DKB v DKC

Facts

DKB, as assignee of a final award from a Swiss-seated arbitration against DKC, obtained leave on 22 December 2023 in Originating Application No 10 of 2024 to enforce the award in Singapore. DKC applied to stay enforcement under s 6 of the International Arbitration Act 1994, relying on what it called a Sanctions Defence and an arbitration clause in a 2017 Deed of Settlement. On 19 February 2025 the Singapore International Commercial Court stayed the proceedings on conditions, the first being that DKC commence an expedited arbitration under the rules of the Arbitration Institute of the Stockholm Chamber of Commerce within 10 days.

DKC did not do so. On 26 February 2025 its solicitors asked DKB to agree to an extension to 31 March 2025, saying the request for arbitration had to serve as the statement of claim. DKB refused, pointing out that DKC had known since 28 January 2025 of a related arbitration brought by another party on substantially the same issues, yet had taken no steps in it. On 6 March 2025 DKC applied in SIC/SUM 17/2025 to extend time to 14 April 2025, citing settlement talks, a board approval and tender process for appointing counsel, and the time needed to prepare the request. On 7 March 2025 DKB applied in SIC/SUM 18/2025 to lift the stay, and alternatively sought security of US$ 15m. These are the court's grounds for its orders of 1 April 2025.

Issues

1. Whether DKC had shown adequate reasons for the length of the extension of time it sought to commence the Stockholm arbitration.
2. Whether, weighing the factors in Navayo, DKC should nonetheless be given more time rather than having the stay lifted.
3. Whether DKC should be ordered to provide security as a further condition of the stay.

Holding

The court varied its order of 19 February 2025 so that DKC had to commence the Stockholm arbitration by 12 April 2025, a shorter extension than DKC sought. DKC's application in SUM 17 thus succeeded in part, and DKC was ordered to pay its costs. DKB's application in SUM 18 to lift the stay was stood over until the end of that arbitration, with liberty to apply on two days' notice, and costs of SUM 18 were reserved. No security was ordered.

Reasoning

On the first issue, the court found little justification for the delay. DKC had known of the related arbitration since 28 January 2025, its counsel had said the issues were substantially the same, and the basis of the Sanctions Defence had already been set out in its earlier affidavits and expert report. Settlement talks were irrelevant without evidence that DKB agreed to an extension. Internal governance procedures did not allow a company to ignore court-ordered deadlines, and appointing counsel some five weeks after the orders was not reasonable. DKC was free to choose its lawyers, but that did not excuse non-compliance.

On the second issue, the court applied the four Navayo factors. The first two weighed against DKC. The prospects of success in the arbitration were treated as neutral, though it was undisputed that DKC had not made the payments under the deed, and it would bear the onus of justifying that by the Sanctions Defence. The prejudice to DKB, beyond delay, was the risk that the two arbitrations might not be consolidated, which was not overwhelming, and DKB could have started the arbitration itself. Given the size of the claim, the parties' agreement to arbitrate and the limited prejudice, DKC was given a final opportunity, though a further extension would need very compelling reasons.

On the third issue, the court accepted that s 6 allows security as a condition in a proper case but said the power should be used with great caution. Because a stay under s 6 is mandatory, conditions should generally only facilitate the arbitration, and security should only protect property at risk of being dissipated, which was not suggested. Security was not appropriate to cover DKB's past enforcement costs, about which the evidence was silent, or as a way to compel DKC to act.

From the judgment