The Basis and Extent of a Stay of Court Proceedings in favour of Arbitration Proceedings

In Carlsberg Breweries A/S c CSAPL (Singapore) Holdings Pte Ltd [2020] SGHC(I) 5 the Plaintiff sued for the repayment of a loan extended to the Defendant under a loan agreement. The repayment was triggered by the Defendant’s breach of Clauses 2(a) and 2(c) of their Deed of Undertaking, some of which were constituted by breaches of the Amended Shareholders’ Agreement. The issues arose from an Amended Shareholders' Agreement and were, by common consent, to be determined in the conjoined references to arbitration.   To save judicial resources and time, the Defendant applied for a stay of the Court proceedings on the grounds that the issues raised in the arbitration overlapped with the issues raised in the suit. Essentially, the question before the Court concerned the extent of the stay that should be ordered.    The Court noted that there is no agreement that the Clause 2(c) issues be referred to arbitration. Therefore, the basis for a stay of the Clause 2(c) issues is that it would be a more efficient, expeditious and cost-effective way of dealing with the dispute between the parties for the arbitration to take place first in order to see if the grounds for the Clause 2(c) claim are ruled out by a finding of the arbitrators. If the arbitration does not have that effect, the Clause 2(c) issues will have to be determined by this Court.   In the Court’s opinion, the interests of justice would be best served by the Clause 2(c) issues being determined as soon as convenient, because they have the potential to be determinative of the entire dispute and can be decided in a much shorter timeframe than the arbitration. Those issues, and the questions of construction which arise in relation to accrued rights, can be decided by the Court without trespassing on the arbitrators’ jurisdiction to decide on the other issue. The Court therefore ordered a stay in relation to all matters save for the issues under Clause 2(c).