Singapore High Court Provides Guidance on Stays of Arbitral Proceedings

Singapore High Court Provides Guidance on Stays of Arbitral Proceedings

A recent decision of the Singapore High Court has clarified the circumstances in which it will order a stay of arbitral proceedings pending a challenge to the tribunal's jurisdiction.

By way of background, a tribunal in a Singapore-seated arbitration is empowered to rule on its own jurisdiction. If a tribunal rules that it has no jurisdiction (at any stage of the proceedings) or that it has jurisdiction (on a plea as a preliminary question), the International Arbitration Act (the "Act") permits any of the parties to apply to the High Court to determine the matter. International Arbitration Act (Cap 143A), section 10(3).

Section 10(9) of the Act provides that any such application will not operate as a stay of the arbitral proceedings unless the High Court orders otherwise. In other words, the default position is that the arbitration will continue concurrently with the High Court application. It has long been unclear what test the High Court will apply in deciding whether to stay the arbitral proceedings under section 10(9).

In the recent case of AYY v AYZ & Anor, [2015] SGHCR 22, Assistant Registrar Seow noted the dearth of authorities on this point and succinctly formulated a test based on the established principles applicable to the stay of execution of court judgments pending appeals. Seow AR stated that a stay of arbitration will generally be ordered if "an applicant is able to demonstrate with reasonable and credible substantiation that a refusal of stay would result in detriment in respect of which the applicant could not later be adequately restituted." [2015] SGHCR 22 at [7].

Any additional cost burden, of itself, is unlikely to satisfy this test because the High Court can always make an appropriate costs order in the event that a jurisdictional challenge is successful. A stay will be ordered only where the continuance of the arbitration would result in a detriment or prejudice that could not be adequately compensated by a costs order. Seow AR stated that an example of such detriment or prejudice might conceivably be where a party challenging the tribunal's jurisdiction is compelled to disclose confidential or sensitive information to a competitor in order to defend the arbitral proceedings.

Although the decision does not have significant precedential value, it provides useful guidance and is consistent with the thrust of jurisprudence in Singapore, including the recent Singapore Court of Appeal decision in Tomolugen Holdings Ltd v Silica Investors Ltd, [2015] SGCA 57, which affirmed the position that court proceedings will be stayed if the court is satisfied on a prima facie basis that the conditions for the grant of a stay have been met. By limiting the circumstances in which arbitral proceedings may be stayed, the High Court burnishes Singapore's reputation one of the world's most arbitration-friendly jurisdictions.

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Matthew J. Skinner

John Rainbird

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