Singapore Court of Appeal rules arbitral tribunal and not court to examine existence of dispute | Practical Law

Singapore Court of Appeal rules arbitral tribunal and not court to examine existence of dispute | Practical Law

Alvin Yeo, Senior Counsel (Senior Partner) and Andre Maniam (Head of Litigation & Dispute Resolution Department), WongPartnership LLP

Singapore Court of Appeal rules arbitral tribunal and not court to examine existence of dispute

Published on 02 Oct 2009 • International, Singapore
Alvin Yeo, Senior Counsel (Senior Partner) and Andre Maniam (Head of Litigation & Dispute Resolution Department), WongPartnership LLP
The Singapore Court of Appeal has affirmed the principles to be considered in relation to an application to stay court proceedings in favour of arbitration. The Court of Appeal also expounded on the current judicial philosophy towards international arbitration, which clearly is one of facilitating and promoting arbitration in Singapore.
On 26 August 2009, the Singapore Court of Appeal in Tjong Very Sumito & Ors v Antig Investments Pte Ltd [2009] SGCA 41 affirmed the principles to be considered in relation to an application to stay court proceedings in favour of arbitration and expounded on the current judicial philosophy towards international arbitration.
The applicant and the respondent were parties to an agreement for the sale and purchase of shares (the Agreement). The Agreement provided for arbitration in the event of a dispute between the parties.
The Agreement was varied to provide that payment by the applicant to a third party would discharge its payment obligations to the respondent under the Agreement. Subsequently, the third party asked for, and the applicant agreed to make, early payment of this sum. The respondent was not told of this early payment, and later asked the applicant to pay it instead of the third party. The applicant ignored the request and the respondent eventually commenced court proceedings.
The applicant then applied to stay the court proceedings pursuant to section 6(1) of the International Arbitration Act on the basis that the matter should be referred to arbitration as agreed in the Agreement. The issues facing the Court of Appeal were whether there was a "dispute" for the purposes of section 6(1), and whether the applicant's silence meant that it did not dispute the respondent's claim.
In considering the matter, the court laid down the steps to be followed when determining whether there is a "dispute" which should be referred to arbitration (and hence a basis for ordering a stay of court proceedings pursuant to section 6(1)):
  • The court will interpret the word "dispute" broadly and will readily find that a dispute exists unless the defendant has unequivocally admitted that the claim is due and payable.
  • There is a "dispute" if the defendant expressly asserts that he denies the claim; the court will not assess the merits of this denial.
  • The court can also infer that the claim is not admitted from previous inconclusive discussions between parties, prevarication or even silence:
    • There is prevarication where a defendant unequivocally admits the claim, but then later resiles from this admission. In this case, there is a "dispute" over the substantive claim and also whether the defendant can challenge his earlier admission.
    • The defendant's silence, without more, is insufficient to constitute a clear and unequivocal admission since there may be good reasons why a party remains silent.
  • If a defendant makes an unequivocal admission extending to both liability and quantum, then there is no "dispute". The claimant may bring his claim in court but must come armed with compelling evidence of the admission. If that admission is challenged with any semblance of credibility, the court will ordinarily be inclined to decide that a "dispute" has arisen.
This decision makes clear that the situations where a claimant may seek to bring court proceedings in lieu of agreed upon arbitration processes on the basis that there is no "dispute" to be referred to arbitration are limited. For practical purposes, this is possible only where a defendant clearly and unequivocally admits both liability and quantum of damage but insists on proceeding with arbitration. However, in practice such situations are relatively rare.
The Court of Appeal's helpful explanation of the current judicial policy clearly affirms that the courts will give effect to parties' contractual choice of dispute resolution. As emphasised by the court:
"Courts should therefore be slow to find reasons to assume jurisdiction over a matter that parties have agreed to refer to arbitration. It must also be remembered that the whole thrust of the IAA is geared towards minimizing court involvement in matters that the parties have agreed to submit to arbitration."