27/04/2016

When does an arbitration clause prevail

Clare Ambrose analyses the recent decision in Maybank Kim Eng Securities Pte Ltd v Lim Keng Yong and another [2016] SGHC 68

Where related claims arise out of related contracts containing conflicting jurisdiction clauses there is an inherent danger of multiplicity of proceedings with the risk of wasted costs and inconsistent decisions. In this case the Singapore High Court used its inherent powers to stay court proceedings pending the outcome of a related arbitration, even though this meant not giving full effect to an agreement for the exclusive jurisdiction of the courts of Singapore. In effect the competing arbitration agreement was given practical precedence over the choice of the Singapore court because this was in the interests of efficient case management and the pro-arbitration policy of Singapore’s legislation and case law. If a party uses inconsistent dispute resolution clauses in its standard terms then it is likely that the arbitration clause will prevail.

Steven Chong J’s decision reinforces and extends the Court of Appeal’s approach in Tomolugen Holdings v Silica Investors Ltd [2015] SGCA 57 (“Tomolugen Holdings Ltd”),decided under the International Arbitration Act (Cap143A, 2002 Rev Ed) (“the IAA”), by applying it in the context of a domestic arbitration.

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