Section 6 of the Singapore International Arbitration Act (IAA) provides that where any party to a valid arbitration agreement to which the IAA applies institutes court proceedings against another party to that agreement "in respect of any matter which is the subject of the agreement", any party may, before taking a step in those proceedings, apply to the court to have the proceedings stayed.

In Tjong Very Sumito and others v Antig Investments Pte Ltd [2009] 4 SLR(R) 732 (Tjong Very Sumito), the Singapore Court of Appeal discussed the operation of section 6 of the IAA, stating that the party applying for the stay has to show that:

In 2003, the parties entered into a contract under which Aksa Far East Pte Ltd (defendant) was to supply generator sets originating from England to Giant Light Metal Technology (Kunshan) Co Ltd (plaintiff) (Contract). The Contract, which was drafted in Chinese, contained the following arbitration agreement (as translated):

The plaintiff alleged that the defendant had breached its obligations under the Contract and commenced proceedings in the PRC Court. The defendant chose not to participate in those proceedings. The PRC Court subsequently rendered a judgment in the plaintiff's favour, which included the refund of US$190,000 and compensation of RMB7,088 (PRC Judgment). The PRC Judgment was served on the defendant in Singapore.

On 10 February 2012, the plaintiff commenced its claim for the debt arising from the PRC Judgment in the High Court (Suit). On 29 February 2012, the defendant applied to stay the Suit pursuant to section 6 of the IAA.

The defendant argued that there was a clear arbitration agreement in the Contract and that the plaintiff was in breach of this agreement by commencing the Suit in Singapore.

The High Court rejected the defendant's arguments. On the face of the arbitration agreement, it was clear that it only applied to disputes or controversies occurring during performance of the Contract. Citing the case of Tjong Very Sumito, the court acknowledged that section 6 of the IAA could only apply if a claim, in respect of which a party was seeking a stay, fell within the terms of an arbitration agreement. The court therefore sought to determine which of the following the defendant was seeking:

If the latter, the defendant's application could not succeed.

The High Court concluded that the Suit related to a debt arising from the PRC Judgment. Accordingly, the defendant was seeking to stay the plaintiff's debt claim, rather than any dispute or controversy arising out of or relating to the Contract. Since the Suit did not fall within the terms of the arbitration agreement, section 6 of the IAA was inapplicable and the stay was refused.

The High Court also noted that the defendant made the conscious decision neither to object to the proceedings before the PRC Court nor to appeal against the PRC Judgment when it was granted. Coupled with the fact that the defendant did not argue that the PRC Judgment was either not made by a court of competent jurisdiction or that it was in any way irregular, the High Court found that there could be no question that the PRC Judgment was final and conclusive. Therefore, the High Court concluded that "[t]he plaintiff is therefore entitled to institute the Suit in order to claim the debt arising from the PRC judgment from the defendant in Singapore."

This case provides a demonstration of the Singapore courts' robust approach towards the interpretation of arbitration agreements. Whilst they will typically look to honour the parties' intentions and ensure that an obligation to arbitrate is upheld, in situations that clearly fall outside of the wording of an agreement, the courts will resist attempts to extend an obligation beyond what the parties agreed.

Giant Light Metal Technology (Kunshan) Co Ltd v Aksa Far East Pte Ltd [2012] SGHCR 2.