The High Court of Singapore has left it to an arbitral tribunal to determine whether a respondent to an arbitration signed the alleged arbitration agreement on which the arbitration was based. She claimed her signature was forged, that no arbitration agreement existed and that the court should stay the arbitration. In this note, the parties will be referred to by their role in the arbitration, which was the reverse of their role in the litigation.
In Malini Ventura v Knight Capital Pte Ltd and others [2015] SGHC 225, Judith Prakash J stayed court proceedings brought by the respondent and left to the tribunal the question of whether the arbitration agreement existed or was forged. The arbitration agreement was in a guarantee allegedly given by the respondent for a loan to her husband’s company by the claimants. After the claimants had commenced the arbitration and the tribunal had indicated it would determine the existence of the arbitration agreement when it considered the merits of the claim, the respondent brought these proceedings to stay the arbitration. The claimants then made an application under s 6(2) of the International Arbitration Act (IAA) to stay these proceedings.
The guarantee provided for any dispute or difference arising amongst the parties with respect to the Deed or “as to any matter or thing of whatsoever nature arising thereunder or in connection therewith, including any question regarding its existence, validity or termination” to be submitted to a single arbitrator to be appointed by the parties or, failing agreement, to a single arbitrator to be appointed on the request of any party by the President of the Court of Arbitration of the Singapore International Arbitration Centre.
The respondent argued that the kompetenz-kompetenz doctrine did not extent to allowing the tribunal to determine the very existence of an arbitration agreement where forgery was alleged, saying that it should be the court that considers this issue first. She said it would be strange if an arbitral tribunal considered the issue and then ruled there was no arbitration agreement, which was the only source of its jurisdiction to consider and determine the issue.
The claimants argued that s 6 of the IAA applied, which said:
Enforcement of intentional arbitration agreement
6.—(1) Notwithstanding Article 8 of the Model Law, where any party to an arbitration agreement to which this Act applies institutes any proceedings in any court against any other party to the agreement in respect of any matter which is the subject of the agreement, any party to the agreement may, at any time after appearance and before delivering any pleading or taking any other step in the proceedings, apply to that court to stay the proceedings so far as the proceedings relate to that matter.
(2) The court to which an application has been made in accordance with subsection (1) shall make an order, upon such terms or conditions as it may think fit, staying the proceedings so far as the proceedings relate to the matter, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed.
Her Honour held at [28] that “generally the court’s consideration of whether an arbitration tribunal has jurisdiction or not must come after the tribunal’s own examination of the issue” and that “the tribunal’s powers in relation to the issue are wide because it can consider not only validity but also the very existence of the arbitration agreement.” Her Honour distinguished English authority suggesting the court should consider the issue the first - Nigel Peter Albon (trading as N A Carriage Co) v Naza Motor Trading Sdn Bhd and anor [2007] 2 All ER 1075 and Ahmad Al-Naimi (t/a Buildmaster Construction Services) v Islamic Press Agency Inc [2000] 1 Lloyd’s LR 522 - saying that there were considerable differences between the approach of the English Arbitration Act and the IAA. Unlike the IAA, the English Act dealt with both international and domestic arbitrations, it did not enact the UNCITRAL Model law, and it did not give the same primacy to the tribunal (at [36]).
Her Honour held that, if the party applying for the stay of court proceedings under s 6(2) of the IAA were able to show on a prima facie basis that the arbitration agreement existed, the matter would then go to the tribunal to decide whether such existence could be established on the usual civil standard and then, if any party was dissatisfied with the tribunal’s decision, such party could come back to the court for the last say on the issue. The Court of Appeal has observed that it was only in the clearest case that the court should decide that there was no jurisdiction instead of remitting the matter to the tribunal for an initial decision (see Tjong Very Sumito v Antig Investments Pte Ltd [2009] 4 SLR(R) 732 at [22]–[24]).
Her Honour said at [37] that, having accepted and given effect to the principle of “kompetenz-kompetenz” for so many years, we must disregard the logical discomfort in the notion that an arbitral tribunal can be given authority to decide on its jurisdiction when it may end up deciding that because one party did not sign it, no arbitration agreement ever existed and therefore in fact the tribunal had no authority to decide the question. Otherwise we may find ourselves drawing finer and finer distinctions between situations in which the principle applies and situations in which it does not.
Turning to determine whether the claimants had established the prima facie existence of the arbitration agreement, her Honour noted at [40] that the executed guarantee had been returned by solicitors who had acted for the primary borrower, that the respondent met with one of the claimants after default on repayment, she did not dispute the existence of the guarantee until in her defence to the arbitration, she agreed to a mediation with the claimants, and a hand-writing expert opined that there were points of similarity between her alleged handwriting on the guarantee and her actual handwriting.
In terms of s 6(2), the stay had to be granted unless the arbitration agreement is null and void, inoperative or incapable of being performed. “Null and void” means “devoid of legal effect” which would be the result of the agreement being procured by duress, mistake, fraud or waiver. It does not apply to a situation in which no agreement was concluded at all. Further, for an arbitration agreement to be “inoperative”, it must have been concluded but for some reason ceased to have legal effect (at [42]).
