Navigator Investment Services Ltd v Acclaim Insurance Brokers Pte Ltd

Andrew Phang Boon Leong JA (delivering the judgment of the court):

[1] This is an appeal against the decision of the High Court judge (“the Judge”) who refused to grant a stay of an application for pre-action discovery and pre-action interrogatories in Acclaim Insurance Brokers Pte Ltd v Navigator Investment Services Ltd [2009] SGHC 12 (“Judgment”). As would be apparent in the course of this judgment, this case raises two interesting (and important) points of practice, namely: (a) the significance of the Singapore International Arbitration Centre (“SIAC”) Rules in the determination of the applicable legislation for the arbitration concerned (viz, whether the Arbitration Act (Cap 10, 2002 Rev Ed) (“the AA”) or the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the IAA”) applies); and (b) how the court will approach a stay application under s 6 of the AA and/or s 6 of the IAA where an application for pre-action discovery and/or pre-action interrogatories is concerned.

[2] It is not necessary to set out the facts leading to the present dispute in detail, as they are not material for the purposes of the present appeal. On 25 June 2004, the appellant, viz, Navigator Investment Services Ltd (“Navigator”), a wholly-owned subsidiary of Aviva Ltd (“Aviva”), and the respondent, viz, Acclaim Insurance Brokers Pte Ltd (“Acclaim”), entered into a Distributorship Agreement (“the Distributorship Agreement”). Under the Distributorship Agreement, Acclaim was appointed as a distributor for Navigator’s investment products. In return, Acclaim was entitled to claim for certain distribution fees. Acclaim later entered into a similar arrangement with iFast Financial Pte Ltd (“iFast”). The present proceedings, however, do not involve iFast.

[3] On 1 August 2006, Acclaim entered into a Financial Adviser Manager Agreement (“the FAM Agreement”) with Edward Wong Leong Wei (“Wong”), and later appointed him as the head of one of its units. As part of his duties, Wong managed a team of Financial Adviser Representatives (“FARs”) who were required to source for and recommend investments to clients. Under the FAM Agreement, Wong was entitled to receive commissions and payments for the services rendered by him or his FARs.

[4] In early July 2007, Wong and his FARs went on a staff retreat to Phuket, Thailand. An employee each from Aviva and iFast was allegedly present at the retreat. Upon their return from Thailand, Wong allegedly instructed his FARs to sign pre-prepared letters of resignation which were backdated to 14 June 2007. Wong then allegedly used Acclaim’s old letterhead to write letters purporting to accept these resignations and to discharge the FARs from their agreements with Acclaim. It was alleged that these letters were similarly backdated to 14 June 2007.

[5] Sometime in July 2007, Wong’s FARs allegedly arranged for $26 million worth of “Funds Under Administration” (ie, the aggregate amount invested by Acclaim’s clients for a period of over 90 days in Navigator’s investment products) to be transferred from Acclaim’s account with Navigator to Leadenhall Insurance Brokers Pte Ltd (“Leadenhall”). Leadenhall was a financial adviser company in which Wong and/or Wong’s father allegedly had pecuniary interests. As an aside, approximately $31 million worth of “Funds Under Administration” in Acclaim’s account with iFast was also allegedly transferred to Leadenhall. To effect the transfer, it was necessary to obtain each client’s written consent and signature. It is alleged that many signatures were forged. Numerous clients subsequently complained about the transfers.

[6] On 8 August 2007, Wong’s services with Acclaim were terminated for reasons not apparently related to the present action. On 16 August 2007, Wong forwarded the resignation letters of the FARs who had resigned to Acclaim, and, together with 14 FARs, demanded unpaid commissions at Acclaim’s office. Thereafter, Acclaim filed reports with the police, the Monetary Authority of Singapore and the Corrupt Practices Investigation Bureau with respect to Wong’s conduct. Acclaim also wrote to Aviva (ie, Navigator’s parent company (see [2] above)) and iFast to request for information relating to the transfer of the “Funds Under Administration”. Aviva wrote back, confirming that the transfers had taken place. However, Aviva did not agree to provide any documents without their clients’ prior consent. On the other hand, iFast provided Acclaim with copies of the transfer documents.

[7] On 14 December 2007, Wong and Stralos Services Pte Ltd (“Stralos”) commenced Suit No 781 of 2007 (“Suit 781”) in the High Court against Acclaim for unpaid commissions and earnings allegedly due under the FAM Agreement.

[8] On 17 December 2007, Acclaim filed Originating Summons No 1830 of 2007 (“OS 1830”) to seek pre-action discovery of certain documents as well as pre-action interrogatories of certain information from Navigator. The documents and information which Acclaim sought related to the transfer of the “Funds Under Administration” from Acclaim to Leadenhall. In his affidavit filed on 17 December 2007, Anthony Lim (“Lim”), the founder shareholder, managing director and chief executive officer of Acclaim, set out the facts leading up to an alleged conspiracy/collusion, and further outlined the purpose of OS 1830 as follows (at paras 50–52 and 54–55):

[9] On 9 January 2008, Acclaim filed its Defence and Counterclaim in Suit 781, in which it denied that Wong and/or any of his FARs were entitled to commissions or earnings. In its Counterclaim, Acclaim averred, inter alia, that Wong, Leadenhall, representatives from Navigator and iFast, and up to 26 FARs had conspired against Acclaim to injure it. It further averred that Wong had committed various breaches of contractual and fiduciary duties.

