No U-Turns Ahead: Singapore Court of Appeal holds that commencement of court proceedings may lose you the right to later rely on arbitration agreements

In the recent landmark decision of Marty Ltd v Hualon Corp (Malaysia) Sdn Bhd [2018] SGCA 63, the Singapore Court of Appeal held that the commencement of court proceedings notwithstanding the existence of a binding arbitration agreement and without any explanation or qualification is in and of itself sufficient to constitute a prima facie repudiation of the arbitration agreement. Counterparties who have accepted the court’s jurisdiction would correspondingly be deemed to have accepted the repudiatory breach, and will also no longer be entitled to insist on adherence with the arbitration agreement.

The Singapore Court of Appeal’s decision is noteworthy as it departs from longstanding authority that the mere commencement of litigation proceedings would not constitute repudiation of the arbitration agreement. The Court also provides important guidance to parties to Singapore seated arbitrations on whether (and when) it is appropriate to commence litigation in circumstances where an arbitration agreement exists, and how to react if a counterparty does so.  We analyse the decision below.

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Singapore Court of Appeal confirms the validity of “unilateral option to arbitrate” clauses

In the recent decision of Wilson Taylor Asia Pacific Pte Ltd v Dyna-Jet Pte Ltd [2017] SGCA 32, the Singapore Court of Appeal confirmed that the Singapore courts will enforce a dispute resolution clause which gives only one party the option to arbitrate.  The court also clarified the requirements and threshold for a stay of proceedings to be granted under section 6 of the Singapore International Arbitration Act ("IAA")

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Singapore Court of Appeal provides guidance on applications to stay proceedings in favour of arbitration and scope of arbitrability

In Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2015] SGCA 57, a distinguished panel of the Singapore Court of Appeal considered an application to stay court proceedings in favour of arbitration under section 6 of the Singapore International Arbitration Act ("IAA"). They confirmed the appropriate standard of review to be adopted in respect of the existence and scope of the arbitration agreement as a prima facie standard.  The Court of Appeal also provided guidance on determining whether the subject matter of a claim is arbitrable or not, holding that minority shareholder claims under s.216 of the Companies Act (Cap 50, 2006) are arbitrable.  Finally, the Court of Appeal demonstrated flexibility in exercising its case management powers to regulate the conduct of court proceedings involving multiple parties, not all of whom are party to the arbitration agreement.

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