The plaintiff bank financed a company, Onsys Energy Pte Ltd (Onsys) for the purchase of a cargo of fuel oil by issuance of a letter of credit. As the lawful holder of bills of lading acknowledging the carriage of the cargo of fuel oil on board the vessel the Titany Unity, the plaintiff claimed for misdelivery of cargo by filing an admiralty in rem action against the defendants.The plaintiff claimed for the sum of the invoice value of the cargo and the direct loss arising from the defendants having delivered the cargo to third parties without presentation of the bills of lading.

The second defendant, Singapore Tankers, was the registered owner of the vessel. The first defendant, Oceanic, was the alleged demise charterer of the vessel by way of a demise charterparty, the existence of which was not admitted by the plaintiff.

Oceanic filed an application for the admiralty action filed in the High Court against Oceanic to be stayed in favour of arbitration at the Singapore Chamber of Maritime Arbitration pursuant to s 6 of the International Arbitration Act based on the ground that the plaintiff and Oceanic had agreed in writing to refer the matters relating to the admiralty action to arbitration. Clause 41 of the time charterparty between Oceanic and Onsys dated 1 November 2011 provided 'All and any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration at the Singapore Chamber of Maritime Arbitration ("SCMA") in accordance with the Arbitration Rules of the SCMA ("SCMA Rules") for the time being in force at the commencement of the arbitration, which rules are deemed to be incorporated by reference in this clause.'

Oceanic argued that the bills of lading incorporated the time charterparty, including the arbitration provision. The plaintiff argued that there was no time charterparty, and hence, no arbitration agreement between Oceanic and the plaintiff at all.

Counsel for Oceanic argued that the court’s role at the stay stage was only to determine whether the arbitration agreement existed on a prima facie level. Counsel for the plaintiff argued that the court should conduct a full examination of evidence to determine if there was in fact an arbitration agreement on a balance of probabilities, before the court could grant a stay in favour of arbitration.

The plaintiff also filed a cross-application for the court to exercise its discretion under ss 6 and 7 of the Arbitration Act to refuse Oceanic’s stay application, or to order a stay in favour of arbitration subject to certain conditions, in the event that a valid arbitration agreement was found to exist. The second part of the plaintiff’s cross-application asked the court to impose the following two terms if Oceanic’s application for a stay was granted:

1. Oceanic waive any time-bar defence under art 3.6 of the Hague-Visby Rules in respect of the plaintiff’s claim ('the time-bar condition'); and
2. the arrested vessel Titan Unity, or any security provided for the release of the vessel, be retained as security in the satisfaction of any arbitral award given in respect of the plaintiff’s claim made in the arbitration ('the security condition').

Held: Oceanic had established on a prima facie standard the existence of the arbitration agreement with the plaintiff. As to the plaintiff's cross-application, the arbitration agreement in question referred the dispute to be resolved by arbitration at the Singapore Chamber of Maritime Arbitration (SCMA) in accordance with the Arbitration Rules of the SCMA (SCMA Rules). Rule 1.2 of the SCMA Rules defines 'the Act' as the International Arbitration Act rather than the Arbitration Act.

As to the time-bar condition, the plaintiff made several arguments in relation to its alleged lack of knowledge of the existence of the demise charterparty and the time charterparty. According to the plaintiff, it knew about these two charterparties only after the time bar had apparently set in. The plaintiff relied on The 'Duden' [2008] 4 SLR(R) 984 (CMI194) and The 'Xanadu' [1997] 3 SLR(R) 360 in support of its position that the time-bar condition should be imposed.

The court held that those two decisions were not relevant to the present case. Here, the plaintiff’s argument was that the time bar does not apply in any event because there is no evidence to show that more than a year has elapsed since the cargo was completely discharged and delivered to third parties. In addition, the plaintiff pointed out that the face of the bills of lading stated that the cargo was intended for delivery to 'bunkers for ocean-going vessels', as opposed to a port. Counsel argued that a purposive reading of s 3(2) of the Singapore Carriage of Goods by Sea Act and s 1(3) of the Carriage of Goods by Sea Act 1971 (UK) meant that the time-bar defence under art 3.6 of the Hague-Visby Rules applies only to bills of lading where the intended carriage is between ports, which is not the situation in the present case. In other words, the plaintiff’s position was that the time bar did not apply both in fact and in law. 

If the arbitral tribunal decides that it has no jurisdiction, the time-bar issue will not arise and the plaintiff will have the chance to seek recourse from the courts. If the arbitral tribunal decides that it has jurisdiction, the plaintiff can argue before the arbitral tribunal that the time bar does not apply. It is not for the courts to pick and choose what issues should be placed before the arbitral tribunal by way of imposing conditions to a stay of court proceedings, where parties have already consented to refer their dispute to arbitration, and where the relevant issues fall within the scope of the arbitration agreement. This must be so if party autonomy is respected. It is not in dispute that the issue of whether Oceanic is entitled to rely on the Hague-Visby Rules time bar falls within the scope of the arbitration agreement. A party to an arbitration agreement will not be allowed a backdoor way of obviating the limited scope of the court’s review of an arbitral award allowed under the arbitral framework, by cherry-picking the issues which may be placed before the arbitral tribunal via a conditional stay of court proceedings. Therefore the time-bar condition is not allowed.

Since the seat of the arbitration is in Singapore, it is both necessary and appropriate that the arrested vessel be retained as security in the satisfaction of any arbitral award given. The security condition is therefore allowed.

Hence, the plaintiff’s action against Oceanic is stayed pursuant to section 6 of the IAA in favour of arbitration at the SCMA, with the arrested vessel be retained as security in the satisfaction of any arbitral award given.