[10] In response, on 10 January 2008, Navigator commenced Originating Summons No 53 of 2008 (“OS 53”) against Acclaim, in which it sought the following reliefs:

(a) a declaration that Acclaim should arbitrate the dispute and the application for pre-action discovery and pre-action interrogatories;

(b) an injunction to restrain Acclaim from commencing or continuing any action against Navigator concerning disputes arising out of or in connection with the Distributorship Agreement in Singapore or any other jurisdiction;

(c) an order for OS 1830 and the supporting affidavit filed by Lim on 17 December 2007 (see [8] above) to be struck out and expunged;

(d) an order to seal the court files for OS 1830 and OS 53; and

(e) an order to restrain Acclaim from disclosing to any non-party the contents of OS 1830, OS 53 and all related affidavits.

[11] On 11 January 2008, Navigator filed Summons No 130 of 2008 (“SUM 130”) to stay OS 1830 in favour of arbitration pursuant to s 6 of the AA. Further on 12 January 2008, Navigator filed Summons No 148 of 2008 (“SUM 148”) to restrain Acclaim from commencing or continuing any action against it with regard to disputes arising out of or in connection with the Distributorship Agreement until the final disposal of OS 53, to seal the court files for OS 1830 and OS 53 until the final disposal of OS 53, and to restrain Acclaim from disclosing to any non-party the contents of OS 1830, OS 53 and all related affidavits.

[12] SUM 148 was heard on 14 January 2008 by a High Court judge, who ordered the sealing of the court files but made no orders on the other prayers sought. No order was made in relation to the prayer for an injunction against proceedings after Acclaim had agreed that it would not be instituting proceedings pending the hearing of OS 1830. No order was made in relation to the prayer for non-disclosure after Acclaim had given an undertaking in terms. The same High Court judge heard OS 53 on 5 March 2008 and made no orders with respect to that particular application, although the interim order made and undertakings given in relation to SUM 148 were ordered to stand until the disposal of OS 1830. On 25 September 2008, an assistant registrar dismissed SUM 130. Navigator appealed against that decision in Registrar’s Appeal No 383 of 2008 (“RA 383”). On 17 November 2008 (three days before Acclaim was due to file its submissions for RA 383), Navigator filed Summons No 5059 of 2008 (“SUM 5059”) to amend SUM 130 to seek a stay of OS 1830 under s 6 of the IAA in addition or in the alternative to the grounds originally stated in SUM 130. The Judge dismissed both RA 383 and SUM 5059, and Navigator appealed against his decision in Civil Appeal No 5 of 2009 (“CA 5”), ie, the present appeal.

[13] On 18 April 2008, Navigator commenced Arbitration No 21 of 2008 (“ARB 21”) at the SIAC, seeking, inter alia, declarations that it was not liable to Acclaim in any way. Navigator and Acclaim have filed their respective statements of claim and defences for ARB 21. However, as a result of the proceedings in SUM 130, the arbitrator concerned suspended ARB 21 sine die, until further application by either of the parties. The relevant correspondence between the parties suggests that Navigator had proposed that discovery in ARB 21 proceed notwithstanding the suspension. However, Acclaim was not amenable to this proposal because the documents, if provided, would remain confidential and could not be used for the purposes of Suit 781.

[14] The Judge began by dismissing SUM 5059. In his view, there was nothing to indicate that the IAA applied since ARB 21 “concerned parties in Singapore on matters governed by Singapore law, and Singapore was the forum of the arbitration” (Judgment at [3]). The Judge also found that Acclaim had not consented to having arbitration under the IAA (ibid). Furthermore, Navigator had taken “an inordinately long time” to claim that ARB 21 was an international arbitration and had failed to run that argument before the assistant registrar below (ibid). In the Judge’s view, the onus on Navigator to demonstrate that the arbitration was an international arbitration was a high one, and, given the paucity of evidence as well as argument, the amendment should not be allowed (ibid).

[15] Following from his dismissal of SUM 5059, the Judge decided against exercising his discretion to stay OS 1830 (Judgment at [4]). He gave the following reasons for doing so (ibid):

[16] Turning to an overview of the arguments of the respective parties (the specific arguments being dealt with in more detail at the appropriate junctures below), Navigator began by submitting that the IAA was applicable. The arbitration clause within the Distributorship Agreement (“the Arbitration Clause”) provided that any arbitration would be resolved in accordance with the “Arbitration Rules of the [SIAC] for the time being in force”. Since the dispute arose at the end of 2007, Navigator contended that the applicable rules were the SIAC Rules (3rd Ed, 1 July 2007) (“the SIAC Rules 2007”). Accordingly, the IAA was applicable, as Rule 32 of the SIAC Rules 2007 states that the law of the arbitration shall be the IAA where the seat of arbitration is Singapore. The transitional provisions of the SIAC Rules 2007 did not apply because the parties had not, in the Arbitration Clause, expressly referred to arbitration under the SIAC Domestic Arbitration Rules, as required under Art 2(1) of Schedule 1 of the SIAC Rules 2007.

