2. The determination of the scope of the arbitration agreement raises specific issues in two different scenarios:

Please download to get full document.

View again

of 17
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Information Report
Category:

Devices & Hardware

Published:

Views: 0 | Pages: 17

Extension: PDF | Download: 0

Share
Related documents
Description
NON-SIGNATORIES, GROUPS OF COMPANIES AND GROUPS OF CONTRACTS IN SELECTED ASIAN COUNTRIES : ACASE LAW ANALYSIS BERNARD HANOTIAU 1 INTRODUCTION 1. An arbitration agreement only applies to the disputes that
Transcript
NON-SIGNATORIES, GROUPS OF COMPANIES AND GROUPS OF CONTRACTS IN SELECTED ASIAN COUNTRIES : ACASE LAW ANALYSIS BERNARD HANOTIAU 1 INTRODUCTION 1. An arbitration agreement only applies to the disputes that fall within its scope (rationae materiae) and in relation to the persons who may be considered to be parties to the arbitration agreement (rationae personae). 2. The determination of the scope of the arbitration agreement raises specific issues in two different scenarios: - In relation to groups of contracts: when the dispute finds its origin in several contracts concluded by the same parties or different parties and which do not all contain the same arbitration clause or, at least, compatible arbitration clauses. The issue arises as to whether it is possible to join and decide together in one procedure all the disputes which arise from the various contracts relating to the same project, or whether it is possible to decide under the arbitration clause contained in one contract the disputes arising under a related agreement that does not contain an arbitration clause or contains a jurisdiction clause 2. - In relation to groups of companies or more generally non-signatories: when the project which is at the heart of the dispute has been negotiated and performed by one or more companies which belong to a group of companies (e.g. with a parent and subsidiary relationship) and/or by one or more individuals, some or all of which have not formally signed the arbitration clause or the contract containing this clause, the issue arises as to 1 2 Member of the Brussels and Paris bars. Professor emeritus of the University of Louvain, Belgium. Founding partner, Hanotiau & van den Berg, Brussels and Singapore. The author wants to thank MM. Nicholas Thio (Singapore), Fu Panfeng (Mainland China), Chris Stackpole (Hong Kong), Alan Thambiayah (Malaysia) and Hiroyuki Tezuka (Japan) for their helpful assistance. See in this respect our analysis of the case law, mostly European and American, in relation to this issue in Bernard Hanotiau, Complex Arbitrations : Multiparty, Muticontract, Multi-Issues and Class Actions, Kluwer Law International, 2005, Chapter II, and in particular the conclusions of the analysis of the case law at pp. 96 and following. 1 whether such non-signatories may be properly considered to be parties to the arbitration agreement The purpose of this article is to analyse the published decisions rendered on these issues in selected Asian countries, namely, Singapore, Mainland China, Hong Kong, India, South Korea, Malaysia and Japan. SECTION I. SINGAPORE 4. The Singapore Courts have been confronted with the issues of non-signatories, groups of companies and groups of contracts in a number of cases. 4 SUB-SECTION I. GROUPS OF CONTRACTS 1. The parties to the various agreements are not the same and the agreements do not contain incompatible arbitration clauses 5. With respect to groups of contracts, and the issue of whether an arbitration clause in one contract can be said to apply to disputes arising under other contracts of the group, the position in Singapore has evolved from the strict rule that clear and express reference to the arbitration agreement is required for such incorporation in a case of multiple contracts (the strict rule ) to the current contextual approach based on an inquiry into the objective circumstances surrounding the entering into of the contracts in question, including the parties intentions objectively assessed (the contextual approach ). 6. The strict rule approach appeared in Singapore jurisprudence in the Court of Appeal s decision in the case of Star-Trans Far East Pte Ltd v. Norske-Tech Ltd. and Others. 5 Star- Trans, a freight forwarder, had entered into a contract with Norske-Tech and Speditor. The purpose of the contract was for Star-Trans and Speditor to organise ocean carriage of plant and equipment from various parts of the world to a proposed construction site in Riau, Indonesia for Norske-Tech (the company that had undertaken the construction project). That contract contained an arbitration clause. Separately, another company PT Riau, had furnished a performance guarantee to secure Norske-Tech s performance of its obligation under the above contract. The performance guarantee did not contain an arbitration clause and bore the signatures of Star-Trans, Norske-Tech and PT Riau. Clause 3 of the performance guarantee provided inter alia that all rights of Norske-Tech under the contract may be exercised by PT Riau [ ] and the rights of Norske Tech under the