ReSolution Issue 9 May 2016 | Page 47

Timothy Cooke advises clients in all areas of alternative dispute resolution, with a focus on international commercial arbitration. Timothy has advised clients in a broad array of international commercial disputes, particularly those in the fields of energy and infrastructure, construction and finance, as well as joint venture and other investment disputes. He manages high-value, legally- and factually-complex cross-border disputes, which often involve questions of fraud or corruption. Timothy is a Registered Foreign Lawyer in Singapore and is admitted to practice in England and Wales as a Barrister.

174 DLR (4th) 385 (USA), and WSG Nimbus PteLtd v Board of Control for Cricket in Sri Lanka [2002] 3 SLR 603 (Singapore), the word ‘may’ was construed to confer on the parties an option to arbitrate. Once that option is exercised, a binding arbitration agreement comes into existence.

Having rejected the first analysis, the Board considered how a party who was a defendant in litigation could exercise the option to arbitrate: was it required itself to commence arbitration for determination of the issues that the other party had sought to litigate (the second analysis), or could it request that the dispute be arbitrated and/or seek a stay of litigation (the third analysis)?

The second analysis was ultimately rejected because it required the party that wished to arbitrate the matter, but that was a defendant in litigation in a state court, to incur the expense of commencing an arbitration merely for a declaration of no liability. Those expenses would include paying a nonrefundable filing fee to an arbitral institution on commencement of arbitration proceedings, plus further advances on costs as ordered by the institution, plus the legal costs of preparing the arbitration claim. Furthermore, the party electing to arbitrate may be required to satisfy various escalation provisions prior to commencing arbitration (in this case, the arbitration clause required the parties to negotiate for 20 days). The Board concluded that requiring the party that was a defendant to litigation but that wished to arbitrate the dispute to incur these costs and undertake such steps did not make commercial sense.

The Board was left with the third analysis. It concluded that this reflected the consensual approach to arbitration, recognising that such consent was the acknowledged hallmark of arbitration. On this analysis, a dispute could be pursued through the courts if neither party elected to submit it to arbitration. However, notice by either party would trigger a mutual agreement to arbitrate, at which point the claimant who had commenced litigation in court would have to either commence identical proceedings in arbitration or drop the suit. The defendant to such litigation would be entitled to a stay of the proceedings and would not be obliged to commence arbitration proceedings.

Comment

This case confirms the consensual approach to arbitration between commercial parties. The decision is noteworthy not only for its findings on how an option to arbitrate may be exercised, and how such an election gives rise to the right for a stay of litigation in favor of arbitration, but also because of the range of cases analyzed in support of the Board’s conclusion, which were drawn not only from English authorities, but also from the United States and Singapore. Such an approach is consonant with an increasing harmonization of international arbitration jurisprudence, thereby promoting predictability and certainty for commercial parties.