In the recent case of PT Tri-MG Intra Asia Airlines v Norse Air Charter Limited, the Singapore High Court ordered a stay of proceedings in favour of arbitration in a dispute relating to a contract which, on its face, contained an arbitration clause as well as a jurisdiction clause.

The dispute related to an aircraft lease agreement between an Indonesian company (Tri-M.G.) and a Mauritian company (Norse). The agreement was governed by Singaporean law and contained an ICC arbitration clause as well as a clause which stated that:

"Each of the parties to this Agreement agrees for the exclusive benefit of the others (sic) that the courts of The Republic of Singapore shall have jurisdiction to hear and determine any suit, action or proceedings and to settle any disputes which may arise out of or in connection with any Governing Document (respectively "Proceedings" and "Disputes") and, for such purposes irrevocably submits to the jurisdiction of such courts."

Tri-MG filed a suit in the Singapore courts in 2008, claiming that money was due and owing under the agreement. Norse filed an application to stay the proceedings in favour of arbitration pursuant to section 6 of the Singapore International Arbitration Act.

In the absence of any reported local decision in respect of an analogous scenario, the judge analysed case law from various jurisdictions and observed that diverse international courts had sought to give effect to the parties' intentions using similar techniques of construction. In particular, the court considered the English Commercial Court judgment in Paul Smith Ltd v H & S Holding Inc [1991] 2 Lloyds's Rep 127 together with the authorities which followed it, and found them persuasive. Following the reasoning in Paul Smith, the judge held that the two clauses could be reconciled by interpreting the jurisdiction clause as a reference to the law governing the arbitration and as a submission to the Singapore courts' supervisory jurisdiction over the arbitration.

Furthermore, the judge was not persuaded by Tri-MG's argument that the conflicting clauses gave the parties an option between litigation and arbitration. In this regard, he observed that the language of the arbitration clause was mandatory, and that such an option would require clear and unequivocal drafting. Moreover, the judge noted that the parties' pre-action correspondence had been solely premised on the basis that their dispute was to be referred to arbitration, and included a request from Tri-M.G. to vary the arbitral institution chosen.

This decision confirms the arbitration-friendly approach of the Singapore courts. However, there is no guarantee that such an approach would be adopted in every jurisdiction and such ambiguous clauses often (as here) lead to costly and time consuming battles in respect of jurisdiction. The key point therefore remains to ensure that dispute resolution clauses are drafted in unambiguous terms.

(PT Tri-MG Intra Asia Airlines v Norse Air Charter Limited [2009] SGHC 13)