Singapore High Court decides that a dispute falls under an arbitration agreement if prima facie evidence is successful

In Presscrete Engineering Pte Ltd v SsangYong-Wai Fong Joint Venture [2023] SGHC 8, the Singapore High Court granted a stay of court proceedings in favour of arbitration.

Facts:
SsangYong-Wai Fong Joint Venture (defendant) appealed against the Assistant Registrar’s decision to dismiss its application in HC/SUM 2805/2022 (“SUM 2805”) for a stay of court proceedings in favour of arbitration. The defendant, was the main contractor in a design and construction project. Presscrete Engineering Pte Ltd, the claimant, was its subcontractor for ground improvement works.

4 HC/OC 28/2022 (“OC 28”) was commenced by the claimant, inter alia, to claim damages stemming from the defendant's failure to pay for works performed. The parties appeared to be at odds over whether the relevant works fell within the Subcontract’s scope of works. On 28 July 2022, the defendant filed SUM 2805, seeking a stay of the whole of OC 28 pursuant to s 6 of the Arbitration Act 2001 (2020 Rev Ed) and O 6 r 7(5) of the Rules of Court 2021. The defendant relied on the arbitration agreement contained in clause 43 of the Subcontract (the “Arbitration Agreement”). Under “Settlement of Disputes” it was stated that in the event of any dispute between the Main Contractor (the defendant) and the Sub-Contractor (the claimant), with regards to any matter or thing of whatsoever nature arising out of the Subcontract or in connection therewith, such dispute shall be finally resolved by arbitration in accordance with the Arbitration Rules of the Singapore International Arbitration Centre. The issue to be decided in this case was whether OC 28 (or any part thereof) fell within the scope of the Arbitration Agreement.

Parties’ arguments:
The claimant argued that the disputed works were never intended to be part of the Subcontract, and thus fell outside the Subcontract’s scope of works. Therefore, it concluded that if the disputed works did not fall within the scope of the Subcontract, then they did not fall within the scope of the Arbitration Agreement. The defendant, on the other hand, argued that the claim in OC 28 “arose out of” or was “in connection with” the Subcontract, and as such, OC 28 related entirely to disputes which were to be referred to arbitration under the Arbitration Agreement.

Court’s Decision:
According to the Court the defendant succeeded in demonstrating that the dispute prima facie fell within the scope of the Arbitration Agreement. It was noted that the Arbitration Agreement was worded in the widest possible terms. The Court found that the disputed works were especially not plainly and obviously of a different nature. In the Court’s view, the claimant failed to show that the dispute fell outside the scope of the Arbitration Agreement. Therefore, the Singapore High Court allowed the defendant’s appeal.

Key takeaways:
This case demonstrates that the more broadly an arbitration clause is drafted, the greater the scope for its interpretation. It also underscores the importance of careful drafting when including an arbitration clause in a contract. Similar costly and time-consuming disputes can be easily avoided by meticulously drafting the respective arbitration clauses.