[18] Navigator further argued that even if a stay was not granted under the IAA, this court should nevertheless grant a stay under its inherent jurisdiction.

[19] Acclaim argued that whether the AA or the IAA applied would be immaterial, because under s 6 of the AA and s 6 of the IAA, a party is entitled to stay court proceedings only after appearance has been entered but before any pleading or step in the proceedings has been taken. In the present case, Navigator had not entered an appearance in respect of OS 1830 and was therefore precluded from applying for a stay under either the AA or the IAA.

[20] Acclaim further argued that there was no “dispute” in OS 1830 within the meaning of the Arbitration Clause since it was only attempting to obtain documents and answers in order to assess the possibility of commencing a claim against Navigator. Acclaim also highlighted that it had not added Navigator as a party to any proceedings and/or commenced any proceedings against it.

[21] Acclaim also pointed out that Navigator could not rely on both the AA and the IAA as the AA and the IAA could not apply at the same time. In any case, the AA was applicable because the parties had never agreed in writing that the IAA or the UNCITRAL Model Law on International Commercial Arbitration (“the Model Law”) was applicable. Further, Acclaim highlighted that since Rule 32 of the SIAC Rules 2007 was carried over from the SIAC Rules (International) (2nd Ed, 22 October 1997) (“the SIAC Rules 1997”), the provision was intended to lay to rest any doubts that an international arbitration having its seat in Singapore was to be governed by the IAA, and not some other legislation or the Model Law. Acclaim did not dispute that the Arbitration Clause referred to the SIAC Rules 2007, but argued that, in regard to the applicable substantive legislation (as opposed to procedural rules), the rules in force at the date the Distributorship Agreement was entered into should apply.

[22] Acclaim argued that even if the IAA was applicable, Navigator was estopped from arguing that any arbitration was governed by the IAA. It argued that Navigator had always acted on the basis that the AA was applicable, given the fact that SUM 130 and OS 53 had been argued based on the AA. In respect of ARB 21, Navigator had never mentioned that the proceedings were governed by the IAA until SUM 5059 was filed. Therefore, Acclaim argued, both parties had proceeded on the basis that the AA was applicable, and it would be unjust for Navigator to renege on the agreed interpretation of the Arbitration Clause. According to Acclaim, the doctrine of estoppel by convention applied to prevent Navigator from arguing that ARB 21 was an international arbitration which should be governed by the IAA.

[23] Further, Acclaim contended that Navigator had taken a step in the proceedings by its actions in filing OS 53. By seeking declaratory relief, an injunction against proceedings, an order to expunge the documents filed, as well as an injunction restraining Acclaim from disclosing matters to third parties, Navigator had gone beyond the court’s normal jurisdiction to stay proceedings and also beyond its right to arbitrate. It was also highlighted that Navigator had argued OS 53 on its merits before the High Court judge concerned.

[24] Before we deal with the substantive merits of the appeal, it would be appropriate for us to deal with the following issues at this juncture.

[25] First, Navigator applied under Summons No 1910 of 2009 to admit certain documents for the purposes of the present appeal. These documents can be categorised, simply, as documents relating to Suit 781, documents stating that Navigator did not agree to provide discovery and/or answer interrogatories before OS 1830 was filed, and a letter from Navigator to Acclaim dated 9 March 2009 offering discovery in ARB 21. Given that no trial or hearing on the merits has taken place in the present proceedings, it was within the court’s discretion to admit these documents (see the decision of this court in Jurong Town Corp v Wishing Star Ltd [2004] 2 SLR 427 at [27]). We allowed Navigator’s application to admit the documents at the hearing of this appeal on 21 May 2009 for the following reasons:

(a) With respect to the documents relating to Suit 781, we accepted Navigator’s explanation that it only discovered those documents when it had made a request to inspect the court file for Suit 781 after the Judge’s decision had been delivered, though we should not be taken as suggesting that either party was at fault for the initial omission.

(b) With respect to the documents stating that Navigator did not agree to provide discovery and/or answer interrogatories before OS 1830 was filed, we accepted that the documents were introduced as a response to the allegations raised by Acclaim that there was such an agreement (here and below) and therefore allowed their admission.

(c) With respect to the letter that purportedly evidenced Navigator’s offer of discovery in ARB 21, we noted that Acclaim had, in a similar vein, sought to introduce its solicitors’ response (dated 10 March 2009) to Navigator’s letter which set out its version of events. Given that these letters arose after the conclusion of the High Court hearing, we therefore exercised our discretion and allowed both letters (ie, Navigator’s letter and Acclaim’s response) to be admitted.

[27] Having decided in Navigator’s favour in relation to SUM 5059, the two issues for us to decide are as follows: (a) whether the AA as opposed to the IAA is applicable; and (b) whether OS 1830 should be stayed under either s 6 of the AA or s 6 of the IAA (as the case may be). The issue of whether OS 1830 should be granted (or dismissed) does not arise for consideration in the context of the present proceedings.