See our analysis of the case law, mostly European and American in relation to this issue in the same treatise, Chapter III, and in particular the conclusions of the analysis of the case law at pp. 160 and following. The 2013 Arbitration Rules of the Singapore International Arbitration Centre which are presently under revision contain themselves several provisions on the multiparty appointment of arbitrators (Rule 9) and joinder of the proceedings (Rule 24 b). [1996] 2 SLR (R) contract may at any time be assigned to PT Riau (emphasis added). Disputes later arose between Star-Trans, Norske-Tech and PT Riau, as a result of which Star-Trans commenced court proceedings. Norske-Tech and PT Riau applied for a stay of the court proceedings on the grounds that Star-Trans had agreed to submit disputes between the parties to arbitration. 7. The issue before the Court of Appeal was whether PT Riau was a party to the main contract as a consequence of the performance guarantee. The court observed that the performance guarantee was a separate and distinct contractual undertaking vis-à-vis the main contract. Further, the use of general words such as all rights was not sufficiently clear to permit the incorporation by reference of the arbitration clause into the performance guarantee. The court cited the views of Robert Merkin according to which: The approach taken by the courts is that the arbitration clause in the charterparty between owner and charterer is not, in the absence of clear wording, to be incorporated into the contract evidenced by the bill of lading as between owner and consignee. The rule is probably not confined to bills of lading cases, and it has been held in other contexts that an arbitration clause in a contract between A and B is not to be incorporated by reference into a contract between B and C unless clear words of incorporation are used However, in the recent case of International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd (the Lufthansa case), 7 the Court of Appeal considered that there may no longer be place for the strict rule in Singapore jurisprudence: The strict rule has been overextended impermissibly from its original application in the context of bills of lading and charterparties. It clearly should not be taken as a rule of general application. The question in general is one of construction: did the parties intend to incorporate the arbitration agreement in question by referring, in their contract, to it or to a document containing it? In our judgment, the analysis of whether a particular case is a one contract or a two-contract case as that notion has developed in English law, while possibly useful in some aspects, is not helpful for our purposes. It is ultimately a matter of contractual interpretation; and in undertaking this exercise [ ] the task is one which must be done having regard to the context and the objective circumstances attending the entry into the contract. As the [High Court] rightly noted, [b]e it incorporation or construction, the court is always seeking to ascertain the parties objective intentions (emphasis added) The Lufthansa case concerned the challenge of an arbitral tribunal s ruling on jurisdiction pursuant to Section 10 of the IAA. The case is quite interesting given that the gist of the challenge was whether an arbitration clause contained in one contract between two parties Arbitration Law, Lloyd s 1991, See also L&M Concrete Specialists Pte Ltd v. United Eng. Contractors Pte Ltd. [2000] 2 SLR(R) 852 at 18 where the Court held that for an arbitration agreement in one contract to be incorporated into another, it must be brought to the attention of the other contracting party with a red hand pointing to it. International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2013] SGCA 55. [2013] SGCA 55 at 34 of the judgment. 3 bound a third party who subsequently entered into supplemental agreements with the original two parties. 10. Under an agreement between Datamat and Thai Airways International Public Company Ltd ( Thai Airways ) entered into on 12 January 2005, Datamat had agreed to provide to Thai Airways an electronic data protection system ( EDP system agreement ). Two months later, on 11 March 2005, Lufthansa and Datamat entered into a Cooperation Agreement under the terms of which Lufthansa agreed to supply, deliver and commission to Datamat a new Maintenance Repair and Overhaul system ( MRO system ), a component of the EDP system. 11. On 14 March 2005, Datamat entered into a Sale and Purchase Agreement ( S&P Agreement ) with International Research Corporation Public Company Ltd ( IRCP ), a company engaged primarily in the business of providing information and communication technology products and services. Under the S&P Agreement, IRCP had three main obligations: - first, it would provide a banker s guarantee in the name of Datamat in order for Datamat to comply with its obligations under the EDP system agreement; - second, it would supply and deliver various hardware and software for the EDP system; and - third, it would pay Lufthansa for the goods and services provided by Lufthansa under the Cooperation Agreement. 