,4 where an opposite conclusion, favouring a narrow reading of ss 12(1) and 12(7), was reached by Judith Prakash J, who held that the Singapore courts have no powers except in the circumstances contemplated in ss 6(3) and 7, to make any order in aid of foreign arbitration, and therefore are incapable of granting a Mareva injunction to support a foreign arbitration. The latter decision was appealed to the Court of Appeal, which heard oral submissions on 29 July 2006 and has reserved judgment.

8 Section 12(7) should also be read in tandem with Art 9 of the Model Law, which has the force of law in Singapore by virtue of s 3(1)5 of the IAA and which is reproduced in the First Schedule of the IAA. Article 9 of the Model Law states:

It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure.

III. Arrest of vessels to secure potential arbitration award

9 Section 6(1) of the IAA provides that if an action is commenced in breach of an international arbitration agreement, such an action shall be mandatorily stayed in favour of arbitration. The application for a stay should be made at any time after appearance and...