Law senate

Stay of Court case in favour of an arbitration under AAI, limited to the issues covered by the Arbitration – Singapore Court of Appeal

The Court of Appeal in Singapore in a case between Tomolugen Holdings Limited and Another & Silica Investors Ltd and others reported in (2015) SGCA 57 by a Judgment dated 26th October 2015, held that the stay in favour of an arbitration, under International Arbitration Act, can be granted only with regard to the issues covered in the arbitration.

Brief Facts of the case: Plaintiff, a minority shareholder of the respondent company alleged that the affairs of the company are conducted in an oppressive and unfairly prejudicial manner to the minority shareholders and sought relief under S. 216 of the Companies Act. The Defendant sought stay of the said court case under S.6 of the International Arbitration Act. The High Court Judge who entertained the said applications seeking stay of the court proceedings in favour of arbitration, dismissed the stay application mainly on the ground of arbitrability of the dispute coupled with insufficient remedial adequacy since the arbitrator cannot provide all the reliefs which can be granted by a court while exercising the powers under S.216 of the Companies Act. Hence the matter went to Singapore Court of Appeal.

Main Contentions of the Parties: The Plaintiffs contended that all the defendants in the suit are not parties to an arbitration clause and the dispute is not arbitrable. The defendant contended that the issues involved in the arbitration can be adequately resolved by an arbitrator and there is no limitation to the powers of the Arbitrator. Silicon investors by a broad classification argues that the entire dispute falls outside the ambit of the arbitration clause. LionsGate 2nd defendant argues that the issuances of shares and management participation are under the purview of the arbitration clause and the other two issues are not covered by the arbitration clause.

Findings of the Court of Appeal: The Court of Appeal after dealing with each of the factual points and relied upon various judgments from jurisdictions and came to a conclusion that the stay should be granted in favour of the arbitration, if the defendants come forward to settle the issue of management participation in the Company, in the arbitration. It came to such a conclusion because the Court of Appeal accepted the settled law, that the stay under S.6 of the IAA can be granted only with regard to the part of the court case which covers issues that fall under the purview of an arbitration agreement. Hence in case of such acceptance the other court cases shall be stayed by the court, exercising its inherent powers of case management. It was also held that the issue of Management participation in Companies is an arbitrable issue and not like winding up etc.

Name :- Meghna Mukherjee The Author is an Associate Advocate at Law Senate, Law Firm Website- https://www.lawsenate.com