Articles

By Gan Kam Yuin - Partner, Bih Li & Lee LLP and Timothy Quek - Associate, Bih Li & Lee LLP

1. BMP had a dispute with BMO and 2 others, over BMP’s ownership of shares in its Vietnamese subsidiary¹ . The Vietnamese subsidiary had a company charter (much like a Constitution for Singapore companies). For reasons which do not matter, the company charter was revised² ; what does matter is that the revised charter contained an arbitration clause at Article 22(2).

2. BMP invoked Article 22(2) and brought an arbitration to the SIAC against BMO. A sole arbitrator was appointed. The arbitrator ruled that he had the jurisdiction to decide on the disputes raised in the arbitration. BMO then applied to the High Court under section 10(3) of the International Arbitration Act against the arbitrator’s ruling³ . BMO raised several challenges in its application.

3.One challenge was that Article 22(2) was merely permissive and did not compel the parties to submit their disputes to arbitration. The parties adduced different versions of Article 22(2) but eventually the Court accepted the version put forward by BMO⁴ . Justice Ang noted that the word “shall” appeared in BMO’s version whereas the word “may” was used in BMP’s version⁵ . The choice of words is a useful starting point for the question of whether the parties intended their disputes to be resolved by arbitration only, but departure from this starting point is warranted if there is “clear indication that parties intended otherwise”⁶ . Construing the clause in its entirety and context, the Court found that this clause was indeed mandatory and the parties had to bring their disputes to arbitration⁷ .

4. BMO also argued that the disputes between itself and BMP did not strictly fall within the revised charter. This case note will not deal with the substance of the disputes as those are peculiar to the facts of the case. Nonetheless, we should note that whilst Justice Ang agreed that the disputes may not have been “directly premised on the rights and duties created by the Revised Charter”, the words “all arising disputes” in Article 22(2) had “a wide ambit and should be liberally construed so as to further the intent that the disputes should be susceptible to the forum chosen for the resolution of disputes⁸ ”. This approach is consistent with the approach taken in previous decisions of the Singapore Courts⁹ .

5. The other challenges raised by BMO were that BMP had waived the right to arbitrate, or repudiated the arbitration agreement, or was estopped from asserting the right to arbitrate¹⁰.

6. At first blush, BMO’s arguments seem particularly cogent because it was common ground between the parties that, prior to commencing arbitration proceedings, BMP had sued BMO in the British Virgin Islands for the same causes of action and the same relief¹¹ . In fact, during the period of March 2015 to March 2016, there were ostensibly parallel litigation (in the BVI Court) and arbitration (in the SIAC) proceedings.

7. However, Her Honour held, on the facts, that BMP’s act of commencing litigation proceedings in the BVI did not amount to an election as BMP had not been “put to election”¹² . Waiver by election is a choice made by the innocent waiving party after the wrongdoing party’s breach of contract; in that situation, the wrongdoing party may assert that the innocent party has waived its rights. In this case BMP was the ‘wrongdoing party’ who had supposedly acted in breach of the arbitration agreement by suing in the BVI, and it was not open to BMO to argue that BMP had waived its rights. Her Honour went on to observe that, on the facts, it seemed that BMP had not had actual knowledge of Article 22(2) when the BVI litigation was commenced, due to (in particular) an oversight by the BVI Counsel¹³ . Therefore, BMP did not have the actual knowledge of the arbitration agreement which is necessary for waiver by election to arise.

8. As for repudiation, the Court held that commencing litigation proceedings per se need not constitute a repudiation of the arbitration agreement, and one must consider if there is an explanation for the breaching party’s conduct¹⁴ . Justice Ang noted the explanation given by BMP (that it had not been advised of the existence of Article 22(2)) and reviewed the procedural history of both the BVI litigation proceedings and the SIAC arbitration proceedings¹⁵ . Again, this case note will not set out the procedural history of both proceedings as they are specific to this case, but what is instructive is the approach the Singapore Courts will take in evaluating what actions amount to repudiation of an agreement to arbitrate.

9. Finally, on estoppel, BMO argued that BMP was estopped from pursuing the arbitration proceedings since it had litigated in the BVI¹⁶ . The Court held that BMO had not made out the first two elements of promissory estoppel as there was (1) no clear and unequivocal promise made by BMP to BMO that BMP would never commence arbitration proceedings in Singapore¹⁷ and (2) no change of position by BMO in reliance on any such promise¹⁸ .

10. In conclusion, the Court dismissed BMO’s application to the High Court and agreed with the arbitrator that he had the jurisdiction to decide on the disputes raised in the arbitration.