In the decision of Transocean Offshore International Ventures Ltd v Burgundy Global Exploration Corp  2 SLR 821, the High Court determined the applicable dispute resolution procedure where there were differing and contrary dispute resolution clauses.
Transocean Offshore International Ventures Ltd (the “Plaintiff”) and Burgundy Global Exploration Corp (the “Defendant”) were parties to a novated offshore drilling contract (“Drilling Contract”) which provided for the Plaintiff to supply a drilling vessel and drilling services to the Defendant.
It was a condition precedent under the Drilling Contract that parties would enter into an escrow agreement (“Escrow Agreement”) for the opening of an escrow account for the Defendant to deposit an escrow amount 30 days prior to the commencement of the mobilisation of the drilling vessel by the Plaintiff or before 15 December 2008, whichever was the earlier. As per the terms of the Escrow Agreement, the Defendant’s failure to deposit monies into the escrow account within the time frames stipulated by the Escrow Agreement would entitle the Plaintiff to terminate the Drilling Contract.
The dispute resolution clause in the Escrow Agreement conferred non-exclusive jurisdiction in favour of the Singapore courts “with respect to any legal action or proceedings… relating in any way to” the Escrow Agreement and contained an irrevocable agreement between parties to waive objections to such jurisdiction.
The Defendant failed to deposit money into the said escrow account within the time frames stipulated by the Escrow Agreement and the Plaintiff treated the failure as a repudiatory breach which it elected to accept and terminated the Drilling Contract.
The Plaintiff proceeded to commence action against the Defendant in the High Court of Singapore, claiming damages for the Defendant’s breach and/or repudiation of the Escrow Agreement.
Upon commencement of the action, the Defendant took out an application to stay proceedings brought by the Plaintiff in favour of arbitration. This was made on the basis that the dispute resolution clause in the Drilling Contract provided for arbitration in Singapore in accordance with the London Court of International Arbitration (LCIA) rules, for any dispute “arising out of or in relation to or in connection with this Contract”.
The court held that the dispute resolution clause under the Drilling Contract did not apply for the following four reasons:
a. The parties had intentionally carved the Escrow Agreement out from the Drilling Contract, expressly subjecting the former to a non-exclusive jurisdiction clause rather than an arbitration clause. The court found that this evidenced a clear intention by parties to subject claims arising from the Escrow Agreement to the dispute resolution clause found within that particular agreement.
b. Despite the width of the wording of the arbitration clause in the Drilling Contract, the court held that the Drilling Contract was only intended to cover claims arising out of the Drilling Contract and not the Escrow Agreement. As the Plaintiff’s termination of the Drilling Contract was premised not on any breach of the Drilling Contract but rather the Defendant’s breach of the Escrow Agreement, the dispute resolution clause under the Escrow Agreement applied.
c. The specificity of the dispute resolution clause under the Escrow Agreement overrode the generality of the dispute resolution clause under the Drilling Contract.
d. Even if proceedings under the Escrow Agreement did fall within the scope of the Drilling Contract’s dispute resolution clause, the Defendant waived the agreement to arbitrate by entering into the subsequent Escrow Agreement which contained a different dispute resolution clause and was therefore estopped from asserting its right to insist on arbitration.
The Defendant’s subsequent appeal against the above decision was dismissed by the Court of Appeal.