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Conditional Stay of Proceedings: When can a waiver of a defence of time-bar be invoked

The recent decision in The Navios Koyo [2021] SGHC 131 emphasises the importance of ascertaining and complying with the relevant jurisdiction clause or arbitration agreement prior to commencing proceedings or risk the claim being time-barred.

The claimant, who was the holder of the bills of lading, arrested the vessel Navios Koyo on 18 September 2020 through the Singapore High Court on grounds of alleged mis-delivery of a cargo. The claimant was in possession of the bills of lading as it had extended financing to its customer. Therefore, it did not have a copy of the charterparty referenced in the bills of lading when it arrested the vessel. The claimant was only provided a copy of the charterparty during the court proceedings. The charterparty contained an arbitration clause in London.

The owners of the Navios Koyo applied for a stay of the Singapore court proceedings in favour of arbitration in London. At this point, claims brought under the bills of lading had become time-barred under the Hague Visby Rules. The claimant argued that the stay should be conditional on the waiver of the time-bar defence in the arbitration proceedings.

Decision of the High Court
The Court expressed that the imposition of a condition as to the waiver of a defence of time-bar can only be justified in very special circumstances. In this regard, the Court stated that a claimant seeking a time-bar waiver as a condition to a stay must show that it would be unjust to penalise it for having allowed its claim to become time-barred and that the following factors are relevant in this context:

1.              Whether the conduct of the plaintiff in not commencing arbitration proceedings before its 
                 claim became time-barred was reasonable; and

2.              Whether the defendant should be faulted for the claimant's failure to commence arbitration
                 proceedings before its claim became time-barred.

In this case, the Court refused to exercise its discretionary power to grant a conditional stay on the basis of the time-bar waiver because it formed the view that the claimant was the author of its own misfortune, stating inter alia that Clause 1 on the reverse side of the bill of lading expressly referred to the incorporation of an arbitration clause. This should have notified the Claimant of the existence or potential existence of the arbitration clause. 

The judgment illustrates the importance of complying timelines in a dispute. In doing so, parties should ensure that reasonable efforts are made to obtain the relevant documents and ascertain the corresponding timelines, especially when they have been notified of the existence of such documents.

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