Reed Smith Client Alerts

This article was originally published in Practical Law Arbitration.  Reproduced with permission.  This client alert is co-written by Reed Smith Pte Ltd and Resource Law LLC who together form the Reed Smith Resource Law Alliance in Singapore. Reed Smith LLP is licensed to operate as a foreign law practice in Singapore under the name and style, Reed Smith Pte Ltd (hereafter collectively, “Reed Smith”). Where advice on Singapore law is required, we will refer the matter to and work with Reed Smith’s Formal Law Alliance partner in Singapore, Resource Law LLC, where necessary.

In A co and others v D and another [2018] SGHCR 9, the Singapore High Court found that it was not appropriate to exercise its inherent jurisdiction to stay court proceedings in favour of arbitration.

Autoren: Kohe Hasan Nikisha Mirpuri

* Kohe Hasan is a Partner in Reed Smith's Singapore office and a Director of Resource Law LLC. Nikisha Mirpuri is an Associate in Reed Smith's Singapore office. 

Speedread:

The Singapore High Court has refused to exercise its inherent jurisdiction to stay court proceedings commenced under the Singapore Companies Act (Cap 50) in favour of arbitration.

The plaintiffs were various related companies of which the defendants were directors and / or alleged de facto directors. A joint venture investment agreement (IA), containing an arbitration clause, was entered into by some of the plaintiffs, but the defendants were not parties to the IA.

The plaintiffs brought court proceedings against the defendants in the Singapore courts. The defendants applied to stay the proceedings in favour of arbitration pursuant to section 6 of the International Arbitration Act (Cap 143A) (IAA), or alternatively pursuant to the court’s inherent jurisdiction.

The court held that the defendants were neither parties to the arbitration agreement, nor could they compel a party to the arbitration agreement to arbitrate a dispute, and therefore, they were not able to avail themselves of section 6 of the IAA, for a stay of proceedings.

Further, the court refused to exercise its inherent powers of case management to order a stay in favour of arbitration, finding that there had been no attempt to circumvent the operation of an arbitration clause and there was separately no abuse of process.

The case contains interesting commentary on the “agency principle” (which would allow non-signatory directors to compel companies to arbitrate), and confirms that it does not apply in Singapore. There is, therefore, no Singapore precedent for agent beneficiaries of a party to an arbitration clause to compel parties to that clause to arbitrate. The case also shows that despite the general "pro-arbitration” stance of the Singapore courts, the courts will refuse to exercise their inherent powers of case management in circumstances where doing so will only cause delay and no fruitful gain, in particular, where the party seeking a stay has taken inconsistent positions before it. Case: A co and others v D and another [2018] SGHCR 9 (20 June 2018).