Section 6(1) of the International Arbitration Act (IAA) provides that, where any party to an arbitration agreement institutes any court proceedings 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 apply to have the proceedings stayed.

Section 6(2) of the IAA provides that, where an application has been made under section 6(1), the court shall make an order staying the proceedings, unless the arbitration agreement is null and void, inoperative or incapable of being performed.

In January 2008, ANL Singapore Limited (appellant) and PT Djakarta Lloyd (respondent) entered into a slot charter-party entitled "AAX Main Agreement" (the Agreement). The Agreement contained an arbitration clause, providing that "all disputes" arising under the Agreement be referred to arbitration.

The appellant subsequently issued a claim against the respondent, claiming that the respondent owed it certain slot fees under the Agreement. The appellant arrested one of the respondent's ships as security for the claim.

The respondent subsequently filed a summons. The summons made two requests:

The assistant registrar subsequently ordered that the ship be released and that the proceedings and sale of the ship be stayed in favour of foreign arbitration. The appellant subsequently appealed on both points.

On the second point, the appellant argued on appeal that there was no "dispute" between the parties and therefore a stay of proceedings was not warranted. In support of this proposition, the appellant referred to previous correspondence with the respondent, as well as a Letter of Undertaking, in which the respondent admitted owing "an estimated USD 2.8 million".

The respondent claimed that the Letter of Undertaking did not provide an unequivocal admission to the claim and, if there had been any previous admission of liability, it had been by mistake.

The High Court confirmed that the proceedings should be stayed, rejecting the appellant's argument that the respondent's alleged earlier admission meant that there was no dispute between the parties.

In its decision, the High Court relied upon the case of Tjong Very Sumito v Antig Investments Pte Ltd [2009] 4 SLR(R) 732 (see Legal update, Singapore Court of Appeal rules arbitral tribunal and not court to examine existence of dispute), in which it was held that the word "dispute" is to be interpreted broadly. Accordingly, the courts will "readily find that a dispute exists unless the defendant has unequivocally admitted that the claim is due and payable". Equally, the court stated that "there is undoubtedly a 'dispute' referable to arbitration if the defendant expressly asserts that he denies the claim…". As the respondent denied that it owed the appellant the amount claimed, the High Court held that a dispute existed between the parties.

The High Court also held that any mistaken admission by the respondent should not act to prevent a stay of proceedings. Again, the High Court relied upon the case of Tjong Very Sumito, in which it was held that "where the defendant prevaricates; first making an admission and then purporting to deny the claim on the ground that the admission was mistaken, or fraudulently obtained, or was never made", there is a dispute "both over the substantive claim as well as over whether the defendant can challenge the alleged earlier admission". The court here confirmed that, "the matter should ordinarily be referred to arbitration".

As the arbitration agreement required "all disputes" arising under the Agreement to be referred to arbitration, the High Court held that a stay under section 6 of the IAA was mandatory. The only ground on which a stay could be refused under section 6 of the IAA was if the arbitration agreement was "null and void, inoperative or incapable of being performed". The High Court noted that the appellant had not sought to allege the arbitration agreement was void on any such grounds.

This case highlights the reluctance of the Singaporean courts to assume jurisdiction over matters that parties have agreed to refer to arbitration. Accordingly, the Singaporean courts will interpret the word "dispute" broadly in the context of an arbitration agreement. If a defendant expressly denies a claim, the Singaporean courts are highly likely to find that a dispute exists. This is notwithstanding whether the defendant has previously mistakenly made an admission. If the dispute falls within the terms of an arbitration agreement, the Singaporean courts will be obliged to stay any proceedings that have been commenced in respect of that dispute, subject to certain statutory exceptions.

The "Makassar Caraka Jaya Niaga III-39" [2010] SGHC 306.