Piallo Gmb H v Yafriro International Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 26 November 2013
• Date: 26 November 2013
• Docket Number: Suit No 354 of 2013 (Registrar's Appeal No 222 of 2013)
• Court: High Court (Singapore)

Piallo Gmb H

Plaintiff

and

Yafriro International Pte Ltd

Defendant

[2013] SGHC 260

Belinda Ang Saw Ean J

Suit No 354 of 2013 (Registrar's Appeal No 222 of 2013)

High Court

Arbitration—Stay of court proceedings—Claims on dishonoured cheques—Whether claims ‘in respect of any matter which is the subject of the agreement’—Whether ‘dispute’ existed within meaning of arbitration clause—Section 6 International Arbitration Act (Cap 143 A, 2002 Rev Ed)

The plaintiff, Piallo Gmb H (‘Piallo’), entered into a distributorship agreement (‘Distributorship Agreement’) with the defendant, Yafriro International Pte Ltd (‘Yafriro’), under which the latter had the exclusive right to market, distribute and sell all collections of de La Cour-branded watches, jewellery and accessories (‘de La Cour products’) in various Asian markets for a period of five years. Article 20 of the Distributorship Agreement (‘Art 20’) contained an arbitration provision.

Piallo terminated the Distributorship Agreement with immediate effect before the end of the five-year term by a letter of November 2012. In that letter, Piallo cited non-compliance with the terms of the Distributorship Agreement as a reason for early termination.

Apparently, after Piallo's termination of the Distributorship Agreement the parties engaged in negotiations in an attempt to resolve the disputes between them amicably. In the course of these negotiations, Yafriro indicated that it might be prepared not to insist on its strict contractual rights and instead accept a non-exclusive distributorship arrangement after the termination of the Distributorship Agreement, on condition that the de La Cour products would be ordered from Piallo, and be directly supplied by Piallo to Yafriro, without the involvement of any intermediary. Piallo invited Yafriro to make payment of the then latest batch of time pieces by way of post-dated cheques.

Yafriro issued 15 post-dated cheques (‘Cheques’) totalling a sum of CHF 511,210 (or S$680,198) in favour of Piallo, the dates of which ranged from 10 January to 30 April 2013.

According to Piallo, the Cheques were intended to be partial payment of de La Cour products supplied to Yafriro, and as at 21 December 2012, the total amount invoiced was CHF 570,333.45 for the de La Cour products supplied between May and December 2012. Yafriro on its part acknowledged that it owed some money to Piallo, but it countered that Piallo had separately breached the terms of the Distributorship Agreement.

Yafriro subsequently countermanded the Cheques after giving notice to do so in a letter dated 8 January 2013. Ultimately, all but three of the Cheques were presented for payment, but Piallo and its bankers were unable to get payment.

Piallo sued Yafriro on the Cheques on 19 April 2013. Yafriro entered appearance and, on 9 May 2013, filed an application to stay the proceedings in favour of arbitration under Art 20.1, reliance being placed on s 6 (1) of the International Arbitration Act (Cap 143 A, 2002 Rev Ed) (‘IAA’). An assistant registrar allowed the stay application, whereupon Piallo appealed.

Held, dismissing the appeal:

(1) In the context of s 6 (1) of the IAA, the first question was whether the present proceedings were ‘in respect of any matter which is the subject of the agreement [to arbitrate] ’ (ie, Art 20.1). This question was answered by examining the true nature of the claim, the defences and the cross-claims raised in the arguments: at [16] and [37] .

(2) Article 20.1 was apt to cover the claim on the dishonoured Cheques in these proceedings in that the claim (ie, the subject ‘matter’ of these proceedings) was a dispute arising out of or in connection with the Distributorship Agreement. Generally, Piallo's claim on the dishonoured Cheques and Yafriro's cross-claim for damages for breach of the Distributorship Agreement arose out of the ‘same incident’ in the sense that the circumstances that led to the Cheques being handed over to Piallo after the termination of the Distributorship Agreement had to do with the understanding reached between the parties following their negotiations on the same. In this type of situation, it was not difficult to accept that it was the intention of parties that such claims arising out of the same incident be resolved by the same process, that was, by arbitration alone rather than by arbitration and litigation for different disputes: at [31] and [38] .

(3) In this case, the resolution of the contractual issue (ie, the cross-claims) was necessary for a decision on the bill of exchange issue, so that it could be said that the contractual issue and the bill of exchange issue were so closely connected together on the facts that an agreement to arbitrate on one could properly be construed as covering the other given the sufficiently wide and general words chosen in Art 20.1. Based on the evidence, if the present proceedings were not stayed, Yafriro would at the very least raise the defence of estoppel to the claim on the dishonoured Cheques and a cross-claim for damages for misrepresentation that would exceed the amount of the dishonoured Cheques. All these issues (estoppel and misrepresentation) were intricately tied up with the circumstances surrounding the performance of and negotiations over the Distributorship Agreement: at [38] , [40] , [46] and [48] .

