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Singapore High Court Grants A Stay To Party Contesting Arbitral Jurisdiction

The case of Trinity Construction Development Pte Ltd v Sinohydro Corp Ltd (Singapore Branch) [2020] SGHC 215 emphasises the pro-arbitration attitude of the Singapore courts which are ready to grant a stay of arbitration to an applicant which had consistently disputed the jurisdiction of the arbitral Tribunal.

The defendant in this case received a statutory letter of demand (“LOD”) from the plaintiff for a debt purportedly due under two invoices issued in relation to a consulting service agreement. The defendant disputed the LOD and as a result, the plaintiff commenced an arbitration. The defendant objected to the Tribunal's jurisdiction on the basis that there is a lack of an arbitration agreement, and in any event, the arbitral procedure and composition of the Tribunal was not in accordance with that agreement.

The defendant then applied for the suit to be struck out, however this was dismissed. On appeal, the defendant maintained that the plaintiff's statement of claim should be struck out and alternatively, a stay of proceedings should be granted.

The Court observed that although the defendant, which was applying for a stay of proceedings, had taken the position that it was not a party to the arbitration and therefore could not rely on section 6 of the Arbitration Act for that purpose, a stay could nonetheless be granted in respect of proceedings between parties who were not bound by an arbitration agreement. This is so, even if there is the possibility of the non-existence of an arbitration agreement, so long as it is necessary to serve the ends of justice. 

Therefore, the Court granted a stay on the grounds that:
1.      the stay of proceedings will not prejudice the plaintiff, which had only turned to the courts
         due to the defendant's jurisdictional objections and the plaintiff's legitimate concerns regarding
         the limitation period;
2.      the plaintiff was willing and consistently recognised its obligation to arbitrate;
3.      the identical parties, duplication of factual bases and claim, presented a risk of inconsistent
         findings and increased corollary costs;
4.      the questions of jurisdiction should rightly be dealt with by the Tribunal itself—an avenue
         which was still available since the arbitration proceedings had not been discontinued but only
         held in abeyance.

As observed from this ruling, even if there is a dispute as to the existence of an arbitration agreement, or whether the parties to the court proceedings are bound by an arbitration agreement, the question should be placed before the Tribunal first.

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