In the recently published decision of the Singapore High Court in Equinox Offshore Accommodation Ltd v. Richshore Marine Supplies Pte Ltd [2010] SGHC 122, the High Court held that it has no power to grant an order for the discovery of documents prior to the commencement of arbitration.
The facts of the case were relatively simple. Equinox Offshore Accommodation Ltd ("Plaintiff") and Richshore Marine Supplies Pte Ltd ("Defendant") entered into an agreement pursuant to which the Defendant was appointed sole agent for the purchase of certain goods. In consideration for its services, the Defendant was entitled to payment based on a 12% mark-up of the price of the goods. The Plaintiff was concerned that the Defendant had overcharged it and filed an originating summons under Order 24, Rule 6(1) of the Rules of Court seeking the disclosure of certain accounts and purchase records which the Defendant was required to keep under the terms of the agreement. The Plaintiff sought such an order despite the existence of an arbitration clause in the agreement between the parties.
The court considered whether it had power to grant an order for pre-arbitration discovery on two bases: (i) under Order 24, Rule 6(1) of the Rules of Court; and (ii) under its inherent jurisdiction. It came to the conclusion that it would not grant such an order on either basis.
Firstly, the Court found that the powers granted under Order 24, Rule 6(1) of the Rules of Court only applied to 'court proceedings' rather than 'arbitration proceedings'. As such, where an arbitration agreement existed between the parties, an order for disclosure prior to the commencement of proceedings would only be available where the dispute fell outside the scope of the arbitration agreement and a party intended to commence court proceedings.
Secondly, the court held that it had no inherent jurisdiction to order pre-arbitration discovery. The Court came to this conclusion by noting that a strong and compelling reason must be shown why a court should exercise an inherent jurisdiction and, in circumstances where a detailed statutory regime dealing with the situation existed (such as in the present case, where the SIAC Rules and Order 69A of the Rules of Court set out a regime of procedural rights related to arbitration), then no such jurisdiction would arise.
The Court noted that it was "surely for the parties to make the necessary contractual provision for such a pre-arbitral process of discovery if the parties wished to do so" and that "to invoke the assistance of the courts prior to the commencement of arbitral proceedings may, in certain instances, appear to run contrary to the spirit and scheme of arbitration."
The decision highlights both the reluctance of Singaporean courts to interfere in the arbitration process and the importance of party autonomy in the eyes of the courts. In light of the decision, parties (and their lawyers) would be well advised to consider whether a need for pre-arbitration discovery might arise in the future and provide for such discovery in the arbitration agreement itself.
O'Melveny & Myers LLP routinely provides advice to clients on complex transactions in which these issues may arise, including finance, mergers and acquisitions, and licensing arrangements. If you have any questions about the operation of the applicable statutory provisions or the case law interpreting these provisions, please contact any of the attorneys listed on this alert.
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