12. Datamat assigned its rights to receive payment from Thai Airways to the Siam Commercial Bank Public Company Ltd ( SCB ). 13. Datamat subsequently ran into financial difficulties and was unable to meet its payment obligations to Lufthansa. On 8 August 2005, Lufthansa, Datamat and IRCP entered into Supplemental Agreement No. 1 (backdated to 2 May 2005), under the terms of which Datamat was obliged to transfer to IRCP moneys received from Thai Airways. Upon receiving these moneys, IRCP would pay Lufthansa for the works and services rendered by Lufthansa under the Cooperation Agreement. 14. On 3 May 2006, Lufthansa, Datamat and IRCP entered into Supplemental Agreement No. 2. According to this agreement, IRCP would pay Lufthansa for sums payable by Datamat under the Cooperation Agreement directly from IRCP s bank account with SCB. IRCP would disburse the payments to Lufthansa after payments by Thai Airways to Datamat were received by Datamat and transferred to IRCP s SCB account. 15. The Cooperation Agreement contained a multi-tiered dispute resolution mechanism providing inter alia that all disputes arising out of this Cooperation Agreement, which cannot be settled by mediation [ ] shall be finally settled by arbitration to be held in 4 Singapore in the English language under the Singapore International Arbitration Centre Rules. The Supplemental Agreements did not contain an arbitration clause. 16. It appeared that IRCP refused to pay Lufthansa. As a result, on 24 February 2010, Lufthansa informed Datamat and IRCP that it was terminating the Cooperation Agreement and Supplemental Agreements No. 1 and No. 2 (collectively, the Supplemental Agreements ). On 13 May 2010, Lufthansa filed its notice of arbitration with the Singapore International Arbitration Centre. IRCP argued that it was not a party to the arbitration agreement, an objection that the tribunal dismissed. In its decision dated 1 June 2012, the Tribunal held that the Cooperation Agreement and the Supplemental Agreements were to be treated as one composite agreement between Lufthansa, Datamat and IRCP. Accordingly, the arbitration agreement found in the Cooperation Agreement applied to the Supplemental Agreements, to which IRCP was indisputably a party. The decision was challenged by IRCP before the High Court. 17. Lufthansa s position was that IRCP was bound by the arbitration agreement as Lufthansa, Datamat and IRCP had intended for the Supplemental Agreements to be an extension of the Cooperation Agreement. Lufthansa also submitted that the Cooperation Agreement and the Supplemental Agreements were in fact one composite agreement; in other words, the contract between Lufthansa, Datamat and IRCP comprised of the Cooperation Agreement and the Supplemental Agreements and that, on this analysis, there was nothing to incorporate into the Supplemental Agreements as per the strict rule. Conversely, IRCP s position was that the Supplemental Agreements were separate and distinct from the Cooperation Agreement and that, consequently, the arbitration clause contained in the Cooperation Agreement did not apply to the Supplemental Agreements. 18. The High Court 9 and subsequently the Court of Appeal were in agreement that the true issue was: what were Lufthansa, Datamat and IRCP s common intentions, if any, when objectively ascertained, as to the applicability of the [multi-tiered dispute resolution mechanism] to resolve their disputes [ ] at the time when all of them entered into the Supplemental Agreements?. 10 The Court of Appeal emphasised that the task was one which must be done having regard to the context and the objective circumstances attending the entry into the contract. 11 However, as explained below, the Court of Appeal did not agree with the High Court s findings on the object and purpose of the Supplemental Agreements. 19. The High Court took the view that the object and purpose of the Supplemental Agreements was to enforce Lufthansa s right to payments under the Cooperation Agreement [and that the] Supplemental Agreements transferred Datamat's payment obligations under the International Research Corp v Lufthansa Systems Asia Pacific Pte Ltd and Another [2013] 1 SLR 973. Ibid. at 48. [2013] SGCA 55, at 34 of the judgment. See Zurich Insurance (Singapore) Pte Ltd v. B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) Cooperation Agreement to IRCP. 12 The High Court went on to hold that it is clear that IRCP's payment obligations to Lufthansa are inextricably tied to Datamat's obligations under the Cooperation Agreement. A dispute over an invoice issued under the Cooperation Agreement would invariably affect IRCP's payment obligations under the Supplemental Agreements. IRCP's payment obligations are not free-standing and unconnected to the terms of the Cooperation Agreement. 13 The High Court therefore decided that, having adequate regard to the plain language of the Supplemental Agreements and the relevant factual matrix, the parties (i.e. Datamat, Lufthansa and IRCP) had intended the same dispute resolution mechanism in the Cooperation Agreement to bind all three parties to the Supplemental Agreements. 