Singapore Court of Appeal: ‘Case Management Stay’ Of Court Proceedings In Favour Of Arbitration

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The presence of concurrent jurisdiction does not condemn the parties, or the court or the arbitration tribunal, to unnecessary duplication. A tool available to the court in this respect is the case management stay of court proceedings to allow an arbitration tribunal to proceed first. It is a discretionary tool that can be used flexibly.[1] However, a rare and compelling case is required for a stay to be granted.[2]

In cases outside the ambit of mandatory stay of court proceedings as provided under Section 9 of the English Arbitration Act, 1996 and Section 6 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) in principle the court has an inherent jurisdiction to stay its proceedings by way of a case management stay to allow one or more issues to be determined by way of arbitration. However, unlike a mandatory stay, a case management stay is discretionary.[3]

Now, consider a situation where party A commences court proceedings against party B for alleged infringement of A’s rights by B. However, before the adjudication could have been completed by the court, A sends a proposed Settlement Agreement (‘SA’) to B for its countersigning which was left in limbo for a substantial period of time by B only to be finally accepted later. This is now not acceptable to A due to lapse of substantial amount of time and therefore A proceeds with prosecuting B in the court of law for alleged infringement of A’s rights by B. Faced with this position, B triggers arbitration against A invoking arbitration clause contained in the SA for the Arbitral tribunal to decide the validity of SA.

In the aforesaid background, the question arises as to whether B is entitled to a case management stay of court proceedings initiated by A (for alleged infringement of its rights by B) in favour arbitration triggered by B (for determination of validity of SA by the tribunal) if A is contending that there are ‘Overlapping issues’ between the court proceedings and arbitration? This question was decided by the Singapore Court of Appeal (‘SGCA’) in PUBG Corp v Garena International I Pte Ltd and others[4].

The applicable principles on which a court should exercise its inherent power to stay court proceedings on case management grounds, pending the resolution of a related arbitration were developed by the Singapore Court of Appeal in Tomolugen Holdings Ltd and anor v Silica Investors Ltd and or appeals[5] (“Tomolugen”).

Tomolugen concerned a court action involving multiple defendants, only one of whom was party to an arbitration clause with the plaintiff that covered some of the issues in dispute. A mandatory stay under Section 6 of IAA was granted in respect of the sole issue falling within the arbitration clause. This gave rise to a multiplicity of proceedings with some matters involving some parties and some issues in arbitration, and other parties and other issues in court. The court was confronted with the question of case management, either by ordering a stay of the remaining issues in the court proceedings against the defendant who was privy to the arbitration clause, or by staying the court proceedings against the remaining defendants until after the conclusion of the arbitration proceedings with the defendant who was party to the arbitration agreement.

It was in that context that the SGCA remarked that it is ultimately for the court to take the lead in facilitating the fair and efficient resolution of the dispute as a whole. The grant of a case management stay of court proceedings, where a related arbitration is ongoing, is a balance between three imperatives or “higher-order concerns”: preserving the plaintiff’s right to choose whom to sue and where; upholding agreements to arbitrate; and preventing an abuse of process.[6] Thus, the SGCA held that inherent power to stay court proceedings where related issues involving some or all of the same parties are also subject to an arbitration agreement must be exercised with due sensitivity and regard to the facts and in particular, the nature of the overlapping issues.[7]

Applying the above test in the present case, the SGCA was required to consider whether there exist any overlapping issues between the court proceedings and arbitration. To put it simply, if there is a valid settlement that has the effect of compromising the underlying claims (determination of which is before the Arbitral Tribunal), the court proceedings cannot proceed; and if there is no valid settlement, then the court proceedings must proceed (with adjudication of the issue as alleged by A with regard to infringement of its rights by B). Thus, the SGCA dismissed A’s contention that there is no overlap of factual or legal issues in the court proceedings and arbitration.

The SGCA found that it becomes obvious, given the contentions of each party, that the existence or otherwise of a valid settlement be resolved first since the effect of a settlement is to put an end to the proceedings, to preclude parties from taking any further steps in the action, and to supersede the original cause of action altogether.[8]

In view thereof, the SGCA upheld the High Court’s decision of granting a case management stay in this case, reasoning that since A has not raised the validity of SA in the court proceedings, the court cannot decide the validity of SA without first allowing the tribunal to determine that question. More so, when a court is presented with what appears on its face to be a valid arbitration agreement and a dispute that appears to fall within the scope of that agreement, the court is bound not to ignore that agreement. Instead, it should allow any such dispute to be determined by the arbitral tribunal.[9] Pertinently, the SGCA’s opined that this analysis is not affected by the fact that this case concerns a case management stay rather than a mandatory stay under Section 6 of the IAA.[10]

Disclaimer: The views expressed in this post are mine and do not reflect the views of the organisation(s) I am engaged with

[1] Minister Of Finance (Incorporated) & Anor v International Petroleum Investment Company & Anor [2019] EWHC 1151 (Comm) (08 May 2019) at [83]

[2] Reichhold Norway ASA v. Goldman Sachs International [2000] 1 WLR 173, Lord Bingham’s at page 186

[3] Autoridad Del Canal De Panamá v Sacyr, S.A. & Ors [2017] EWHC 2228 (Comm) at [142]

[4] [2020] SGCA 51

[5] [2016] 1 SLR 373

[6] Tomolugen at [186] and [188]

[7] Tomolugen at [186]

[8] As held in Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd [2019] 2 SLR 131 at [95],

[9] Tomolugen at [63]; Malini Ventura v Knight Capital Pte Ltd [2015] 5 SLR 707 at [36]; Sim Chay Koon and ors v NTUC Income Insurance Co-operative Ltd [2016] 2 SLR 871 at [4]–[6].

[10] PUBG Corp v Garena International I Pte Ltd and others at 17

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