[28] The Arbitration Clause states, as follows:

[29] Navigator highlighted that since the Arbitration Clause referred to the “Arbitration Rules of the [SIAC] for the time being in force”, the applicable rules would be the SIAC Rules 2007. Rule 32 of the SIAC Rules 2007, in particular, was emphasised, as it states as follows:

Navigator argued that the parties, by adopting the SIAC Rules 2007, which provided that the IAA was applicable (pursuant to Rule 32), had thereby opted for the IAA to apply.

[30] Acclaim, on the other hand, argued that the IAA was not applicable for two reasons. First, there was no agreement between it (ie, Acclaim) and Navigator that the IAA or the Model Law was to apply. The requisite factors set out in s 5(2) of the IAA were also not satisfied. Therefore, any arbitration conducted would be domestic in nature. Rule 32 of the SIAC Rules 2007 was carried over from Rule 32 of the SIAC Rules 1997 (which applied to international arbitrations) and could not have been intended to apply to domestic arbitrations. Rather, it was meant to lay to rest any doubts that the governing law in the case of an international arbitration having its seat in Singapore was the IAA, and not some other legislation or the Model Law. Second, while the Arbitration Clause did refer to the SIAC Rules 2007, the issue here concerned the substantive legislation, as opposed to the code or procedural rules, that was applicable. Therefore, the “incidental reference” in the SIAC Rules 2007 to the IAA was not intended by the parties to mean that the IAA was to be the governing legislation, as the parties had “only consented to the rules of procedure which were applicable as at the time in force”.

[31] In our view, the IAA was the applicable legislation in the present case. Section 5(1) of the IAA is the crucial provision, as it allows for parties to agree that the IAA applies. The said provision reads as follows:

[32] The purpose of the provision just quoted is clear. In Law Reform Committee, Singapore Academy of Law, Report of the Sub-Committee on Review of Arbitration Laws (August 1993) (Chairman: Mr Giam Chin Toon) (“the Sub-Committee Report”), it was observed thus (at para 16):

And as Hsu Locknie, in “The Adoption of the UNCITRAL Model Law on International Commercial Arbitration in Singapore” [1994] SJLS 387, stated in a similar vein (at 394):

[33] Indeed, it is not irrelevant to note that the AA was enacted in 2001 in order to bring it, as stated during the Second Reading of the Arbitration Bill (Bill 37 of 2001) by the Minister of State for Law, Assoc Prof Ho Peng Kee, “more in line with [the IAA] and international practices, as reflected in [the Model Law]” (Singapore Parliamentary Debates, Official Report (5 October 2001) vol 73 at col 2213). Assoc Prof Ho proceeded to observe further as follows (at col 2214):

[34] The issue before this court, therefore, is what the parties had agreed to when they referred, in the Arbitration Clause itself (reproduced at [28] above), to “the Arbitration Rules of the [SIAC] for the time being in force”. Prima facie, the rules for the time being (as opposed to the rules applicable at the time the contract was made) are applicable where the contract provides that disputes are to be decided in accordance with the rules of a particular tribunal (see Sir Michael J Mustill & Stewart C Boyd, The Law and Practice of Commercial Arbitration (Butterworths, 2nd Ed, 1989) at p 282 and Robert Merkin, Arbitration Law (Informa London, 2008) (“Arbitration Law”) at para 14.6; see also the decision of this court in Black & Veatch Singapore Pte Ltd v Jurong Engineering Ltd [2004] 4 SLR 19 at [19]– [20]). In the present case, only one set of rules was applicable at the time of the dispute, viz, the SIAC Rules 2007. Acclaim does not dispute that the Arbitration Clause refers to the SIAC Rules 2007. Therefore, the issue is whether the reference to, as well as the incorporation of, the SIAC Rules 2007 was sufficient to bring an arbitration commenced pursuant to the Arbitration Clause within the purview of the IAA.

[35] Rule 32 of the SIAC Rules 2007 (reproduced above at [29]) states that the “law of the arbitration shall be the [IAA]”. In our view, if the parties have agreed that the lex arbitrii is the IAA, it is difficult to see how the parties can be said not to have agreed that the IAA was to apply within the meaning of s 5(1) of the IAA. Support for this proposition can be found in Halsbury’s Laws of Singapore vol 2 (LexisNexis, 2003 Reissue) at para 20.013. More importantly, in the decision of this court in NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR 565 (“NCC International”), V K Rajah JA observed (at [52]):

[36] The observations set out in the preceding paragraph were recently applied by Assistant Registrar Nathaniel Khng (“AR Khng”) in the Singapore High Court decision of Sembawang Engineers and Constructors Pte Ltd v Covec (Singapore) Pte Ltd [2008] SGHC 229 (“Sembawang Engineers and Constructors”). The issue that had to be considered, in AR Khng’s words, was as follows (id at [23]):

He proceeded to observe, as follows (ibid):

[37] AR Khng proceeded to cite, as well as apply (id at [25]), the observations of Rajah JA in NCC International (to which we have already made reference (at [35] above)). In AR Khng’s words (Sembawang Engineers and Constructors at [26]):

He did, however, raise (as well as address) two possible concerns with regard to the adoption of such an approach.

