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This article was originally published in Practical Law Arbitration. Reproduced with permission.  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 Marty Ltd v Hualon Corporation (Malaysia) Sdn Bhd (receiver and manager appointed) [2018] SGCA 63, the Singapore Court of Appeal considered whether commencing court proceedings amounted to a repudiatory breach of an arbitration agreement, and therefore precluded the party commencing such proceedings from referring disputes to arbitration if the repudiation was accepted.

Authors: Joyce Fong Dan Perera

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The Singapore Court of Appeal has allowed an appeal from the Singapore High Court's decision in BMO v BMP [2017] SGHC 127. The Singapore Court of Appeal found that the respondent was in repudiatory breach of an arbitration agreement by commencing court proceedings, and that this repudiatory breach had been accepted by the appellant. Therefore, the tribunal in the parallel arbitration had no jurisdiction over the dispute. The Singapore Court of Appeal stated, obiter, that it was not inclined to accept the English law position that repudiatory intent is necessary for a party to be in repudiatory breach of an arbitration agreement.

This decision is important because the Singapore Court of Appeal's view that commencement of court proceedings may amount to a prima facie repudiation of an arbitration agreement will be of persuasive authority in future cases.

Although this approach is unlikely to result in vastly different outcomes from the cases adopting the English courts' position, as set out in Rederi Kommanditselskaabet Merc-Scandia IV v Couniniotis SA [1980] 2 Lloyd's Rep 183 (The Mercanaut), this development is interesting because it shifts the burden of proof to the party commencing court proceedings, who would be well placed to displace the prima facie assumption of an intention to abandon the arbitration agreement by proving its lack of intent to do so. Parties who choose to commence court proceedings notwithstanding an arbitration agreement, for example, to seek interim relief, would be well advised to act cautiously and ensure that they clearly and unequivocally communicate their intention to uphold the arbitration agreement. (Marty Ltd v Hualon Corporation (Malaysia) (10 October 2018).)