Navigator Investment Services Ltd v Acclaim Insurance Brokers Pte

• Jurisdiction: Singapore
• Court: Court of Appeal (Singapore)
• Judgment Date: 29 September 2009
• Docket Number: Civil Appeal No 5 of 2009
• Date: 29 September 2009

Navigator Investment Services Ltd

Plaintiff

and

Acclaim Insurance Brokers Pte Ltd

Defendant

[2009] SGCA 45

Chao Hick Tin JA

and

Andrew Phang Boon Leong JA

Civil Appeal No 5 of 2009

Court of Appeal

Arbitration–Agreement–Dispute to be resolved in accordance with Arbitration Rules of Singapore International Arbitration Centre for the time being in force–Whether parties had agreed that International Arbitration Act was to apply under Rule 32 SIAC Rules (3rd Ed, 1 July 2007)–Section 5 International Arbitration Act (Cap 143A, 2002 Rev Ed)

Arbitration–Stay of court proceedings–Application to stay an application for pre-action discovery and pre-action interrogatories where parties bound by arbitration agreement–Whether mandatory for court to stay application for pre-action discovery and/or pre-action interrogatories–Section 6 International Arbitration Act (Cap 143A, 2002 Rev Ed)

Civil Procedure–Amendments–Application to amend summons to include International Arbitration Act (Cap 143A, 2002 Rev Ed) as ground of staying originating summons–Whether issue was question of law–Whether prejudice that could not be compensated by appropriate costs order would arise

Acclaim Insurance Brokers Pte Ltd ("Acclaim") entered into a Distributorship Agreement ("the Agreement") with Navigator Investment Services Ltd ("Navigator") to distribute Navigator's investment products. The Agreement contained an arbitration clause (the "Arbitration Clause") which stated " [the dispute] shall be referred to and finally resolved by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre for the time being in force. The Arbitration Rules shall be deemed to be incorporated by reference into this Agreement". Edward Wong Leong Wei ("Wong") was appointed as a head of one of Acclaim's units and managed a team of Financial Adviser Representatives ("FARs"). Wong allegedly arranged for $26 million worth of "Funds under Administration" to be transferred from Acclaim's account with Navigator to Leadenhall Insurance Brokers Pte Ltd ("Leadenhall"), which Wong and/or Wong's father allegedly had pecuniary interests in.

Acclaim filed Originating Summons No 1830 of 2007 ("OS 1830") to seek pre-action discovery of certain documents as well as pre-action interrogatories of certain information from Navigator. The documents and information which Acclaim sought related to the transfer of the "Funds Under Administration" from Acclaim to Leadenhall. The stated purpose of OS 1830 was to assist Acclaim in assessing "the possibility of launching action [sic] against the parties that may have conspired against Acclaim and have caused losses through their illegal acts of forgery" and to "determine the identity of the FARs who were involved in the transfer of the Funds Under Administration in Navigator from Acclaim to any other Financial Adviser Company, and the exact amounts transferred by each FARs [sic]". In response, Navigator filed Summons No 130 of 2008 ("SUM 130") to stay OS 1830 in favour of arbitration pursuant to s 6 of the Arbitration Act (Cap 10, 2002 Rev Ed) ("the AA").

The assistant registrar dismissed SUM 130, and Navigator appealed against that decision in Registrar's Appeal No 383 of 2008 ("RA 383"). Three days before Acclaim was due to file its submissions in respect of RA 383, Navigator filed Summons No 5059 of 2008 ("SUM 5059") to seek a stay of OS 1830 under s 6 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) ("the IAA") in addition or in the alternative to the grounds originally stated in SUM 130. The Judge dismissed both RA 383 and SUM 5059. Navigator appealed against the Judge's decision in the present appeal. In addition, Navigator had also commenced Arbitration No 21 of 2008 ("ARB 21") at the Singapore International Arbitration Centre ("the SIAC") seeking (inter alia) declarations that it was not liable to Acclaim in any way. However, as a result of the proceedings in SUM 130, the arbitrator concerned suspended ARB 21 sine die, until further application by the parties.

Held, dismissing the appeal:

(1) While Navigator had applied to amend SUM 130 to include the IAA as a ground for staying OS 1830 at a very late stage, the issue of whether an arbitration was governed by the IAA or the AA was a question of law. It was difficult to see how any prejudice that would not be compensated by an appropriate costs order could, in the circumstances, arise. Further, Acclaim had made extensive arguments before the High Court and before this court as to the applicability of the IAA. As such, the court would consider whether the IAA or the AA was the applicable legislation in the context of the present proceedings: at [26].

(2) The IAA was the applicable legislation here. Only one set of rules was applicable at the time of the dispute, viz, the SIAC Rules (3rd Ed, 1 July 2007) ("the SIAC Rules 2007"). Rule 32 of the SIAC Rules 2007 stated that the "law of the arbitration shall be the [IAA]". If the parties had agreed that thelex arbitrii was to be the IAA, it was difficult to see how the parties could be said not to have agreed that the IAA was to apply within the meaning of s 5 (1) of the IAA. Under the Arbitration Clause, it was clear that the parties had expressly agreed (as was clearly stated in Rule 32 itself) that the law of the arbitration was to be the IAA: at [31], [34], [35] and [39].