[38] The first was whether or not s 5(1) of the IAA ought to be confined, instead, only to the concept of an express agreement (id at [27]). AR Khng was of the view that if this had been the case, the legislature would (by analogy (only) with s 15(2) of the IAA) have expressly stated so (id at [28]). With respect, this may be too nuanced an approach to attribute to the legislature. In any event, this particular concern may not, in the final analysis, be a real one (or at least one that raises any real concerns). Let us elaborate.

[39] Where (as in this case) the parties have expressly agreed (via the Arbitration Clause) not only that the arbitration “shall be referred to and finally resolved by arbitration in Singapore in accordance with the Arbitration Rules of the [SIAC] for the time being in force” but also that the aforementioned rules “shall be deemed to be incorporated by reference into this Agreement”, the result is that the parties must be taken to have agreed to the legal substance contained in, inter alia, those rules (including Rule 32). If so, then it is clear that the parties must have expressly agreed (as is clearly stated in Rule 32 itself) that the law of the arbitration shall be the IAA. This, of course, falls squarely within the ambit of s 5(1) of the IAA itself. And this is why Rajah JA made the observations to the same effect in NCC International (reproduced above at [35]). Indeed, such an approach is wholly consistent with the legislative background to s 5(1) of the IAA, which is (as described briefly earlier (at [32] above)) to accord to the parties concerned the freedom to agree to have their disputes dealt with pursuant to the IAA.

[40] The second concern which was expressed by AR Khng was described as follows (Sembawang Engineers and Constructors ([36] supra) at [29]):

[41] AR Khng’s response to this particular concern was as follows (id at [30]– [31]):

[42] Although we think that this second concern is one that has been raised ex abundanti cautela, we are nevertheless in agreement with the reasoning by AR Khng as set out in the preceding paragraph.

[43] In the circumstances, we find that the parties had agreed that the IAA was to apply. We therefore turn to consider whether the court should grant a stay of OS 1830 under s 6 of the IAA.

[44] The issue to be considered is whether or not the court should grant a stay under s 6 of the IAA in the context of an application for pre-action discovery and/or pre-action interrogatories. This particular issue appears simple in form but belies (in its substance) crucial issues centring on the interface between court proceedings on the one hand and arbitration proceedings on the other. Indeed, it constitutes the confluence of a couple of broad policies and (in a more specific vein) raises the larger question as to how these policies can (if possible) be integrated harmoniously into one smooth stream. Even where one proceeding must be chosen over the other, as is the case here, the court must ensure that the underlying rationale of the other proceeding is not undermined.

[45] The crucial provision is, of course, s 6 of the IAA, the material parts of which read as follows:

[46] Indeed, the present issue is raised in a somewhat unusual context in so far as the relevant timeframe vis-à-vis s 6 of the IAA is concerned. The issue that frequently arises is whether or not it is too late for the applicant to apply for a stay pursuant to s 6 of the IAA because it has taken a step in the proceedings within the meaning of subsection (1) thereof (which is, it should be emphasised, not the situation in the context of the present appeal). There is, in fact, a wealth of case law in relation to this particular issue (see, eg, the recent decision of this court in Carona Holdings Pte Ltd v Go Go Delicacy Pte Ltd [2008] 4 SLR 460 (and the various authorities (both local as well as foreign) considered therein); see also Robert Merkin & Johanna Hjalmarsson, Singapore Arbitration Legislation Annotated (Informa, 2009) at pp 19–21). The present proceedings, on the other hand, raise the issue as to whether or not an application for pre-action discovery and/or pre-action interrogatories comes within the purview of s 6 of the IAA in the first place, given the requirement for “appearance” under s 6(1) of the IAA. Indeed, the difference between the two (contrasting) points of time in s 6(1) of the IAA is apparent from the word “and” in that provision (which has been rendered in bold italics, as well as underlined and italicised, in the preceding paragraph).

[47] Turning to the parties’ respective arguments in greater detail and, first, to those proffered by Navigator, it was argued that all the requirements set out in s 6 of the IAA with respect to OS 1830 had been satisfied and that it was therefore mandatory for the court to order a stay of that particular application. It was also argued that OS 1830 was a “proceeding” within the meaning of s 6 of the IAA, and that the reference to “appearance” in that section did not refer to the filing of a Memorandum of Appearance, but only “an entry into the fray”. There was also clearly a dispute between the parties, as evidenced by documents such as Lim’s affidavit filed on 26 March 2008 in response to the summary judgment application by Wong and Stralos. Since the requirements of s 6 of the IAA were satisfied, it was mandatory for the court, pursuant to s 6(2) (reproduced at [45] above), to order a stay of OS 1830 (unless the court “is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed” (per s 6(2))).

[48] Acclaim, on the other hand, highlighted that OS 1830 was an application for pre-action discovery and pre-action interrogatories, and that no substantive action had been commenced. Acclaim argued that a stay could only be applied for after appearance had been entered, and that no appearance was required for such pre-action applications. Indeed, Navigator did not enter an appearance here. Acclaim also relied on the decision of this court in Woh Hup (Pte) Ltd v Lian Teck Construction Pte Ltd [2005] SGCA 26 (“Woh Hup”) to contend that “pre-action discovery is not caught by the [A]rbitration [C]lause” and that it was premature for the court to consider the Arbitration Clause when hearing a pre-action discovery application.

