The "Duden"

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The "Duden"
Singapore High Court: Andrew Ang, J.: 9 September 2008: [2008] SGHC 149
Leong Marnyi Wendy (AsiaLegal LLC) for the Appellant shipowners
Tan Poh Ling Wendy and Fu Simin Charmaine (KhattarWong) for the Respondent Cargo interests
Admiralty and Shipping: claim for cargo damage under bill of lading incorporating arbitration clause of charterparty but charterparty not identified: application for Stay of court proceedings in favour of arbitration: claim in Arbitration time barred under Hague-Visby Rules: Whether court should grant stay on condition that time bar be waived: singapore International Arbitration Act s 6(2): Principles underlying court's discretion to grant terms or conditions for stay: Whether justice of the case called for court to impose terms or conditions
In this case, the court upheld the decision of the Assistant Registrar to the effect that, in granting a stay of proceedings in favour of arbitration under the Singapore International Arbitration Act, the court could impose conditions

DMC Category Rating: Confirmed

This note has been contributed by Chan Leng Sun of Ang & Partners, Singapore. Ang & Partners are the International Contributors to this website for Singapore

The Plaintiffs were the lawful holders and/or endorsees of the Bill of Lading dated 27 September 2004, under which 24,500 mt of Indian Solar Salt was shipped on board the vessel, "Duden" on a voyage from Kandla Port, India to Qingdao, China. On discharge at Qingdao in early November 2004, the cargo was found damaged. Surveyors for the cargo interests found that the damage was caused by rust at the vessels’ bulkheads and the bottom of the vessels’ holds, and the cargo interests accordingly held the Defendant shipowners responsible as contractual and actual carrier.

The Plaintiffs commenced action against the Defendant shipowners in Singapore in 2005 for their loss under the Bill of Lading, but only managed to serve the writ and arrest the vessel in November 2007. The Vessel was released on the provision of security.

The shipowners applied to stay the Singapore action in favour of London arbitration, on the basis that the reverse of the Bill of Lading incorporated "all terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause." There was no identification of the charterparty on the front of the Bill of Lading. The Plaintiffs were only told by the shipowners that there was a London arbitration clause in the relevant sub-charterparty after the one-year time limit for claims under the applicable Hague-Visby Rules had expired; even then, they were initially wrongly informed which sub-charterparty applied, as there was a string of charterparties.

At first instance, the Assistant Registrar granted a stay of court proceedings in favour of arbitration in London on two conditions namely:

  1. The security obtained by the Plaintiffs from the arrest of the Vessel be retained as security for the arbitration proceedings in London.
  2. The Defendants waive the defence of time bar in the arbitration proceedings in London that the Plaintiffs would have been subject to pursuant to Art III r 6 of the Hague-Visby Rules.

The Defendant shipowners appealed to the Judge-in-Chambers.

The judge dismissed the appeal, on the following grounds.

1. The court has an unfettered discretion to impose terms and conditions upon a stay of court proceedings for arbitration. Section 6(2) of the Singapore International Arbitration Act states that when an application is made by a party in accordance with s.6(1), the court must order a stay of court proceedings unless the arbitration agreement is "null and void, inoperative or incapable of being performed" but may impose "such terms or conditions as it may think fit".

2. The justice of the case demanded the imposition of the condition that the Defendants waive the defence of time bar in the English arbitration proceedings especially in light of:

  1. The uncertainty and confusion surrounding the identity of the charterparty referred to in the Bill of Lading. It would have been unreasonable to expect the Plaintiffs to comply with an arbitration agreement found in a charterparty, of the identity of which the shipowners themselves were not certain. In fact, the Plaintiffs were only informed of the identity of the relevant charterparty after the expiry of the one-year time limit for instituting proceedings (bearing in mind that the Plaintiffs were not privy to any charterparty).
  2. There appearing to be no bona fide intention by the Defendants to have the Plaintiffs’ claim arbitrated. Rather, by their conduct in the case, the Defendants appeared to be trying all ways and means to avoid an adjudication of the matter.

The wording of section 6(2) of the Singapore International Arbitration Act is different from that in the comparable provision in section 9 of the Arbitration Act 1996 (UK). As the English statute does not expressly empower the court to impose conditions upon a stay, the view has been expressed that in England, if the criteria for a stay of court proceedings in favour of arbitration are made out, the court is obliged to stay proceedings for arbitration without conditions.

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