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The Singapore High Court grants a stay despite arbitral jurisdiction being disputed

In the recent case of Trinity Construction Development Pte Ltd v Sinohydro Corp Ltd (Singapore Branch) [2020] SGHC 215, the Singapore High Court (SGHC) had the chance to deliberate the effect of commencing court proceedings when there is a parallel arbitration commenced on the same claim and if an applicant is entitled to maintain a stay application in favour of arbitration where the applicant is disputing that it is even a party to that arbitration.

On 1 November 2019, after receiving the claimant’s notice of arbitration, the respondent objected to the tribunal's jurisdiction due to the lack of an arbitration agreement between the parties, and alleged that the arbitral procedure and composition of the tribunal was not in accordance with that agreement.

The claimant subsequently commenced the Singapore court suit against the respondent on 16 March 2020 to preserve the limitation period. It is undisputable that the issues raised in the court proceedings overlapped with those in the arbitral proceedings.

The respondent/defendant thereafter appealed against the assistant registrar's dismissal of its application for the suit to be struck out. The assistant registrar considered that the appropriate course of action was for the respondent/defendant to have applied for a stay of proceedings.

The grounds relied on by the respondent/defendant in its striking-out application were:

  • that the claimant’s/plaintiff's statement of claim was frivolous or vexatious;
  • that was an abuse of court process, and
  • that the suit should be dismissed for multiplicity of proceedings

Dissmissal of the striking-out application:
In determining whether the case should be struck out, the court held that the suit was not frivolous or vexatious since the claim was based on sums which were arguably due and payable from invoices under the agreement. Further, the fact that the matter before the court mirrored the arbitration proceedings did not render the court action an abuse of process since parties were entitled to commence proceedings in any forum they deemed fit.

Stay application granted:
The court observed that although the respondent/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, as long as it is necessary to serve the ends of justice.

This case underlines the pro-arbitration attitude of the Singapore courts and coheres with the principle of kompetenz-kompetenz which ensures that the court at least allows the tribunal to determine its own jurisdiction first. 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 ought rightly to be placed before the tribunal first.

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