Wilson Taylor Asia Pacific Pte Ltd v Dyna-Jet Pte Ltd

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 26 April 2017
• Neutral Citation: [2017] SGCA 32
• Defendant Counsel: Tan Yew Cheng (Leong Partnership)
• Docket Number: Civil Appeal No 71 of 2016 (Suit No 1234 of 2015)
• Date: 26 April 2017
• Hearing Date: 17 April 2017
• Plaintiff Counsel: S Magintharan, Vineetha Gunasekaran, and James Liew Boon Kwee (Essex LLC)
• Year: 2017
• Court: Court of Appeal (Singapore)
• Citation: [2017] SGCA 32
• Published date: 03 May 2017

Sundaresh Menon CJ (delivering the grounds of decision of the court):

This appeal arises out of an application by the Appellant, made by way of Summons No 6171 of 2015 (“Summons 6171”), to stay the court proceedings commenced by the Respondent in Suit No 1234 of 2015 (“Suit 1234”), in favour of arbitration pursuant to s 6 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (the “IAA”).

Summons 6171 was heard and dismissed by an assistant registrar (the “AR”) on 21 January 2016. The Appellant’s appeal in Registrar’s Appeal No 43 of 2016 (“RA 43”) against the AR’s decision was dismissed by the High Court judge (the “Judge”) on 29 February 2016. The decision of the Judge is reported at Dyna-Jet Pte Ltd v Wilson Taylor Asia Pacific Pte Ltd [2017] 3 SLR 267 (the “GD”).

Dissatisfied with the outcome of the proceedings before the AR and the Judge, the Appellant appealed against the decision of the Judge in Civil Appeal No 71 of 2016, which we heard and dismissed on 17 April 2017. We gave some brief reasons for our decision at the time and we now elaborate on those reasons.

Facts

The Appellant engaged the Respondent to install underwater anodes on the island of Diego Garcia in the Indian Ocean. Amongst the terms of their contract (the “Contract”) was a dispute-resolution agreement (the “Clause”), which gave only the Respondent a right to elect to arbitrate a dispute arising in connection with the Contract. The Clause provides:

Dyna-Jet [which is the Respondent] and the Client [which is the Appellant] agree to cooperate in good faith to resolve any disputes arising in connection with the interpretation, implementation and operation of the Contract. Disputes relating to services performed under the Contract shall be noted to Dyna-Jet within three (3) days of the issue arising, thereafter the period for raising such dispute shall expire.

Any claim or dispute or breach of terms of the Contract shall be settled amicably between the parties by mutual consultation. If no amicable settlement is reached through discussions, at the election of Dyna-Jet, the dispute may be referred to and personally settled by means of arbitration proceedings, which will be conducted under English Law; and held in Singapore.

[Emphasis added]

A dispute subsequently arose under the Contract (the “Dispute”). The parties attempted, but failed, to reach a negotiated settlement. The Respondent then commenced Suit 1234 against the Appellant. By doing so, the Respondent in effect elected not to refer the Dispute to arbitration. The Appellant then filed SUM 6171 to have Suit 1234 stayed pursuant to s 6 of the IAA.

The AR dismissed the Appellant’s application for a stay. She held that although the Clause constituted a valid arbitration agreement within the meaning of s 6 of the IAA, only the Respondent was entitled to elect arbitration thereunder. She went on to hold that since the Respondent had elected to pursue its claims by litigation rather than arbitration, the arbitration agreement had become “inoperative or incapable of being performed” under s 6(2) of the IAA with respect to the Dispute.

The Judge dismissed the Appellant’s appeal. He observed that the Appellant, as the applicant for the stay under s 6 of the IAA, bore the burden of proving only that the Clause constituted an arbitration agreement within the meaning of s 2A of the IAA and that the Dispute fell within the scope of the Clause. In order to successfully resist the stay, the Respondent had to prove that the Clause was “null and void, inoperative of incapable of being performed” within the meaning of the proviso to s 6(2) of the IAA. In order to meet its burden, the Respondent had to establish that no other conclusion on this issue was arguable (GD at [26]–[27]).

The Judge held that the Clause constituted an arbitration agreement despite its asymmetrical nature. After an extensive survey of modern Commonwealth authority, the Judge decided that a contractual dispute-resolution agreement conferring an asymmetric right (in other words, a right enjoyed by only one party to the agreement but not by the other) to elect whether to arbitrate a future dispute was nevertheless an arbitration agreement (GD at [61(a)]). Thus he dismissed the Respondent’s argument that the Clause was not an arbitration agreement because of its “lack of mutuality”. The Judge also held that the fact that a contractual dispute-resolution agreement granted a right to elect whether to arbitrate a future dispute was nevertheless an arbitration agreement (GD at [61(b)]). Therefore the characteristic of “optionality” in a dispute-resolution agreement was not inconsistent with the meaning or nature of an arbitration agreement. Summing up these principles, he concluded that a contractual dispute-resolution agreement which confers an asymmetric right to elect whether to arbitrate a future dispute is properly regarded as an arbitration agreement within the meaning of s 2A of the IAA (GD at [61(c)]).

The Judge found that given the events that had transpired, the Clause had become “incapable of being performed” within the meaning of s 6(2) of the IAA because the Respondent had, by electing to litigate the Dispute, foreclosed any possibility that the Respondent (or, for that matter, the Appellant) could subsequently choose to have the Dispute referred to arbitration instead (GD at [152]–[161]).

Our decision

Section 6(1) and (2) of the IAA provide as follows:

Enforcement of international arbitration agreement

6.—(1) … 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.

(2) The court to which an application has been made in accordance with subsection (1) shall make an order, upon such terms or conditions as it may think fit, staying the proceedings so far as the proceedings relate to the matter, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed.

In Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2016] 1 SLR 373 (“Tomolugen”) at [63], we held that s 6 of the IAA required the court to be satisfied that three requirements had been fulfilled, before it granted a stay of the court proceedings said to have been brought in breach of an arbitration agreement: first, that there is a valid arbitration agreement between the parties to the court proceedings; second, that the dispute in the court proceedings (or any part thereof) falls within the scope of the arbitration agreement; and third, that the arbitration agreement is not null and void, inoperative, or incapable of being performed.

We also held in Tomolugen at [63] that in...