Vishva Protech Pvt Ltd v Pacific Pharmaceuticals Pte Ltd

• Judge: Jonathan Toh Jun Hian
• Judgment Date: 12 March 2021
• Neutral Citation: [2021] SGDC 49
• Citation: [2021] SGDC 49
• Court: District Court (Singapore)
• Published date: 06 April 2021
• Docket Number: District Court Suit No 2314 of 2020 (Summons No 4379/2020)
• Plaintiff Counsel: Gomez & Vasu LLC
• Defendant Counsel: Tan Peng Chin LLC
• Subject Matter: Arbitration,Stay of court proceedings,Mandatory stay under International Arbitration Act (Cap 143A, 2002 Rev Ed),Whether Defendant had taken step in proceedings,Whether dispute fell within scope of arbitration agreement
• Hearing Date: 22 February 2021,04 March 2021

Deputy Registrar Jonathan Toh Jun Hian:

The Defendant applied by DC/SUM 4379/2020 (“SUM 4379”) for a stay of proceedings in favour of arbitration on the basis that parties are bound by the arbitration agreement found at clause 23 of their agreement dated 24 January 2018 (the “Agreement” and the “Arbitration Clause” respectively).

The main issue in this application was whether the Defendant was precluded from obtaining a stay because it took a step in the proceedings by making an earlier application in DC/SUM 3510/2020 (“SUM 3510”) to set aside the Writ of Summons filed on 29 September 2020 (the “Writ”). I found that it did not and granted the order to stay these proceedings in favour of arbitration. The Plaintiff also raised a number of other issues which I did not find meritorious.

The issues raised

The Plaintiff made the following arguments resisting the Defendant’s application: The Defendant was precluded from making this application as it took a step in the proceedings by applying for and proceeding with SUM 3510 to set aside the Writ of Summons filed on 29 September 2020 (the “Writ”). The Defendant did not raise a dispute to the Plaintiff’s claims which would trigger the operation of the Arbitration Clause. The Plaintiff’s pleaded claim in detinue for the Defendant’s alleged wrongful detention of a machine known as an “R&D Rapid Mixer Granulator Model-CRMG 13 Ltrs” (the “1st RMG”) fell outside the scope of the Arbitration Clause. The Arbitration Clause was unenforceable for being incomplete, ambiguous and/or uncertain.

I deal quickly with one preliminary point. Prayer 1 of SUM 4379 purported to rely on both the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”), s 6 and the Arbitration Act (Cap 10, 2002 Rev Ed), s 6 for the stay. Counsel for the Defendant, Mr Lin, acknowledged at the start of the hearing that IAA, s 6 was the applicable provision. Both parties proceeded with arguments solely on IAA, s 6. This was clearly correct. There was no dispute that the Plaintiff, one of the parties to the Agreement, is a foreign company registered in India with its place of business in India. The obligations under the Agreement related the sale, supply and delivery of various machinery or equipment by the Plaintiff to the Defendant in connection with a factory in Yangon, Myanmar. In the circumstances, the proposed arbitration was international as defined at IAA, s 5(2).

Whether the Defendant had taken a step in the proceedings Procedural history

After the Defendant was served with the Writ of Summons and Statement of Claim both filed on 29 September 2020 (the “Writ” and “SOC” respectively), it applied in SUM 3510 to set aside the Writ. The following orders were prayed for: 1. That the Writ of Summons filed herein on 29 September 2020 be set aside on the ground of irregularity pursuant to Order 12 Rule 7(1)(a) of the Rules of Court and/or the inherent jurisdiction of the Court. 2. That timelines for filing further pleadings in DC/DC 2314/2020 be held pending disposal of this application.

…

The 1st Affidavit of Mr Khin Swe Oo filed on 21 October 2020 in support of SUM 3510 (“Mr Khin’s 1st Affidavit”) set out three grounds for the application: At the time the application was filed, the Plaintiff was not represented by solicitors.¹ The individual who filed the writ, one Mr Amoghvarsha Shashidhar Koranmath, was not a solicitor. The Plaintiff, by a letter dated 22 September 2020, held Mr Koranmath out to be its employee based in Singapore.² This was a breach of Rules of Court (Cap 322, R 5, 2014 Rev Ed), O 5 r 6(2) (“ROC”). The substance of the Plaintiff’s claims concerned a business-to-business claim, but it failed to comply with the State Courts’ pre-action protocol for business to business debt claims prior to commencing legal proceedings.³ The SOC did not conform to the usual form in that there were no paragraph numbers, and therefore it was “not feasible or practical for the Defendant [to] respond to such claim(s) or enter a Defence to the same.”⁴

SUM 3510 was fixed to be heard on 23 November 2020. Before the hearing, Messrs Gomez & Vasu LLC filed a Notice of Appointment of Solicitor on 12 November 2020 giving notice to the Defendant that they had been appointed to act for the Plaintiff.