(3) Under s 6 of the IAA, the earliest point in time at which a stay application could be made was when a substantive claim had already crystallised. Therefore, an application for pre-action discovery and/or pre-action interrogatories would, by its very nature, not fall within the scope of s 6 of the IAA. However, the mere availability of pre-action discovery and/or pre-action interrogatories did not mean that such an application would be granted by the court or as of right. Where the arbitration clause wasprima facie applicable, absent exceptional circumstances, a court would not grant pre-action discovery or pre-action interrogatories, especially where both the parties involved as well as the issues in dispute between them were one and the same, on the ground of abuse of process. However, pre-action discovery and/or pre-action interrogatories could be important to assist the applicant to determine whether he had a viable cause of action against the respondent (with whom the applicant had an arbitration agreement) or against third parties with whom the applicant had no such agreement. The decision that courts were able to grant pre-action discovery and/or pre-action interrogatories between parties to an arbitration agreement did not militate against the court's commitment towards facilitating and promoting arbitration between commercial parties where possible. Neither was the desire by parties to keep the proceedings confidential an insuperable obstacle as the duty of confidentiality was not an absolute one and the implication that court proceedings were less confidential was one that was overstated. However, no findings were made on the substantive issue in OS 1830 as it was not before the court. Without a doubt, the court hearing the merits of OS 1830 would have to consider all the factors raised by the parties in arriving at its decision: at [53] to [56], [58], [62], [63], [65] and [66].

[Observation: Although the reasoning and decision set out above applied specifically to s 6 of the IAA, there was no reason why the same reasoning and result should not, ceteris paribus, apply to s 6 of the AA as well: at [68].]

Ali Shipping Corp v Shipyard Trogir [1999] 1 WLR 314 (refd)

Black & Veatch Singapore Pte Ltd v Jurong Engineering Ltd [2004] 4 SLR (R) 19; [2004] 4 SLR 19 (refd)

Carona Holdings Pte Ltd v Go Go Delicacy Pte Ltd [2008] 4 SLR (R) 460; [2008] 4 SLR 460 (refd)

Eagle Star Insurance Co Ltd v Yuval Insurance Co Ltd [1978] 1 Lloyd's Rep 357 (refd)

NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR (R) 565; [2008] 2 SLR 565 (refd)

Jurong Town Corp v Wishing Star Ltd [2004] 2 SLR (R) 427; [2004] 2 SLR 427 (refd)

Lian Teck Construction Pte Ltd v Woh Hup (Pte) Ltd [2005] 1 SLR (R) 266; [2005] 1 SLR 266 (refd)

Sembawang Engineers and Constructors Pte Ltd v Covec (Singapore) Pte Ltd [2008] SGHC 229 (refd)

Tjong Very Sumito v Antig Investments Pte Ltd [2009] 4 SLR (R) 732; [2009] 4 SLR 732 (refd)

United Overseas Bank Ltd v Ng Huat Foundations Pte Ltd [2005] 2 SLR (R) 425; [2005] 2 SLR 425 (refd)

Woh Hup (Pte) Ltd v Lian Teck Construction Pte Ltd [2005] SGCA 26 (refd)

Arbitration Act (Cap 10,2002 Rev Ed)s 6 (consd)

International Arbitration Act (Cap 143A, 2002 Rev Ed)ss 5 (1), 6 (consd);ss 5 (2),6 (1), 6 (2),15 (2)

Rules of Court (Cap 322,R 5, 2004 Rev Ed)O 12r 9 (2), O 24r 6, O 26Ar 1

Rules of Court (Cap 322,R 5, 2006 Rev Ed)O 12r 9, O 24, O 24r 6 (3) (a), O 24r 6 (5), O 26A,O 26Ar 1 (3) (a), O 26Ar 6 (5)

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed)ss 8 (2), 18

Arbitration Act 1889 (c 49) (UK)s 4

Arbitration Act 1950 (c 27) (UK)s 4

Arbitration Act 1975 (c 3) (UK)s 1

Arbitration Act 1996 (c 23) (UK)s 9 (3)

Common Law Procedure Act 1854 (c 125) (UK)s 11

Kronenburg Edmund Jerome, Jacqueline Teo Lin and Loh Hui-Qi Vicki (Tan Peng Chin LLC) for the appellant

Oommen Mathew (Haq and Selvam) and John Thomas (David Nayar and Vardan) for the respondent.

Judgment reserved.

Andrew Phang Boon Leong JA

(delivering the judgment of the court):

Introduction

1 This is an appeal against the decision of the High Court judge ("the Judge") who refused to grant a stay of an application for pre-action discovery and pre-action interrogatories in Acclaim Insurance Brokers Pte Ltd v Navigator Investment Services Ltd [2009] SGHC 12 ("Judgment"). As would be apparent in the course of this judgment, this case raises two interesting (and important) points of practice, namely: (a) the significance of the...