The recent case of Silverlink Resorts v MS First Capital Insurance Ltd  SGHC 151 illustrates that a failure to carefully consider the jurisdiction and arbitration clauses in an insurance policy can lead to further dispute and incur further legal costs.
The Plaintiff, Silverlink Resorts Ltd (“Silverlink”) suffered losses at its Amanpuri Resort in Phuket due to the COVID-19 pandemic. Silverlink subsequently submitted a claim under its Industrial All Risks Policy (the “Policy”) issued by the defendant, MS First Capital Insurance Limited (“MS”). MS rejected the claim on the basis that no physical damage had been suffered.
Silverlink therefore commenced proceedings in the Singapore High Court seeking a declaration that it was not necessary for it to establish a claim under the material damage provisions of the Policy (the “Dispute”). MS subsequently applied to stay the proceedings in favour of arbitration.
The Policy contained an arbitration clause which applied to “any dispute arising out of or in connection with” the Policy (the “Arbitration Clause”). It also contained a clause stating that “should any dispute arise between the Insured and the Insurers regarding the interpretation or the application of this Policy the Insurers will, at the request of the Insured, submit to the jurisdiction of any competent Court in Singapore” (the “Jurisdiction Clause”). Further, the Policy Renewal Certificate (“Certificate”) provided that “in the event of any dispute over interpretation” of the Policy, the “Courts of Singapore” would have jurisdiction.
The question was whether the Dispute should be resolved through arbitration or by the Singapore courts. The Court subsequetly found that the parties’ intention, objectively ascertained, was for the Jurisdiction Clause to carve out disputes regarding the interpretation or application of the Policy from the scope of the Arbitration Clause. It further held that the jurisdiction clause in the Certificate confirmed the parties’ intention that disputes relating to the interpretation of the Policy should be resolved through court proceedings. This would make commercial sense because such disputes may be resolved effectively and efficaciously through courts. The stay application was therefore dismissed.
Courts will look to the wording of the clause to objectively determine the intention of the parties. Therefore, such dispute clauses should be carefully drafted to ensure that there is no room for ambiguity.