At the hearing of SUM 3510 on 23 November 2020, the Defendant maintained that it was proceeding with the application on all three grounds. According to the notes of evidence, the Plaintiff did not contest the application. However, the Court did not grant the relief sought and gave brief reasons. On the first ground, the court exercised its power under ROC, O 2 r 1(2) to cure the irregularity as it was more efficient to do so as compared to setting aside the writ and having the Plaintiff re-file fresh proceedings. On the second ground, the court noted that non-compliance with the pre-action protocol only had cost consequences but did not prevent the claim from being filed. On the third ground, the court simply noted that the Plaintiff had informed the court that it would be amending the SOC. I noted that as pleadings had not closed at this time, and the Plaintiff was entitled to do so without leave pursuant to ROC, O 20 r 3.

The court then gave case management directions for the Plaintiff to file and serve the amended SOC by 11 December 2020, and the Defendant to file and serve its Defence by 28 December 2020.

Before me, the Defendant maintained that at the hearing of SUM 3510, counsel for the Defendant had orally informed the court of the existence of the arbitration clause and that the Defendant intended to reserve its right to apply to stay the proceedings in favour of arbitration. Counsel for the Plaintiff took the opposite position and submitted that the alleged reservation was found neither in his own counsel’s notes nor the certified transcript of the notes of evidence of the hearing.

On this point, I was guided by Kraze Entertainment (S) Pte Ltd v Marina Bay Sands Pte Ltd [2013] SGHC 39. In that case, there was a dispute between the parties as to whether certain submissions were made to the court below in oral argument. The record of the notes of evidence did not contain such submissions. Counsel for the plaintiff wrote a letter to court purporting to set out the submissions they had made in oral argument. The court held (at [2]) that the record “stands as it stood” until the party applied to rectify the record or to record a further submission, and declined to take notice of the alleged submissions as set out in counsel’s letter.

In the circumstances, I did not proceed on the basis that the Defendant had reserved its right to apply to stay proceedings in favour of arbitration at the hearing of SUM 3510. No such reservation is found the application papers, the contemporaneous correspondence prior to or immediately after the hearing of SUM 3510, or the record of proceedings of the hearing. I also noted that the Defendant did not seek any case management directions for it to make such an application, but instead accepted, without more, the directions to file its Defence.

The Plaintiff served its Statement of Claim (Amendment No. 1) on 11 December 2020. Thereafter the Defendant informed the Plaintiff by letter dated 21 December 2020 that it intended to apply for a stay of proceedings in favour of arbitration. The Plaintiff submitted that this was the first time a stay of proceedings in favour of arbitration was raised.

The Defendant filed the present application in SUM 4379 on 28 December 2020, the date that it was to have filed its Defence.

Legal principles governing what constitutes a “step”

IAA, s 6(1) states: 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. [emphasis added]

Both parties relied on two Court of Appeal cases for the applicable legal principles governing what constitutes a “step” under IAA, s 6(1).

The Court of Appeal in L Capital Jones Ltd and another v Maniach Pte Ltd [2017] 1 SLR 312 (“Maniach (CA)”) at [77] re-iterated the approach set out in Carona Holdings Pte Ltd and others v Go Go Delicacy Pte Ltd [2008] 4 SLR(R) 460 (“Carona”) at [55]. If a defendant employed court procedures to challenge the merits of the claim, that would constitute a step. If the defendant’s act was purely procedural, then the question is whether it had proceeded

from a procedural point of view, beyond a mere acknowledgment of service of process by evincing an unequivocal intention to participate in the court proceedings in preference to arbitration.

In Carona at [93], the Court of Appeal undertook a comprehensive survey of the case law from other jurisdictions and derived four principles from those cases:

First, where a party performs or carries out a significant act signifying that it is submitting to the court’s jurisdiction rather than to arbitration to resolve the outstanding issues between the parties, that party will be deemed to have taken a step in the proceedings. Second, the act will be regarded as a step in proceedings if it is a step in furtherance of the action by advancing the hearing of the matter in court in contrast to one that serves to smother the action and stop the proceedings dead in its tracks. Third, where a party does an act with the consent of the other party, this will not amount to taking a step in the proceedings. Finally, the courts usually take the position that parties should not blow hot and cold or equivocate. Instead, they should be...