DAY v DAZ

Facts

DAY, a litigation funder, entered into a funding agreement on 28 October 2019 with DAZ, a related company and their parent company. DAY agreed to fund and support DAZ's claim against a company referred to as Co1, in return for a first-priority share of any recovery. DAZ obtained a final arbitral award against Co1 on 16 September 2021, and Co1's application in England to set aside parts of it was dismissed on 11 January 2022.

In settlement talks, Co1 agreed on 22 September 2022 to a draft settlement under which it would pay an agreed sum in instalments, and DAY considered the terms acceptable. DAZ then refused to sign unless DAY shared the first instalment, citing its financial position and the risk of Co1 defaulting on the final payment. Specific Terms 3.3 and 3.4 of the agreement provided that disagreements over whether to settle would be resolved by opinions from DAZ's lawyers and then independent counsel, whose opinion would be final and binding. General Term 14 provided for arbitration of any dispute not subject to those terms. DAZ took the position that ST 3.3 and ST 3.4 did not apply to this settlement.

DAY filed HC/OA 189/2023 seeking, in substance, specific performance of ST 3.3. DAZ applied in HC/SUM 860/2023 for a stay under s 6 of the International Arbitration Act. The Assistant Registrar refused the stay, and DAZ appealed in Registrar's Appeal No 77 of 2023.

Issues

1. Whether a dispute over whether ST 3.3 and ST 3.4 applied at all was a dispute subject to those terms and so carved out of the arbitration agreement.
2. Whether the exclusive jurisdiction clause in GT 18.1, the earlier conduct of DAZ's lawyers, or the authorities relied on by DAY showed the dispute was for the court.

Holding

The High Court allowed the appeal and ordered that OA 189 be stayed under s 6 of the IAA, and ordered DAY to pay DAZ's costs fixed at $10,391 for SUM 860 and $10,750.80 for the appeal, inclusive of disbursements.

Reasoning

Under Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2016] 1 SLR 373, a stay follows if the applicant shows a prima facie case of a valid arbitration agreement covering the dispute that is not defective. Only scope was contested. The court held that ST 3.3 and ST 3.4 dealt with differences of opinion over whether to settle. A dispute subject to those terms presupposed they applied; it could not include a dispute over whether they applied at all. Reading the carve-out as covering any dispute relating to those terms would rewrite them.

GT 18.1 was expressly subject to GT 14, so it did not reach disputes within the arbitration agreement; following BXH v BXI [2020] 1 SLR 1043, it was read as covering the court's supervisory role over arbitrations. The aim of speedy resolution under ST 3.3 begged the question whether those terms applied. That DAZ's lawyers began preparing an opinion showed at most that DAZ was once prepared to start the process before changing its mind. Seeley International Pty Ltd v Electra Air Conditioning BV [2008] FCA 29 and Maxx Engineering Works Pte Ltd v PQ Builders Pte Ltd [2023] SGHC 71 turned on their own clauses and did not support DAY's broad proposition. The dispute therefore fell within GT 14.

From the judgment