Singapore Court of Appeal grants anti-suit relief and clarifies extent to which a dispute beyond terms of contract may fall within arbitration agreement

Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com.

In COSCO Shipping Specialised Carriers Co Ltd v PTI OKI Pulp & Paper Mills [2024] SGCA 50, the Singapore Court of Appeal held that tortious claims, which extended beyond the terms of the contract, arose "out of or in connection with" the arbitration agreement, and granted anti-suit relief. The decision was based on a common-sense inquiry (rather than a formulaic approach) into whether, in substance, the claims were sufficiently connected to the arbitration agreement.

The Singapore Court of Appeal (COA) has held that tortious claims, which extended beyond the terms of the underlying contract, arose "out of or in connection with" the arbitration agreement.

The dispute arose in the context of contracts of carriage made under bills of lading (BLs) with relatively standard arbitration clauses referring "any dispute arising out of or in connection with this Contract" to SIAC arbitration. The appellant's vessel had allided with a jetty bridge in Indonesia. The bridge owner filed a tortious claim in the Indonesian courts. The appellant commenced arbitration in Singapore against the charterer for breaching the BLs' safe port warranty. It also sought an anti-suit injunction in Singapore to restrain the Indonesian proceedings.

At first instance, the Singapore High Court found that the tortious claim fell outside the arbitration agreement. On appeal, the COA reversed that decision, finding that the tortious claim, the contractual defence and the counterclaim for breach of safe port warranty had a common connection: the allision. This meant that the tortious claim arose "out of or in connection with" the arbitration agreement, which justified anti-suit relief.

The COA provided the following guidelines:

• The various tests in the authorities (for example, "causative connection" and "closely knitted") to determine whether claims fall within an arbitration agreement should not be applied formalistically. There is no universal test and the right inquiry is fact-specific, looking at the claims and anticipated defences based on common sense ("in a manner consistent with rational businessmen") rather than the agreement's precise words or the way in which claims are pleaded.
• There is no "one stop shop" starting presumption in Singapore that the parties must have intended all their claims to be decided in the same forum. If the agreement and nature of the claims make it clear that a claim is outside its ambit, then forum fragmentation is inevitable, and the courts should adhere to that outcome.

The phrase "arising out of or in connection with" a contract is found in many arbitration agreements, but the ambit and scope of the phrase continues to vex the common law courts. In this case, it mattered that the incident happened in port and during performance of the contracts, which contained "errors of navigation" clauses. More broadly, the judgment confirms the Singapore courts continue to approach interpretation of arbitration agreements in a "common sense" and less formulaic way.

Case: COSCO Shipping Specialized Carriers Co Ltd v PT OKI Pulp & Paper Mills and others and another matter [2024] SGCA 50 (13 November 2024) (Steven Chong JCA)