[49] It is only logical, as well as correct in principle, that there is a specific timeframe within which a party can apply for a stay of proceedings pursuant to s 6 of the IAA. In this respect, we have already had occasion (see [46] above) to consider what is the latest point in time such an application can be made. We are now concerned with the opposite end of the spectrum, viz, what is the earliest point in time at which such an application can be made. In the context of the present appeal, the key words in s 6(1) of the IAA (reproduced at [45] above) are “at any time after appearance”. (It might be observed, parenthetically, that the phrase “at any time after appearance” and before delivering any pleading (or its equivalent) or taking any other step in the proceedings may be traced back to s 11 of the Common Law Procedure Act 1854 (c 125) (UK) (see also s 4 of the Arbitration Act 1889 (c 49) (UK), s 4 of the Arbitration Act 1950 (c 27) (UK) and s 1 of the Arbitration Act 1975 (c 3) (UK)).) In other words, the earliest point in time at which an application for a stay under s 6 of the IAA can be made would be after the applicant has entered an “appearance” in the context of the court proceedings concerned. Read literally, this would mean that Navigator was not even entitled to apply for a stay under s 6 of the IAA in the first instance as it had not entered any appearance with respect to Acclaim’s application under OS 1830.

[50] In this regard, it is pertinent to note that even prior to the amendments in 2006 that resulted in the present version of the Rules of Court, viz, the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the Rules 2006”), an application for pre-action discovery and/or pre-action interrogatories did not require the applicant concerned to enter an appearance. In particular, applications for pre-action discovery and pre-action interrogatories under, respectively, O 24 r 6 and O 26A r 1 of the Rules of Court (Cap 322, R 5, 2004 Rev Ed) (“the Rules 2004”) were to be commenced by originating summons in Form 7. The title to Form 7 in the Rules 2004 stated as follows: “ORIGINATING SUMMONS (WHERE APPEARANCE NOT REQUIRED)” [emphasis added]. Applying O 12 r 9(2) of the Rules 2004, which states that no appearance need be entered to an originating summons where special provision to that effect is made, the respondent to an application for pre-action discovery and/or pre-action interrogatories was therefore not required to enter an appearance even before the Rules 2006 came into effect.

[51] This brief historical excursus is necessary because, since the aforementioned amendments in 2006, no appearance is required to be entered with respect to all originating summonses generally (see O 12 r 9 of the Rules 2006). This does not, of course, necessarily mean – nor did Acclaim (correctly, in our view) argue - that all originating summonses cannot now be stayed. The acceptance of such a sweeping assertion would result in wholly unintended substantive effects arising from what was essentially a straightforward streamlining of the procedural process that was effected in 2006. Hence, it was necessary for us to set out (as we have done above) what the legal position was prior to the amendments in 2006, which, as we have seen, did not require the respondent to enter an appearance. The key to the whole issue, in our view, lies in the proper construction of the word “appearance” in s 6(1) of the IAA.

[52] There is, admittedly, no magic in the word “appearance” itself. Indeed, the Arbitration Act 1996 (c 23) (UK) dispensed with the phrase “at any time after appearance and before delivering any pleading or taking any other step in the proceedings” and substituted it (in s 9(3) of that particular statute) with the phrase “before taking the appropriate procedural step (if any) to acknowledge the legal proceedings against him”. As Prof Merkin put it (in Arbitration Law ([34] supra) at para 8.26):

Indeed, in the United Kingdom, Departmental Advisory Committee on Arbitration Law, Report on the Arbitration Bill (February 1996) (Chairman: Lord Justice Saville), it was observed as follows (at para 51):

[53] That having been said, it is important to ascertain what the legal significance is from a substantive perspective in so far as the express reference to “appearance” in s 6(1) of the IAA is concerned. Looking, then, at the substance of the matter, it is our view that the earliest point in time at which a stay application can be made under s 6 of the IAA is when a substantive claim has already been crystallised (and this is, in fact, also consistent with the latest UK position, as briefly described in the preceding paragraph). As Singapore Court Practice 2006 (Jeffrey Pinsler gen ed) (LexisNexis, 2006) aptly puts it (at para 12/1/1):

It has also been observed in a similar vein, in Singapore Civil Procedure 2007 (G P Selvam chief ed) (Sweet & Maxwell Asia, 2007) (“Singapore Civil Procedure”), that (at para 12/1/1):

[54] Indeed, it is only at (or after) this particular point in time (when a substantive claim has already been crystallised) that the defendant, cognisant of a clear claim that has in fact been brought against it, can then apply to the court to stay that particular claim (subject, of course, to the latest point in time at which such an application can be made, as stipulated in s 6(1) of the IAA itself (see also [46] above)). Indeed, as just alluded to, it would appear to be contrary to both logic as well as commonsense for a potential defendant to apply for the stay of a claim that had yet to be brought against it. But what if there was a situation where a claim would almost surely be made? For example, could it be argued, in the context of the present case, that Acclaim would almost surely commence court proceedings against Navigator, especially since one of the conditions for an application for pre-action discovery and/or pre-action interrogatories, according to O 24 r 6(3)(a) and O 26A r 1(3)(a) of the Rules 2006, is that the person against whom the order is sought “is likely to be a party to subsequent proceedings” [emphasis added]? As a matter of fact, however, there is no way of knowing with any certainty the answer to this question. More importantly, there must also be a clear and defined cut-off point, and that point, in our view, must be when a substantive claim has already crystallised. If so, then it follows that an application for pre-action discovery and/or pre-action interrogatories would, by its very nature, fall outside this particular cut-off point and, hence, not fall within the scope of s 6 of the IAA.

