Sim Kay Choon & Ors v NTUC Income Insurance Co-operative Limited [2015] SGCA 46

In the recent case of Sim Kay Choon & Ors v NTUC Income Insurance Co-operative Limited, the Singapore Court of Appeal had to address questions relating to the proper relationship between the courts and arbitration, in particular the circumstances under which the court should ignore the existence of an arbitration agreement. The appellants were seeking the court’s exercise of its discretion under the Arbitration Act not to refer a matter to arbitration. In other words, the appellants were asking the court not to stay the present proceedings in favour of arbitration.

The appellants had brought an action for themselves and on behalf of 34 others against the respondent for an alleged breach of employment terms and wrongful termination. They were parties to contracts that included an arbitration agreement.

The court found that, as a general rule, where a party seeks to avoid its obligation to arbitrate its dispute, the court should undertake a restrained review of the facts and circumstances before it in order to determine whether it appears on a prima facie basis that there is an arbitration clause and that the dispute is caught by that clause. The standard was found to be amply met in the present case. On the face of it, the court should hold the parties to their duty to arbitrate and allow them to raise any relevant objections such as those in relation to jurisdiction, the validity of the arbitration agreement, or subject matter arbitrability before the tribunal.

The appellants’ counsel then submitted that the court should as a matter of discretion decline to uphold the arbitration agreement on three main grounds:

  • The cost of arbitration would be higher due to reasons, including the availability of class action relief in court proceedings;
  • The nature of the statutes involved would be applicable to employment and with a particular emphasis on protecting workers; and
  • The subjective belief of the appellants that they would get a better hearing in the court.

The court held that these were not sufficient bases for it to exercise its discretion not to stay the proceedings in favour of arbitration because of the following reasons:

  • It was not a legitimate ground to say that arbitration will be more costly. The respondent would be expected and encouraged to adopt measures to control costs in the interests of all parties.
  • There was nothing in the nature of the statutes that would be unsuitable for an arbitrator to deal with. Further, the court observed that there would be retired judges and senior lawyers who may be available and willing to be appointed as arbitrator(s) to hear the matter.
  • The subjective preference of a party would generally not be a relevant basis for the exercise of the court’s discretion.

The court also highlighted that the existence of an agreement to arbitrate was a further important factor which must be considered when the court was faced with whether it should exercise the discretion in this context. The court found that the very existence of such an agreement between the parties, pursuant to which they have undertaken to resolve their disputes in a particular way, means that something weighty must be shown in order to demonstrate that there is sufficient reason not to hold the parties to that agreement.

This decision is consistent with the pro-arbitration stance of the Singapore courts, and confirms that they will seek to uphold arbitration agreements.