ReSolution Issue 13, May 2017 | Page 35

Citing its previous decision in Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2016] 1 SLR 373 the Court of Appeal held that three conditions would have to be satisfied before a court would grant a stay under section 6(2) of the IAA namely:
• a valid arbitration agreement exists between the parties to the court proceedings;
• the dispute in the court proceedings falls within the scope of the arbitration agreement; and
• the arbitration agreement is not null and void, inoperative, or incapable of being performed.
The Court of Appeal agreed with the High Court that the disputes clause constituted a valid arbitration clause and held that, on the weight of modern Commonwealth authority, neither the fact that the clause was asymmetrical, nor the fact that it made arbitration of a future dispute entirely optional instead of placing the parties under an immediate obligation to arbitrate, prevented the court from arriving at this decision.
Because the dispute-resolution agreement that the parties had signed gave only Dyna-Jet the election to arbitrate, the court found that Dyna-Jet's court proceedings fell outside the scope of the agreement. Justice Sundaresh Menon, writing for the three-judge panel (including JJ Judith Prakash and Steven Chong Chief) held that the optional nature of the clause meant that it did not place the parties under a present obligation to arbitrate but it would give rise to an arbitration agreement only if and when [Dyna-Jet] elected to arbitrate a specific dispute in the future. On this basis, the Dispute could have fallen within the scope of the Clause only if [Dyna-Jet] had so elected. In the absence of such an election, in the words of s 6(1) of the IAA, the dispute in the present circumstances was not a “matter which is the subject of the agreement”.
Comment
The Court found that it was plain that the Respondent never elected to arbitrate the Dispute. On the contrary, by the time the Appellant applied to stay the proceedings, the Respondent had already elected otherwise by commencing the present proceedings.
The decision confirms that in Singapore, along with many other major common law and civil law jurisdictions, a properly drafted arbitration clause conferring an asymmetric right on one party to elect whether to arbitrate a future dispute and thus compel its counterparty to arbitrate, is nevertheless a valid arbitration agreement.