Singapore HC Considers Exclusive Jurisdiction and Arbitration Clauses

In Silverlink Resorts Ltd v MS First Capital Insurance Ltd [2020] SGHC 251, the Singapore High Court considered whether the arbitration clause or the jurisdiction clause (providing for litigation in Singapore) applied to the Dispute.

The arbitration clause was expressed to apply to “any dispute arising out of or in connection with” the relevant insurance policy which was not settled pursuant to the mediation clause, while the jurisdiction clause was expressed to apply to “any dispute … regarding the interpretation or the application of” the insurance policy. On the face of the provisions, there was an overlap between the scope of the arbitration clause on the one hand, and the scope of the jurisdiction clause on the other.

The dispute in these proceedings concerned the question whether the plaintiff had to establish an admissible claim for property damage under section I of the insurance policy before a claim could be admitted under section II for business interruption. It was clear that the dispute could fall within the scope of the arbitration clause but as it related to the interpretation or application of the insurance policy, it could also fall within the scope of the jurisdiction clause. The issue therefore was whether the arbitration clause or the jurisdiction clause applied to the dispute, which in turn depended on how the two seemingly conflicting clauses fell to be interpreted.

The Court noted that Courts have taken a generous approach in construing arbitration clauses (noting the well-known decision in Paul Smith Ltd v H&S International Holding Inc [1991] 2 Lloyd’s Rep 127, adopted in Singapore in BXH v BXI [2020] 1 SLR 1043), stating (@22):

“It is by now well settled that in construing an arbitration clause, the court does not adopt a technical approach but construes it based on the presumed intentions of the parties as rational commercial parties: Tomolugen at [124], citing Fiona Trust & Holding Corporation v Privalov [2007] 2 Lloyd’s Rep 267, affirmed by the House of Lords subnom Premium Nafta Products Ltd v Fili Shipping Co Ltd [2008] 1 Lloyd’s Rep 254 (“Fiona Trust”). In this regard, parties are presumed to have “intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal” unless the language shows otherwise: Fiona Trust at [13], per Lord Hoffmann.”

That said, the Court noted that it is not the case that the Paul Smith approach applies whenever an agreement contains an arbitration clause and a jurisdiction clause. There are limits to this generous approach to interpretation and ultimately, it depends on the intention of the parties, objectively ascertained; parties to an agreement can decide to have certain types of disputes resolved by arbitration and others by litigation, and so long as the arbitration and jurisdiction clauses in an agreement evince the intention of the parties to have different disputes resolved by arbitration and litigation, that intention should be respected and given effect to.

In the Court’s judgment, the parties’ intention, objectively ascertained, was for the jurisdiction clause to carve out disputes regarding the interpretation or application of the insurance policy from the scope of the arbitration clause. As the dispute did not fall within the scope of the arbitration clause, the defendant was therefore not entitled to an order to stay the proceedings in favour of arbitration.

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Hong Kong Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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