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"Something weighty": Chief Justice Menon ex temps the standard required for a court to exercise its discretion to not refer a dispute to arbitration

Henry Winter

Henry Winter,

Singapore

Stephanie Livanes

09 October 2015

In Sim Chay Koon and others v NTUC Income Insurance Co-operative Limited [2015] SCGA 46, the Singapore Court of Appeal considered the proper relationship between the courts and arbitration, and the circumstances in which a court should ignore the existence of an arbitration agreement and allow a party to bring its dispute before the courts.

The dispute concerned a class action for an alleged breach of employment terms and wrongful termination. In an ex tempore judgment Sundaresh Menon CJ referred to s 21(1) of the Arbitration Act, which provides:

The arbitral tribunal may rule on its own jurisdiction, including a plea that it has no jurisdiction and any objections to the existence or validity of the arbitration agreement, at any stage of the arbitral proceedings.

The Court maintained that the existence and applicability of this doctrine meant that where a party seeks to avoid its obligation to arbitrate its dispute, the Court should undertake a restrained view of the facts and circumstances before it so as to determine on a prima facie basis whether that there is an arbitration clause and that the dispute is caught by that clause.  It also held, however, that while the tribunal generally has the first right to determine and pronounce on these matters, it does not have the last word.

The appellants argued that the Court should exercise its discretion to decline to uphold the arbitration agreement.  The Court noted that under section 6 of the Arbitration Act, the Court has the discretion not to refer a matter to arbitration.  However, the Court considered that this discretion should only be exercised "sparingly and in a principled way".

The appellants raised three main arguments in their attempt to sway the Court to exercise its discretion:

1. the cost of the arbitration would be higher due to, inter alia, the availability of class action relief in court proceedings;

2. the nature of the relevant statutes are applicable to employment and have a particular emphasis on protecting workers; and

3. the belief that the appellants would get a 'better' hearing in court.

The Court held that these were insufficient grounds  to exercise its discretion.  The Court noted that there was a further important factor which must be considered when exercising its discretion in this context; namely that the very existence of an arbitration agreement between the parties pursuant to which they have undertaken to resolve their disputes in a particular way.  The Court considered that the existence of an arbitration agreement means that "something weighty" must be shown in order to demonstrate that there are sufficient grounds not to hold the parties to that agreement.

Conclusion

The Court of Appeal has once again demonstrated its pro-arbitration and non-interventionist stance.  The Judgment is also a useful reminder of the Court's discretion to not refer a matter to arbitration, but that the discretion will only be exercised sparingly and in a principled way.  Chief Justice Menon's pronouncement that "something weighty" must be shown in order to demonstrate that there is sufficient reason not to hold the parties to their arbitration agreement is a useful clarification of the necessary standard, though it remains to be seen how "sufficiently weighty" will be interpreted.

Henry Winter

Henry Winter,

Singapore

Stephanie Livanes

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