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Singapore Court Ruling On Overlapping Arbitration & Jurisdiction Clauses

arbitration

The ironic situation where one clause in the contract refers disputes to arbitration, while another clause refers to litigation.

A dispute resolution clause specifies the process, usually by way of litigation or arbitration, through which parties wish to resolve a dispute between them. A dispute resolution clause must be drafted with essential clarity and certainty; otherwise parties may have no choice but to argue about the dispute resolution clause itself.

The recent decision of the Singapore High Court in Silverlink Resorts Limited v MS First Capital Insurance Limited [2020] SGHC 251 concerned the ironic situation where one clause in the contract refers disputes to arbitration, while another clause refers to litigation.

We are mindful that this case is a Singapore case and applied Singapore law, and therefore is not directly applicable to courts in Hong Kong. However, in reaching the decision, the Singapore High Court considered authorities from various common law jurisdictions, and the discussion in the judgment is a helpful discussion of how a common law court might approach this type of controversy. This case therefore may provide practitioners in Hong Kong with helpful guidance and insights.

Brief Facts

Silverlink Resorts Limited (the “Plaintiff”) was the owner of Aman Group, which owned and managed luxury hotels around the world, including the Amanpuri resort in Phuket, Thailand.

The Plaintiff was one of the insured parties under an Industrial All Risks Policy (the “Policy”) issued by MS First Capital Insurance Limited (the “Defendant”). Section II of the terms and conditions of the Policy was entitled “Business Interruption” and dealt with the interruption of or interference with the businesses covered by the Policy.

Due to the COVID-19 pandemic, the Plaintiff was affected adversely by the mandatory hotel closure order issued by the Phuket Governor and the suspension of flights to Thailand ordered by the Civil Aviation Authority of Thailand.

These led to the Plaintiff making a claim under the Policy, and when the claim was rejected to issue court proceedings in the Singapore High Court. In response, the Defendant applied to stay the proceedings in favour of arbitration, pursuant to section 6 of the International Arbitration Act of Singapore. read more

Source: Carrie Yiu and Glenn Haley | Bryan Cave Leighton Paisner

Litigation Edge Singapore