20. The Court of Appeal, 14 after having considered the relevant factual matrix, disagreed with and overturned the finding of the High Court that the parties had intended that the dispute resolution mechanism in the Cooperation Agreement was to be incorporated as part of the Supplemental Agreements. IRCP was therefore not bound by the dispute resolution mechanism in the Cooperation Agreement and the arbitral tribunal did not have jurisdiction over Lufthansa and its dispute with IRCP. It appears that the Court of Appeal came to this conclusion because of the manner in which it characterised the purpose of the Supplemental Agreements: The Supplemental Agreements were entered into not with a view to [IRCP] guaranteeing or undertaking any obligation under the Cooperation Agreement. Instead, [IRCP] s only substantive obligation was in effect to act as a payment agent. The primary contractual arrangement between Datamat and [Lufthansa] as reflected in the Cooperation Agreement remained intact. Significantly, the Supplemental Agreements were to be annexed to and made part of the Cooperation Agreement, to which only Datamat and [Lufthansa] were party. The point, shortly put, is that the Cooperation Agreement, which was between [Lufthansa] and Datamat only, remained the only contract dealing with the rights and obligations between them, save that in relation to payment, [IRCP] agreed to act as a payment agent in accordance with the terms of the Supplemental Agreements (emphasis added) The parties to the various agreements are the same and the agreements do not contain incompatible arbitration clauses 21. The Lufthansa case is particularly interesting since IRCP was not a party to the Cooperation Agreement. The issue is generally easier to resolve when the parties to the various agreements are the same, the agreements are closely connected and none of them contains an incompatible arbitration or jurisdiction clause. One example is Tjong Very Sumito and Others v. Antig Investments Pte Ltd. 16 In that case, the appellants and the [2013] 1 SLR 973, at 60 of the judgment. Ibid. at 62 of the judgment. International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2013] SGCA 55. Ibid. at 38 of the judgment. [2009] 4 SLR(R) 732; [2009] SGCA 41. 6 respondent entered into a Shares Sale and Purchase Agreement ( SPA ) which contained a clause providing for disputes to be resolved by arbitration. The same parties subsequently entered into four further supplemental agreements. Each supplemental agreement was expressed to be supplemental to the SPA. A dispute arose as to whether a payment arrangement under the fourth Supplemental Agreement (that did not contain an arbitration clause) was subject to the arbitration clause in the SPA. The Court of Appeal held that it was, since the fourth Supplemental Agreement could not exist independently without the SPA; nor would it make sense on its own. Like the first three supplemental agreements, its purpose was to supplement and/or modify certain terms of the SPA 17. The dispute therefore arose in connection with the SPA. The Court concluded that the intention of the parties to be bound by the arbitration clause in the SPA extended to the fourth supplemental agreement. 22. In Coop International Pte Ltd. v. Ebel SA, 18 the parties had entered into a distribution agreement which contained an arbitration clause. Subsequently, the parties terminated the distributorship agreement by entering into a termination agreement that did not contain an arbitration clause. They then entered into a settlement agreement. A dispute arose as to the payment of sums under the settlement agreement as a result of which Coop commenced proceedings in the Singapore courts. Ebel applied for a stay of the proceedings on the basis of the arbitration agreement in the distributorship agreement. Coop objected, stating that the dispute did not arise out of the distributorship agreement which had been terminated; instead, the parties respective rights were now governed by the settlement agreement. 23. Before reaching its decision, the High Court enunciated the following principles : If the parties subsequently enter into a new agreement or a series of new agreements which do not have any arbitration clause, and the dispute concerns these new agreements and not the original distributorship agreement, it becomes much less clear (a) whether the dispute in fact has any connection at all with the original agreement; and (b) whether the arbitration clause contained in the original agreement is applicable at all to the later agreements. [ ] It is therefore a question of construction whether the new agreement is merely supplemental to or a variation of the first agreement, or it is one which is wholly separate and independent of the first agreement. [ ] Where two agreements can be regarded substantially as one agreement rather than two separate agreements, then it is likely that the arbitration clause in one agreement would govern disputes arising out of the other agreement. However,
Recommended
View more...
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks