NCC International AB v Alliance Concrete Singapore Pte Ltd

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JA
• Judgment Date: 26 February 2008
• Neutral Citation: [2008] SGCA 5
• Docket Number: Civil Appeal No 47 of 2007
• Date: 26 February 2008
• Published date: 27 February 2008
• Year: 2008
• Plaintiff Counsel: Woo Tchi Chu and John Wang (Robert Wang & Woo LLC)
• Citation: [2008] SGCA 5
• Defendant Counsel: Winston Kwek and Eileen Lam (Rajah & Tann)
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether special circumstances existing to justify granting interim mandatory injunction,Contractor seeking interim mandatory injunction to compel ready-mix concrete supplier to supply concrete,Arbitration,Whether contractor's conduct an abuse of process,Sections 12(1), 12(7) International Arbitration Act (Cap 143A, 2002 Rev Ed),Principles governing when court will make interim orders pending arbitration,Injunctions,Courts and Jurisdiction,Civil Procedure,Court’s power,Abuse of process,No serious steps taken to commence arbitration,Interlocutory order or direction,Sections 28(2), 31(1) Arbitration Act (Cap 10, 2002 Rev Ed),Contractor seeking interim mandatory injunction from court despite arbitration agreement

26 February 2008

V K Rajah JA (delivering the grounds of decision of the court):

Introduction

1 When should the court lend its assistance to prospective or ongoing arbitration proceedings? How should the court exercise its powers in this regard? These issues often bedevil both counsel and the court alike given the present-day prevalence of arbitration agreements. In these grounds of decision, we attempt to elucidate the legal position in the hope that the arbitral community will find it helpful. In particular, we wish to clarify the circumstances in which it may be appropriate for parties to an arbitration agreement to seek the assistance of the courts.

2 This was an appeal by NCC International AB (“the appellant”) against the refusal of the High Court judge (“the Judge”) to grant an interlocutory mandatory injunction pending arbitration in NCC International AB v Alliance Concrete Singapore Pte Ltd [2007] SGHC 64 (“the GD”). Having carefully considered the submissions of both parties, we dismissed the appeal. We now give the detailed grounds for our decision.

The facts

3 The appellant is the main contractor for the construction of underground train stations and tunnels at Upper Paya Lebar and Macpherson for the Circle Line of the Mass Rapid Transit system. Under the contract between the Land Transport Authority (“LTA”) and the appellant (“the Main Contract”), the construction works (“the Works”) were scheduled for completion on 30 November 2007.

4 Alliance Concrete Singapore Pte Ltd (“the respondent”) was the supplier of ready-mixed concrete to the appellant pursuant to a letter of award dated 26 July 2006 (“the Letter of Award”) and a contract of the same date (“the Concrete Contract”).

5 The Letter of Award contained various terms on which the respondent was to supply ready-mixed concrete to the appellant. These included preparing the necessary submission requirements for approval by the LTA’s engineer (“the Engineer”), guaranteeing the quality of the ready-mixed concrete and guaranteeing delivery to the appellant subject to a minimum notice period of one day.

6 The Concrete Contract contained, inter alia, two additional terms. The first was a “firm price” clause (cl 10), which provided that:

The Domestic Sub-contract rates [ie, the rates set out in para 1.0 of the Letter of Award] shall not be adjusted for any price fluctuation in the cost of labour, materials, goods … or for any changes in current legislation or regulations …

The second was a dispute resolution clause (cl 80), which provided that:

If any dispute or difference shall arise between the Domestic Sub-contractor [ie, the respondent] and the Main Contractor [ie, the appellant] in connection with or arising out of the Domestic Sub-Contract [ie, the Concrete Contract] … such dispute or difference shall be referred to the following course for settlement in the same manner as that stated under clause 71 in the Main Contract.

7 In turn, cl 71 of the Main Contract provided that any dispute was to be referred in the first place to the Engineer, and, if there was dissatisfaction with the Engineer’s decision, the dispute was to be referred to the Singapore Mediation Centre (“SMC”) for mediation in accordance with the rules of the SMC. If mediation was unsuccessful, the dispute would then be referred to arbitration according to the rules of the Singapore International Arbitration Centre (“the SIAC Rules”). Before us, both parties accepted that cl 80 of the Concrete Contract read with cl 71 of the Main Contract constituted an arbitration agreement.

8 The present dispute arose following the decision of the Indonesian government in late January 2007 to ban the export of sand – one of the essential ingredients of ready-mixed concrete – to Singapore with effect from 6 February 2007. This decision sent shock waves throughout the local construction industry, which depended primarily, if not solely, on sand from Indonesia.

9 The Singapore government soon intervened via the Building and Construction Authority (“BCA”) and the Singapore Contractors Association Ltd (“SCAL”). On 1 February 2007, the SCAL issued a circular to its members (including the appellant) stating that “BCA has agreed to supply sand directly to contractors for onward delivery to ready-mixed concrete suppliers, precaster [sic] and those contractors with onsite batching”. A few days later, on 3 February 2007, the SCAL issued a more comprehensive advisory (“the SCAL Advisory”) setting out in detail the BCA’s procedure for distributing sand which was to be released from the Government’s stockpile.

10 Unfortunately, the appellant and the respondent failed to agree on how to collect and pay for the sand distributed by the BCA. Although the BCA approved the appellant’s applications for a few weeks’ worth of sand supplies, the sand requested for by the appellant (“the allocated sand”) went uncollected. From 2 February 2007, the respondent stopped supplying ready-mixed concrete to the appellant, save for small quantities required to maintain the structural integrity of the Works.

11 In the ensuing exchange of correspondence between the parties, the appellant took the position that the respondent should collect the allocated sand and supply ready-mixed concrete to it at the fixed price stipulated in the Letter of Award, as provided for under cl 10 of the Concrete Contract. In contrast, the respondent took the position that the appellant should arrange for delivery of the allocated sand to the respondent’s batching site according to the BCA’s procedure and that the Concrete Contract should be renegotiated. However, neither party suggested submitting the dispute to the Engineer or commencing mediation or arbitration in accordance with cl 71 of the Main Contract.

12 On 15 March 2007, the appellant applied via Originating Summons No 429 of 2007 for an interlocutory mandatory injunction (“the Interim Injunction”) that would compel the respondent to deliver ready-mixed concrete which the former had ordered as well as perform the Concrete Contract by continuing to supply ready-mixed concrete in accordance with the terms of that contract. The title of the originating summons contained the words, inter alia, “In the Matter of An Intended Arbitration between [the appellant] as Claimants and [the respondent] as Respondents” [emphasis added]. In a supporting affidavit filed on the same day, the appellant’s authorised representative stated that the appellant undertook “to commence the arbitration expeditiously”. Nevertheless, at the hearing before us on 23 August 2007, approximately seven months after the dispute arose, counsel for the appellant confessed that he had not had any instructions to proceed with arbitration. Indeed, astonishingly, even the notice to commence arbitration had yet to be issued by the appellant.

The decision below

13 The Judge focused on the merits of the application for the Interim Injunction. Despite a request by counsel, the Judge made no finding as to whether he was exercising his jurisdiction under the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) or the Arbitration Act (Cap 10, 2002 Rev Ed) (“AA”).

14 The Judge dismissed the application on the basis that the appellant had failed to show that it deserved the court’s assistance in terms of issuing the Interim Injunction. He gave three reasons for his decision (at [29] of the GD). First, the appellant was not justified in taking the position that because the Concrete Contract did not specify that the ready-mixed concrete was to be prepared using sand from Indonesia, the appellant did not have to do anything except insist on delivery of the ready-mixed concrete. Second, the appellant had failed to follow the process of dispute resolution set out in the Concrete Contract. Third, the appellant should have availed itself of the measures contained in the SCAL Advisory so as to obtain the sand which it needed.

15 Although the Judge expressed wariness about prejudging the appellant’s likelihood of succeeding at the arbitration proceedings to be initiated, he concluded that the arbitrator would most likely adopt “a broad perspective” (at [30] of the GD) in deciding the dispute and that the appellant could not be said to be assured of obtaining an order for specific performance of the Concrete Contract at the arbitration.

The arguments on appeal

16 Taking the Judge’s cue, both parties focused their arguments before this court on the merits of the application for the Interim Injunction. The appellant sought to persuade us that it had a high chance of succeeding at the arbitration (in terms of obtaining an order for specific performance of the Concrete Contract) based on a literal construction of the Concrete Contract and because damages would not be an adequate remedy since the respondent’s failure to supply ready-mixed concrete had halted the Works. The respondent, on the other hand, advanced the doctrine of frustration to show that the appellant was unlikely to succeed at the arbitration, and also argued that, even if the appellant did succeed, damages would be adequate compensation because the appellant’s damages could be quantified. Further, the respondent submitted that the appellant had failed to demonstrate any urgency warranting the grant of the Interim Injunction because, inter alia, the latter had not asked for the present appeal to be treated as an expedited appeal.

17 Unfortunately, both parties dealt only peripherally with the issue of whether the court could and should intervene in the light of the pending arbitration proceedings. The appellant’s position was that the court’s power to provide interim relief in these circumstances was founded on the IAA, and that such power should be exercised in this instance because the merits of the case warranted it. In contrast, the respondent contended that the applicable legislation was the AA, and not the IAA, because the appellant had a business office...