Star-Trans Far East Pte Ltd v Norske-Tech Ltd and Others

• Jurisdiction: Singapore
• Judge: G P Selvam J
• Judgment Date: 14 July 1995
• Neutral Citation: [1995] SGHC 168
• Docket Number: Suit No 660 of 1994
• Date: 14 July 1995
• Published date: 19 September 2003
• Year: 1995
• Plaintiff Counsel: Vivian Ang and Andrew Chan (Allen & Gledhill)
• Citation: [1995] SGHC 168
• Defendant Counsel: Molly Lim and Roland Tong (Wong Yoong Tan & Molly Lim)
• Court: High Court (Singapore)
• Subject Matter: Whether party giving performance guarantee on behalf of one party to main contract could also be considered party to arbitration agreement under main contract,Principles governing grant of injunction to restrain payment under bond,Banking,Arbitration,Stay of court proceedings,Whether entitled to apply for stay of proceedings in court pursuant to such agreement,Right to apply,Whether American Cyanamid relevant,Whether affected by disputes relating to underlying contract,Injunctions,Civil Procedure,Performance bonds,Banker's obligation to pay,Injunction to restrain payment under performance bond Principles governing grant of injunction

Background facts

The action arose out of a written contract dated 24 February 1993 and made initially between the plaintiffs in this action and the first defendants. It was numbered 6021 (the contract).

For a proper understanding of the issues it is necessary to explain the contract and the relationship between the parties to the action. The plaintiffs, Star-Trans Far East Pte Ltd, carry on the business as freight forwarders. They are a Singapore company.

The first defendants (Norske-Tech Ltd) are a Hong Kong incorporated company. The second defendants (PT Riau Andalan Pulp & Paper) are incorporated in Indonesia for the purpose of managing a pulp and paper mill in that country.

The purpose of the contract was for Star-Trans Far East Pte Ltd and Speditor OY (the third defendants) (described in the contract collectively as `the forwarder`) to organize ocean carriage of plant and equipment from various parts of the world to the construction site of the proposed paper mill in Riau, Indonesia. The first defendants (described in the contract as `the owner`) had undertaken the construction of the paper mill. The contract was signed by the plaintiffs, the third defendants and the first defendants.

By a document in the form of a letter from the second defendants referred to in it as RAPP and the first defendants referred to in it as NTL addressed to the plaintiffs and the third defendants, the second defendants gave a guarantee that the first defendants would perform the contract. I shall refer to this document, which is undated, as the `performance guarantee`. It is necessary to set out its contents in full:

We refer to the contract dated 24 February 1993 between Norske-Tech Ltd and Star Trans Far East Pte Ltd jointly with Speditor OY (freight forwarder) relating to the services by the forwarder and the owner by Norske-Tech Ltd of Freight Forwarding Services set out in the Contract No 6021.

In consideration of the forwarder entering into the contract with Norske-Tech Ltd, RAPP irrevocable guarantees the performance undertakes to pay to the forwarder if Norske-Tech Ltd fails to pay them all amounts which are due to be paid by Norske-Tech Ltd under the contract.

The forwarder irrevocably agrees that all the rights of Norske-Tech Ltd under the contract may be exercised by RAPP and all the obligations of Norske-Tech Ltd shall be discharged if performed by RAPP and, without prejudice to the generality of the foregoing, that the rights of Norske-Tech Ltd under the contract may at any time be assigned to RAPP.

The forwarder shall at all times, unless notified in writing to the contrary by RAPP and Norske-Tech Ltd, act in accordance with all notices and instructions by RAPP as if such notices and instructions were given by Norske-Tech Ltd.

This letter shall be governed by and shall be construed in accordance with the laws of England.

The performance guarantee bears the signature of the plaintiffs and the first and the second defendants. It was not signed by the third defendants even though it was jointly addressed to them. The second defendants, therefore, were fully interested and involved in the contract.

The previous proceedings

Before this action the first defendants had instituted another action against the plaintiffs: S 1864/93. This suit was brought to obtain urgent delivery of cargo in the possession of the plaintiffs under a purported lien over the cargo. A statement of claim was filed but nothing further was done. The statement of claim was, of course, an elaboration of the claim in respect of and restricted to the withholding of cargo.

Later, the present plaintiffs commenced S 1898/93. The defendants in that action were the same as in this action. The endorsement of claim was as follows:

The plaintiff`s claim is for US$4,018,116.38 being the amount outstanding on 14 September 1993 in respect of freight, expenses, charges for services rendered, interest, and all other sums payable by the first and/or second defendants under or in connection with a written contract dated 24 February 1993 entered into between the plaintiffs jointly with the third defendants and the first defendants (the contract), and for contractual interest pursuant to the contract, and/or for damages for breach of the first and second defendants` duties under the contract, and/or against the second defendant under a irrevocable contract of guarantee executed by the second defendants in favour of the plaintiffs over the payment obligations of the first defendant under the contract.