[55] It is important to note, at this juncture, that the mere availability of pre-action discovery and/or pre-action interrogatories does not mean that such an application will be granted automatically by the court or as of right. On the contrary, the applicant (in this case, Acclaim) would still need to satisfy the court that it ought to be granted such relief (pursuant to the applicable principles in relation to O 24 and O 26A of the Rules 2006). Indeed, if the applicant has been guilty of an abuse of process, the court would clearly refuse the application. In Woh Hup ([48] supra), this court, whilst holding that the court has the power to grant an application for pre-action discovery, notwithstanding the fact that the respondent concerned was a party to an arbitration agreement, opined thus (at [34]– [35]):

[56] Indeed, as we point out later (at [61] below), the approach of the courts is to facilitate and promote arbitration wherever possible between commercial parties. Hence, any application (including an application for pre-action discovery and/or pre-action interrogatories) will be carefully scrutinised by the court concerned to ensure that the arbitration process is not being circumvented or otherwise undermined. Indeed, where the arbitration clause is prima facie applicable, absent exceptional circumstances, a court would not grant pre-action discovery or pre-action interrogatories (see Woh Hup at [35]), especially where both the parties involved as well as the issues in dispute between them are one and the same, on the ground of abuse of process. Such a strict approach by the court would be consistent with the ideal of facilitating as well as promoting arbitration wherever possible.

[57] That having been said, there may, on the contrary, be valid reasons as to why an application for pre-action discovery and/or pre-action interrogatories should be granted, even if an arbitration agreement is prima facie applicable. For example, as was pointed out in Woh Hup ([48] supra), pre-action discovery might be important in order to assist the applicant to ascertain whether it had a viable cause of action (or causes of action) against the respondent (at [35]). Navigator took great pains to emphasise that this was not the situation in the present case but we need not make any findings in this regard. If, in fact, the causes of action concerned fall within an arbitration clause in an arbitration agreement, the applicant ought then to refer the dispute to arbitration. If, however, the applicant commences an action in court contrary to the terms of the arbitration agreement, the respondent can apply under s 6 of the IAA to stay the action in favour of arbitration. Such flexibility is especially important and useful where the lex arbitrii or the rules of the arbitral tribunal do not provide for any practical solution to allow the putative claimant to obtain discovery and/or interrogatories at a stage when it is still in the dark about the possible causes of action it may have against the other party and is therefore unable to file a statement of case.

[58] Alternatively, as in the present case, pre-action discovery and/or pre-action interrogatories may be sought with a view to mounting a claim not only against a party with whom the applicant has an arbitration agreement, but also against third parties with whom the applicant has no such agreement (see O 24 r 6(5) and O 26A r 6(5) of the Rules 2006). Looked at in this light, the fact situation in the present proceedings is distinguishable from the usual situation where the parties to the arbitration agreement and the parties to the court proceedings concerned are (as was the case in, for example, Woh Hup ([48] supra)) one and the same. Indeed, where an application for pre-action discovery and/or pre-action interrogatories is made, as was the case here, in the context of multi-party proceedings, there appears, ceteris paribus, to be no reason why the court’s power to grant pre-action discovery or pre-action interrogatories should be curtailed, although this power will be exercised sparingly and only (we hasten to add) where valid reasons can be shown.

[59] Hence, from the perspective of the rules of civil procedure, it would appear that applications for pre-action discovery and/or pre-action interrogatories ought to be available to a party notwithstanding the provisions of s 6 of the IAA. Of course, this does not mean that such an application for discovery or interrogatories will be ordered – an important point which has been considered above (at [55]) and which we will return to below (at [67]). However, this is not an end to the matter. Counsel for Navigator, Mr Edmund Kronenburg, argued that adopting such an approach would undermine the need to promote the growth and use of arbitration in Singapore. If Mr Kronenburg is correct, there is an actual, and not merely a potential, conflict between the policies which were alluded to right at the outset of the present part of this judgment (see [44] above).

[60] But would this, in fact, be the result? Or, as also alluded to at the outset of this part of the judgment, can the policies be harmoniously integrated, notwithstanding the availability of pre-action discovery or pre-action interrogatories to the parties? In our view, there is, in fact, no conflict between the policies just mentioned. Many of the points have, in fact, already been dealt with above, although it is (in the circumstances) not only useful but also important to reiterate them in the context of the present argument proffered by Mr Kronenburg. Let us elaborate.

