Singapore Court of Appeal affirms arbitration's place.
The Singapore Court of Appeal has again upheld parties’ agreement to arbitrate and the tribunal’s power to determine its jurisdiction under s 21(1) of the Arbitration Act (Cap 10, 2002, Rev Ed). The court also considered factors relevant to its discretion not to order arbitration under s 6 of the Act.
In Sim Chay Koon and others v NTUC Income Insurance Co-operative Limited [2015] SGCA 46, employees had commenced a class action in the High Court against their employer despite their employment agreements having the following arbitration agreement:
If there is a disagreement, one party must notify the other party in a dated notice describing the nature of the disagreement. If no settlement can be reached within [2 months] through consultation, either part can make a written request to the other party that the disagreement be submitted to arbitration before an arbitrator in Singapore according to the Arbitration Rules of the Singapore International Arbitration Centre in force at that point of time. These Arbitration Rules are deemed to be part of this Agreement.
Kompetenz-kompetenz
The Court of Appeal said at [4]-[5] that s 21(1) of the Act embodies the kompetenz-kompetenz doctrine entitling an arbitral tribunal to rule on its own jurisdiction and that “as a general rule, where a party seeks to avoid its obligation to arbitrate its dispute, the court should undertake a restrained review of the facts and circumstances before it in order to determine whether it appears on a prima facie basis that there is an arbitration clause and that the dispute is caught by that clause”. Section 21(1) says:
The arbitral tribunal may rule on its own jurisdiction, including a plea that it has no jurisdiction and any objections to the existence or validity of the arbitration agreement, at any stage of the arbitral proceedings
A party aggrieved by a determination of a tribunal as to its jurisdiction may seek review from the court under s 48 of the Act as to setting aside awards, with unmeritorious applications being penalised in costs (at [6]). Section 48(1) says:
(1) An award may be set aside by the Court —
(a) if the party who applies to the Court to set aside the award proves to the satisfaction of the Court that —
(i) a party to the arbitration agreement was under some incapacity;
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it, or failing any indication thereon, under the laws of Singapore;
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
(iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, except that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside;
(v) the composition of the arbitral tribunal or the arbitral procedure is not in accordance with the agreement of the parties, unless such agreement is contrary to any provisions of this Act from which the parties cannot derogate, or, in the absence of such agreement, is contrary to the provisions of this Act;
(vi) the making of the award was induced or affected by fraud or corruption;
(vii) a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced; or
(b) if the Court finds that —
(i) the subject-matter of the dispute is not capable of settlement by arbitration under this Act; or
(ii) the award is contrary to public policy.
Discretion
At [7]-[10], the Court said that the discretion not to refer a matter to arbitration under s 6 of the Act should be exercised sparingly and in a principled way. The existence of an arbitration agreement means that something weighty must be shown for there to be sufficient reason not to hold that parties to that agreement. Section 6(1) and (2) says:
(1) Where any party to an arbitration agreement institutes any proceedings in any court against any other party to the agreement in respect of any matter which is the subject of the agreement, any party to the agreement may, at any time after appearance and before delivering any pleading or taking any other step in the proceedings, apply to that court to stay the proceedings so far as the proceedings relate to that matter.
(2) The court to which an application has been made in accordance with subsection (1) may, if the court is satisfied that —
(a) there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement; and
(b) the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration,
make an order, upon such terms as the court thinks fit, staying the proceedings so far as the proceedings relate to that matter.
In this case, it was not at all clear, as argued, that costs would be higher in an arbitration than in court; the legal issues in the arbitration would not make it unsuitable for an arbitrator, and the subjective preference of a party for litigation will generally not be relevant to the discretion.
CAMERON FORD
