Tjong Very Sumito and Others v Antig Investments Pte Ltd [2009] 4 SLR 732 (“Tjong Very Sumito”) was a Singapore Court of Appeal decision which involved an appeal in relation to an application for a stay of proceedings in favour of arbitration, pursuant to Section 6 of the International Arbitration Act 1994.[1]
The Singapore Court of Appeal held inter alia:
“(2) If the arbitration agreement provided for arbitration of “disputes”, then the subject matter of the proceedings would fall outside the terms of the arbitration agreement if: (a) there was no “dispute”; or (b) where the alleged “dispute” was unrelated to the contract which contained the arbitration agreement.
…
(4) In line with the prevailing philosophy of judicial non-intervention in arbitration, the court would interpret the word “dispute” broadly, and would readily find that a dispute existed unless the defendant had unequivocally admitted that a claim was due and payable …”[2] (Emphasis mine)
The legal proposition put forth in Tjong Very Sumito was that that if a defendant unequivocally admitted that a claim was due and payable, there would be no “dispute” between the parties and the subject matter of a proceedings would fall outside the terms of an arbitration agreement (“Impugned Legal Proposition”).
Consequently, in such a situation, an application for stay of proceedings in favour of arbitration would fail.
The Impugned Legal Proposition was recently applied by our High Courts in, amongst others:
(a) CHE Group Berhad v Dato Kweh Team Aik [2019] 1 LNS 1292, at paragraphs 48 to 50;[3]
(b) Delta-Sport Handelskontor GMBH & Anor v Messrs Harjit Sandhu Wan & Associates & Anor [2022] MLJU 875, at paragraph 10; and
(c) ICFI Limited v Bishopgate Capital Limited & Anor [2020] 1 LNS 2192, at paragraph 12.
Pre-Amendment to the Arbitration Act 2005
Prior to the amendment to Section 10(1) of the Arbitration Act (“AA”) 2005, the provision read as follows:
“(1) The court before which proceedings brought in respect of a matter which is the subject matter of an Arbitration Agreement shall, where party makes an application before taking any other step in the proceedings, stay those proceedings and refer the parties to arbitration unless it finds:
(a) that the agreement is null and void, inoperative or incapable of being performed; or
(b) that there is in fact no dispute between the parties with regard to the matters to be referred.” (Emphasis mine)
Pre-amendment to Section 10 of the AA 2005, the courts were required to consider whether “there is in fact no dispute between the parties with regard to the matters to be referred”.
If there was in fact no dispute between the parties with regard to the matters to be referred, the courts did not need to stay the proceedings and refer the parties to arbitration.
The Impugned Legal Proposition would have been relevant to the application of the Section 10(1) of the AA 2005 pre-amendment.
Post-Amendment to the Arbitration Act 2005
The Arbitration (Amendment) Act 2011,[4] which came into force on 1st July 2011,[5] inter alia, amended Section 10(1) of the AA 2005.
Post-amendment, Section 10(1) of the AA 2005 read (and still reads) as follows:
“(1) A court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.”[6]
Limb (b) of the pre-amendment Section 10(1) of the AA 2005 has been removed.
This would mean that the courts are no longer required to consider whether “there is in fact no dispute between the parties with regard to the matters to be referred”.
As such, post-amendment to Section 10(1) of the AA 2005, Tjong Very Sumito is no longer good law where the Impugned Legal Proposition is concerned.
The Federal Court in Tindak Murni Sdn Bhd v Juang Setia Sdn Bhd and another appeal [2020] 3 MLJ 545 (“Tindak Murni”) referred to Tjong Very Sumito as an example of limb (b) prior to the amendment to Section 10(1) of the AA 2005:
“Prior to the amendment to s 10 the courts expended considerable time and effort in determining whether a ‘dispute’ subsisted by virtue of the earlier wording of s 10:
…
(See for example Tjong Very Sumito and others v Antig Investments Ptd Ltd [2009] 4 SLR 732; [2009] SGCA 41 which stated that ‘if it was at least arguable that the matter is the subject of the arbitration agreement, then a stay of proceedings should be ordered it is only in the clearest of cases that the Court ought to make a ruling on the inapplicability of an arbitration agreement’. This resulted in the courts undertaking an exercise of determining whether a dispute existed between the contracting parties).
With the removal of limb (b) however, the issue of the subsistence or otherwise of a dispute between the parties is rendered obsolete and irrelevant.”[7] (Emphasis mine)
Since the Federal Court in Tindak Murni held that the issue of the subsistence or otherwise of a dispute between the parties is rendered obsolete and irrelevant, by implication, the Impugned Legal Proposition is no longer correct nor applicable within our legislative framework.
The Federal Court in Tindak Murni also expressly held the following:
“… under s 10 of the Arbitration Act 2005 as it presently stands, there is no question of the court entering into the arena of whether or not a ‘dispute’ subsists between the parties. The role of the court is simply as set out in s 10, which we have explained in extenso above.
…
The position stated above is therefore trite, namely that the court is not to enquire or investigate whether there subsists a dispute warranting referral to arbitration. That is a matter for the consideration and determination of the arbitral tribunal.”[8] (Emphasis mine)
Further, the Impugned Legal Proposition is clearly inconsistent with the Federal Court’s decision in Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 5 MLJ 417 whereby it was held:
“… The court is no longer required to delve into the details of the dispute or difference (see TNB Fuel Services Sdn Bhd). In fact the question as to whether there is a dispute in existence or not is no longer a requirement to be considered in granting a stay under s 10(1). It is an issue to be decided by the arbitral tribunal.”[9] (Emphasis mine)
In light of the above, Tjong Very Sumito is no longer good law where the Impugned Legal Proposition is concerned.
[1] “International Arbitration Act 1994”. Singapore Statutes Online, https://sso.agc.gov.sg/act/iaa1994?ProvIds=pr6-#pr6-. Accessed 6th December 2022
[2] Tjong Very Sumito and Others v Antig Investments Pte Ltd [2009] 4 SLR 732 (CA), at p. 733
[3] The learned Judicial Commissioner relied on Section 10 AA 2005 decisions prior to the 2011 amendment
[4] “Arbitration (Amendment) Act 2011”. Lawyerment, https://www.lawyerment.com/library/legislation/acts/2011/A1395/section/. Accessed 6th December 2022.
[5] “Arbitration Act 2005”. International Labour Organisation, https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/87342/124975/F35015673/MYS87342%20Eng.pdf#page=45. Accessed 6th December 2022.
[6] “Arbitration Act 2005”. International Labour Organisation, https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/87342/124975/F35015673/MYS87342%20Eng.pdf#page=13. Accessed 6th December 2022.
[7] Tindak Murni Sdn Bhd v Juang Setia Sdn Bhd and another appeal [2020] 3 MLJ 545 (FC), at paragraph 53(a)
[8] Ibid.
[9] Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 5 MLJ 417 (FC), at paragraph 33
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