[1997] 3 SLR(R) 360 - Singapore Law

360 SINGAPORE LAW REPORTS (REISSUE) [1997] 3 SLR(R)The “Xanadu”[1997] SGHC 271High Court — Admiralty in Rem No 139 of 1996(Registrar’s Appeal No 408 of 1996)Lai Kew Chai J11 March; 19 May; 5 June; 28 October 1997Arbitration — Stay of court proceedings — Mandatory stay under InternationalArbitration Act — Imposition of conditions for stay — Factors to be considered inimposing conditionsFactsThe defendants applied for a stay of the plaintiffs’ action on the grounds that thecontracts of carriage upon which the plaintiffs’ claim was brought provided forthe claim to be brought by way of arbitration in London. The stay was grantedon condition, inter alia, that the defendants waived their time-bar defence in thearbitral proceedings. The defendants appealed against this condition.Held, dismissing the appeal:(1) Section 6(2) of the International Arbitration Act (Cap 143A, 1995 Rev Ed)empowered the court to stay proceedings upon such terms and conditions as itthought fit. The court was entitled to impose terms and conditions as appearedreasonable or required by the ties of justice: at [6].(2) The circumstances of the case called for the condition in question. First,there was sufficient ambiguity whether the relevant bill of lading had identifiedthe arbitration clause invoked. Second, the defendants waited until after theexpiry of the time-bar before they filed their application to stay the proceedings.Third, if the condition was not imposed, and in the light of the amount of theirclaim, the plaintiffs would suffer undue and disproportionate hardship: at [6].Legislation referred toInternational Arbitration Act (Cap 143A, 1995 Rev Ed) ss 6(1), 6(2), 7Lee Yean-Lin and Alexander Ee (Rajah & Tann) for the appellants/plaintiffs;Kenneth Lie (Ang & Partners) for the respondents/defendants.[Editorial note: The defendants’ appeal to this decision in Civil Appeal No 139 of1997 was dismissed by the Court of Appeal (M Karthigesu JA and L P Thean JA) on24 March 1998 with no written grounds of decision rendered.]28 October 1997Lai Kew Chai J:1 The defendants in these admiralty proceedings applied for a stay ofthe plaintiffs’ action on the grounds that the contracts of carriage upon

[1997] 3 SLR(R) The “Xanadu” 361which the plaintiffs’ claim was brought expressly provided for the claim tobe brought by way of arbitration in London.2 On 20 November 1996 the learned assistant registrar made thefollowing orders:(a) the action be stayed on condition that the defendants waivetheir time-bar defence in the proposed arbitral proceedings subject tothe plaintiffs commencing the said arbitration proceedings within 14days thereof;(b) security provided pursuant to s 7 of the InternationalArbitration Act (Cap 143A, 1995 Ed) (“the Act”) to be retained assecurity for the arbitration proceedings in London; and(c) costs to be borne by the plaintiffs fixed at $1,000.3 The defendants appealed to the High Court against such part only ofthe decision imposing the condition that the defendants waive any time-bardefence in the arbitral proceedings. After hearing the appeal and furtherarguments in writing, I dismissed the appeal with costs. My reasons are asfollows.4 The defendants’ application for stay was made under s 6(1) of the Actunder which a party to an arbitration agreement to which the Act appliedmay apply to stay proceedings in any court in Singapore brought by theother party to the arbitration agreement.5 Subsection 6(2) states:The court to which an application has been made in accordance withsubsection (1) shall make an order, upon such terms or conditions as itmay think fit, staying the proceedings unless it is satisfied that thearbitration agreement is null and void, inoperative or incapable ofbeing performed.6 I was not persuaded that the learned assistant registrar had exercisedher discretion erroneously in any way. Although she had to order a stay, shewas entitled to impose terms and conditions as appear reasonable orrequired by the ties of justice. For the following reasons, I would go furtherand state that I would have imposed the same condition in thecircumstances of this case. Firstly, there was, at the least, sufficientambiguity which was reasonably entertained by the plaintiffs on thequestion whether the relevant bill of lading had identified the arbitrationclause which was invoked. It was therefore reasonable for the plaintiffs tohave commenced these admiralty proceedings. Secondly, the defendantswaited until after early September 1996, after the expiry of the time bar,before they filed their application on 20 September 1996 to stay theseproceedings. It was noteworthy that the statement of claim was filed on13 August 1996. Thirdly, if the condition was not imposed, the plaintiffs

362 SINGAPORE LAW REPORTS (REISSUE) [1997] 3 SLR(R)would suffer undue and disproportionate hardship, seeing that their claimis in excess of US$222,518.Headnoted by Lim Lei Theng.