Sim Chay Koon and others v NTUC Income Insurance Co-operative Limited

Sundaresh Menon CJ (delivering the judgment of the court ex tempore ):

[1] The central question that is raised in the present appeal is the proper relationship between the courts and arbitration.

[2] The appellants before us brought an action for themselves and on behalf of 34 others against the respondent for an alleged breach of employment terms and wrongful termination. They are parties to contracts that include an arbitration agreement, which reads:

[3] Counsel for the appellants, Mr Choo Zheng Xi, was candid enough to accept that the disputes that have been raised would in principle come within the ambit of the arbitration agreement. The question then is under what circumstances should this court ignore the existence of that agreement?

[4] We put it to Mr Choo at the outset of his argument that a primary feature of arbitration is the doctrine of kompetenz-kompetenz. This is a doctrine that finds expression in s 21(1) of the Arbitration Act (Cap 10, 2002 Rev Ed) which, it is common ground, is the statute that governs this dispute. Section 21(1) provides as follows:

[5] In our judgment, the existence and applicability of the doctrine means that as a general rule, where a party seeks to avoid its obligation to arbitrate its dispute, the court should undertake a restrained review of the facts and circumstances before it in order to determine whether it appears on a prima facie basis that there is an arbitration clause and that the dispute is caught by that clause. That standard is amply met in the present case. Hence, on the face of it, we should hold the parties to their duty to arbitrate and allow them to raise any relevant objections such as those in relation to jurisdiction, the validity of the arbitration agreement, or subject matter arbitrability before the tribunal.

[7] Mr Choo then submitted that the court should as a matter of discretion decline to uphold the arbitration agreement. It is true that under s 6 of the Arbitration Act, the court has the discretion not to refer a matter to arbitration. But, we are satisfied that this discretion should be exercised sparingly and in a principled way.

[8] Mr Choo put a number of points before us but in our judgment, they can essentially be boiled down to three main points:

(a) First, the question of the cost of arbitration, which he said would be higher, including by reason of the availability of class action relief in court proceedings;

(b) Second, the nature of the statutes, namely, the Central Provident Fund Act (Cap 36, 2013 Rev Ed), the Employment Act (Cap 91, 2009 Rev Ed) and the Industrial Relations Act (Cap 136, 2004 Rev Ed), that are implicated in this matter, which Mr Choo said were statutes applicable to employment and with a particular emphasis on protecting workers; and

(c) Third, the subjective belief of his clients that they would get a better hearing in the court.

[9] In our judgment and with respect to Mr Choo, these are not sufficient grounds for the exercise of our discretion not to stay the present proceedings in favour of arbitration. We first point out that there is a further important factor which must be considered when we exercise our discretion in this context and that is the existence of an agreement to arbitrate. The very existence of that agreement between the parties, pursuant to which they have undertaken to resolve their disputes in a particular way, means that something weighty must be shown in order to demonstrate that there is sufficient reason not to hold the parties to that agreement.

[10] Against that background, we turn to the grounds put forward:

(a) In our judgment, it is firstly not a legitimate ground to say that arbitration will be more costly. Even if true, the parties may be taken to have already factored that when they nonetheless chose to arbitrate their disputes. But moreover, we actually have no way knowing if it will or will not be more expensive to arbitrate this matter. As we observed during Mr Choo’s arguments, we expect and would encourage the respondent to adopt measures to control costs in the interests of all the parties.

(b) As to the nature of the statutes, again there is nothing in the nature of these statutes that make it unsuitable for an arbitrator to deal with the issues they give rise to. Further, as we observed, there are retired judges and senior lawyers who may be available and willing to be appointed as arbitrator(s) to hear this matter.

(c) Lastly, the subjective preference of a party will generally not be a relevant basis for the exercise of the court’s discretion.