Conduct of parties before action

The plaintiffs in S 1898/93 by ex parte SIC 5590/93 effectively applied for a Mareva injunction on the assets of the first and/or second defendants in Singapore up to the sum of US$6.13m. The gist of the ground on which the application was founded was that the conduct of the first and second defendants `had been less than honest, and there was a likelihood of their assets being dissipated to defeat the plaintiffs` claim.` The application was heard inter partes by LP Thean J [as he then was] and dismissed with costs to be paid by the plaintiffs to the defendants.

In the same action, ie S 1898/93, the first and second defendants took out two summons-in-chambers. By SIC 5608/93 they prayed for an order for delivery up of certain cargoes on board the mv Svenja upon payment of certain sums to the plaintiffs` solicitors. By SIC 5708/93 the first and second defendants applied for a similar order in respect of certain cargoes on the Gallia. The two applications were heard by LP Thean J who in substance granted the orders sought.

On 8 October 1993 that is after the above suits had been filed and well before the present suit was commenced, the plaintiffs` solicitors wrote to the defendants` solicitors in the following terms:

We refer to the various proceedings which have been instituted in court over this matter.

As you are aware, in the Contract No 6021 dated 24 February 1993 (the contract) made between our respective clients, there is a provision which requires that all disputes arising out of or in connection with the contract to be referred to arbitration on the terms stated therein.

Hence we are concerned and suggest that both parties should, at this juncture, come to an agreement on the future conduct of this matter. We propose that the issues relating to demurrage, costs, expenses and the alleged breaches of the contract should be referred to arbitration. As for the present proceedings which have been instituted, these could be stayed or discontinued once all the ancillary matters have been resolved. Further, we would propose that for the purpose of saving of costs, an arbitration in a manner other than under the ICC Rules be agreed between the parties and that this be conducted in Singapore.

We will be obliged if you could take your clients` instructions and revert to us on the aforesaid.

It is important to note that the plaintiffs refer to `present proceedings` meaning the actions mentioned above. Their call for arbitration was unambiguous and unconditional. Further, it was clear that such call was made by the plaintiffs to the first as well as the second defendants because both defendants were represented by the same solicitors, M/s Wong Yoong Tan & Molly Lim. The arbitration clause of the contract read as follows:

Any disputes arising out of or in connection with this contract shall be finally settled by arbitrators, without recourse to the courts, under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators appointed under such rules. The findings of the arbitrators shall be binding on the parties and enforceable in any court of competent jurisdiction.

This contract shall be governed by and construed in accordance with the laws of England.

The place of arbitration shall be Singapore.

Performance of the contract shall continue during the arbitration proceedings. No payment due or payable to forwarder by owner shall be withheld on account of pending reference to arbitration.

Wong Yoong Tan & Molly Lim, the solicitors for the first and second defendants, then wrote to the plaintiffs` solicitors asking whether the third defendants, who are also a party to the contract, were similarly inclined to refer the matter to arbitration. On the 27 October 1993 the plaintiffs reaffirmed the plaintiffs` keenness for an arbitration in an unambiguous reply:

Although Speditor OY is a party to the contract, they have indicated that they are not interested in the dispute between our respective clients under the contract and we have only made them a nominal party in the said legal proceedings. [Emphasis added.]

The plaintiffs` solicitors went on to add:

We will seek the views of Speditor OY as to whether they wish to firstly take part in the proposed arbitration proceedings and if so, whether they agree to our proposal to refer the dispute to arbitration in a manner other than under the ICC Rules. We will revert to you once we have received a reply from Speditor OY. In the event that they do not wish to take part in the arbitration proceedings, then we do not see the need to make them a party thereto.

It was therefore clear as far as the plaintiffs were concerned that the arbitration could proceed without the third defendants being a party to the arbitration proceedings.

The first and second defendants` solicitors responded by a letter dated 1 November 1993 as follows:

We refer to your fax dated 27 October 1993.

How have Speditor OY indicated that they are not interested in the dispute between our respective clients? For your information, our clients are holding Speditor OY jointly liable together with your clients for any loss and damage suffered by our clients by reason of the non-performance of their obligations under the contract. As such, if you do not intend to make Speditor OY a party to the arbitration proceedings, we will do so.

We...