(4) Even accepting that the Cheques were initially a clear and unequivocal admission of Piallo's claim, the circumstances before and after the Cheques were issued showed that Yafriro subsequently denied the claim. At the very least there was a dispute over whether the Cheques had been rightly countermanded by Yafriro, which was a dispute that should be referred to arbitration: at [54] to [57] .

CA Pacific Forex Ltd v Lei Kuan Ieong [1999] 2 HKC 571 (refd)

Fiona Trust & Holding Corp v Privalov [2007] Bus LR 686; [2007] 2 Lloyd's Rep 267, CA (refd)

Fiona Trust & Holding Corp v Privalov [2007] Bus LR 1719; [2008] 1 Lloyd's Rep 254, HL (refd)

Getwick Engineers Ltd v Pilecon Engineering Ltd [2002] HKCFI 189 (refd)

Halki Shipping Corp v Sopex Oils Ltd [1998] 1 WLR 726 (refd)

International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2014] 1 SLR 130 (refd)

Larsen Oil and Gas Pte Ltd v Petroprod Ltd [2011] 3 SLR 414 (refd)

Nova (Jersey) Knit Ltd v Kammgarn Spinnerei Gmb H [1977] 1 WLR 713 (refd)

Safa Ltd v Banque du Caire [2000] 2 Lloyd's Rep 600 (refd)

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

Wong Fook Heng v Amixco Asia Pte Ltd [1992] 1 SLR (R) 654; [1992] 2 SLR 342 (refd)

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

Arbitration Act 1975 (c 3) (UK) ss 1, 1 (1)

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

Peter Doraisamy and Nur Rafizah Binte Mohamed Abdul Gaffoor (Selvam LLC) for the appellant

Sim Chong and Loo Chieh Ling Kate (JLC Advisors LLP) for the respondent.

Belinda Ang Saw Ean J

1 The plaintiff, Piallo Gmb H (‘Piallo’), sued the defendant, Yafriro International Pte Ltd (‘Yafriro’), on several dishonoured cheques on 19 April 2013. Yafriro successfully applied before an assistant registrar to stay the proceedings in favour of arbitration pursuant to s 6 (1) of the International Arbitration Act (Cap 143 A, 2002 Rev Ed) (‘IAA’) (see [2013] SGHCR 20). Piallo appealed vide Registrar's Appeal No 222 of 2013. I dismissed the appeal on 30 August 2013, and now give the reasons for my decision.

The facts

2 Piallo, an Austrian company, manufactures timepieces, jewellery and accessories under the ‘de La Cour’ brand. On 17 September 2008, it entered into a five-year distributorship agreement with Yafriro (‘Distributorship Agreement’), under which the latter had the exclusive right to market, distribute and sell all collections of de La Cour watches, jewellery and accessories (‘de La Cour products’) in various Asian markets for a period of five years. Article 20 of the Distributorship Agreement (‘Art 20’) contained the following arbitration provision:

1. Article 20 Arbitration / Governing Law

   20.1 Any dispute arising out of or in connection with the present contract shall be finally settled under the rules of Arbitration of the ICC Paris by one arbitrator appointed in accordance with said Rules.

2. 20.2 The seat of arbitration is Geneva.

3. 20.3 This contract is governed by the laws of the [sic] Switzerland.

4. 20.4 The language of arbitration is English.

3 Piallo terminated the Distributorship Agreement with immediate effect before the end of the five-year term. It was, however, unclear as to when the termination notice was given. According to Yafriro's former lawyers, Rajah & Tann (‘R&T’), the purported termination was on or about 30 October 2012. However, Piallo's termination letter of November 2012 was undated. In that November 2012 letter, Piallo cited non-compliance with the terms of the Distributorship Agreement as a reason for early termination, but Piallo stated that it would continue a working relationship with Yafriro and, as such, it would send 15 to 20 watches every month to the latter.

4 R&T's letter of 4 April 2013 to Piallo's lawyers, Selvam LLC (‘the April letter’) most conveniently summarises Yafriro's version of the events that developed after Piallo's purported termination of the Distributorship Agreement. R&T's narrative touched on how, when and why 15 post-dated cheques (‘Cheques’) totalling a sum of S$680,198 (Singapore dollar equivalent of CHF 511,210) were issued and handed over to Piallo despite Yafriro's contentions that Piallo had breached the Distributorship Agreement in several respects. The dates of the post-dated Cheques ranged from 10 January to 30 April 2013. Paragraph 4 of the April letter reads as follows:

Further, and without prejudice to the above, our clients had issued the cheques even before they had received all the time pieces which they ordered...