[61] As a matter of general policy, it is now clearly established that the courts will endeavour to do their level best to facilitate and promote arbitration between commercial parties wherever possible. Indeed, as far back as 1977, for example, Lord Denning MR observed, in the English Court of Appeal decision of Eagle Star Insurance Co Ltd v Yuval Insurance Co Ltd [1978] 1 Lloyd’s Rep 357, thus (at 360):

The position stated by Lord Denning is an a fortiori one today. The approach at the present time in the local context has been succinctly stated by V K Rajah JA in the recent decision of this court in Tjong Very Sumito v Antig Investments Pte Ltd [2009] SGCA 41, as follows (at [28]):

[62] Given the clear and unquestionable commitment of the courts in facilitating, as well as promoting, arbitration between commercial parties wherever possible, would the decision of this court to the effect that the courts are able to grant pre-action discovery and/or pre-action interrogatories militate against such a commitment?

[63] It is clear, in our view, that the question posed in the preceding paragraph must be answered in the negative. Indeed, as we have already noted above (at [57]), the grant of pre-action discovery and/or pre-action interrogatories might (depending on the precise facts) even aid arbitration – at least in so far as such discovery and interrogatories might assist the applicant to ascertain whether it had a viable claim against the respondent. Further, having regard to the factual context in which the present appeal has arisen, we see no reason why Acclaim ought to be deprived of the opportunity to discover whether it has a claim against Navigator and/or other parties as well (some of whom, in fact, had initiated the claim against Acclaim in the first place); in particular, Acclaim’s stated purpose of commencing OS 1830 was not simply to identify any possible claim against Navigator per se but also (inter alia) to identify the FARs whom it could possibly claim against (see the extracts from Lim’s affidavit filed on 17 December 2007 set out at [8] above). However, we must be careful to point out that we make no findings on the substantive issue in OS 1830 as such because it is not before us. Without a doubt, the court hearing the merits of OS 1830 will have to consider all the factors raised by the parties in arriving at its decision.

[64] There is, of course, a difference between pre-action discovery on the one hand and pre-arbitral discovery on the other. Indeed, arguments have been made that the court does not have the power, under s 18 of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“the SCJA”), read together with para 12 of the First Schedule thereof, to grant pre-arbitral discovery (see the Singapore High Court decision of Lian Teck Construction Pte Ltd v Woh Hup (Pte) Ltd [2005] 1 SLR 266 at [20]; see also Woh Hup ([48] supra) at [11]– [16]). It has, to the best of our knowledge, not been settled by our courts as to whether or not the courts would be able to grant pre-arbitral discovery. This court in Woh Hup ([48] supra) noted that there were doubts on whether the court had the power to order pre-arbitral discovery, but left the point open as it was unnecessary for this issue to be decided (at [36]). Prof Pinsler has persuasively argued why the courts do not have the jurisdiction to grant pre-arbitral discovery (see Jeffrey Pinsler, “Is Discovery Available Prior to the Commencement of Arbitration Proceedings?” [2005] SJLS 64). This view is persuasive not only because of the detailed arguments set out in this learned article, but also because it would be most appropriate for the courts (if it is at all possible) to leave the entire conduct of arbitration proceedings in the hands of the arbitral tribunal.

[65] At this juncture, however, we should deal with an important objection to the court having the power to grant pre-action discovery and/or pre-action interrogatories. This relates to the desire by the parties in most (if not all) arbitrations to keep the proceedings confidential. However, we do not think that this would constitute an insuperable obstacle as such. Whilst the law clearly recognises the duty (and, indeed, the importance) of confidentiality in arbitration, this duty of confidentiality is by no means an absolute one (see, generally, Quentin Loh Sze On SC and Edwin Lee Peng Khoon, Confidentiality in Arbitration: How Far Does It Extend? (Academy Publishing, 2007), especially at chapters 12 and 13). In particular, one established exception to such a duty is where it is reasonably necessary to protect the legitimate interests of a party to the arbitration (see, eg, the English Court of Appeal decision of Ali Shipping Corporation v Shipyard Trogir [1999] 1 WLR 314 at 326–327).

[66] Further, the implication that court proceedings are somehow less confidential is one that is overstated. There are, in fact, procedures in place for the sealing of court files (including the files relating to the application for pre-action discovery and/or pre-action interrogatories itself, as was the case here), as well as for hearings or proceedings to be heard in camera if it is “expedient in the interests of justice, public safety, public security or propriety, or for other sufficient reason to do so” (per s 8(2) of the SCJA). However, we also acknowledge the fact that an application made on the ground of confidentiality may be a more limited right inasmuch as it might be denied by the court “in exercise of its inherent jurisdiction because of the fundamental importance of the litigation” (see Singapore Civil Procedure ([53] supra) at para 33/3/2). This brings us, in fact, to what is, in our view, the most important argument as well as safeguard which strongly supports the decision we have arrived at to the effect that pre-action discovery and pre-action interrogatories are available even to parties to an arbitration agreement under the IAA.

[68] Although our reasoning and decision set out above applies specifically to s 6 of the IAA, we see no reason why the same reasoning and result should not, ceteris paribus, apply to s 6 of the AA as well.

Respondent’s Case at pp 51–52.

Appellant’s Case at p 49.

Respondent’s Case at p 30.