Singapore confirms position on admissibility v jurisdiction in multi-tiered dispute resolution clauses

The ruling came after an appeal to the High Court in Singapore over whether the arbitral tribunal had jurisdiction if the respondent failed to comply with the pre-arbitration procedures under the contract.

The High Court held that the question of compliance with pre-arbitration steps goes to the admissibility of the claim, not to the tribunal’s jurisdiction, bringing Singapore in line with recent decisions in the UK and Hong Kong.

Karah Howard, an arbitration expert with Pinsent Masons, said the decision would finally resolve a point previously unsettled in Singapore law – and would have significant implications for those seeking to commence arbitration in the country.

“Until now, it was unclear under Singaporean law whether failure to comply with a pre-arbitration step – such as negotiation, or senior management meetings - could deprive a tribunal of jurisdiction, potentially invalidating awards,” she explained.

“Singapore now follows the approach taken in the UK and Hong Kong in treating pre-arbitration steps as admissibility issues. This reduces the risk of conflicting outcomes and enhances Singapore’s reputation as a modern arbitration seat.

“Parties can be confident that procedural objections about pre-arbitration steps will not derail arbitration awards on jurisdictional grounds in court, but will be handled as admissibility issues to be determined by the tribunal.”

The case came to court following a dispute between the owner applicant and a consortium comprising Company A – the off-shore consortium partner – and the respondent, listed as the onshore consortium partner.

The consortium did not have separate legal status – with both members jointly and severally liable as contractor. Although the off-shore partner was named as consortium leader, both entities could invoice the applicant independently for their respective scopes of work.

But while the applicant and Company A reached a separate settlement over their issues, the respondent was not a party to that agreement and subsequently began UNCITRAL arbitration proceedings under Singapore law against the applicant to recover payments. The applicant challenged the tribunal’s jurisdiction, contending first that the respondent was not entitled to arbitrate alone and second arguing that the respondent’s failure to comply with contractual pre-arbitration steps meant that the tribunal lacked jurisdiction.

The court was asked to decide two principal issues: whether the respondent had standing to begin arbitration independent of Company A; and whether non-compliance with pre-arbitration steps impacted on the tribunal’s jurisdiction and, if so, whether the applicant had waived those steps.

On the first issue, the court found that the contract demonstrated that the parties intended the respondent could act independently in certain aspects, including initiating disputes. This was supported by provisions enabling both consortium members to issue separate invoices for their respective work, with contractor defined as including both entities “jointly and severally”.

On the second issue, the court upheld the tribunal’s dismissal of the jurisdictional objection, agreeing that failure to comply with a pre-arbitration step is a matter of admissibility rather than jurisdiction: that is, if it relates to whether a claim should be heard at all instead of whether the tribunal is authorised to hear it. It found this determination in line with the general consensus in international arbitration that preconditions to arbitration should be treated as matters of admissibility rather than jurisdiction.

It also upheld the principle that clear words are necessary to create a condition precedent to arbitration, finding that the pre-arbitration requirement for management meetings was not sufficiently clear. The right to arbitrate disputes “which cannot be settled amicably” was not expressed as subject to the pre-arbitration steps, and the words “notwithstanding the above” in the pre-arbitration steps similarly was too equivocal to impose an obligation to comply with those steps before arbitrating.

Whilst the court found that escalating management meetings required in the arbitration clause had not been strictly observed as specific clauses for pre-arbitration steps were not referred to in arrangements and attendees lacked requisite seniority, the applicant’s conduct – in agreeing to proceed with meetings and not raising timely objections to these failures - amounted to a waiver of strict compliance with the pre-arbitration process.

Johanne Brocas, an arbitration expert with Pinsent Masons in Singapore, explained: “If parties want pre-arbitration steps to be mandatory obligations to be complied with before arbitration can start, the contract must be clear that the arbitration cannot be commenced until the pre-arbitration step is complied with - the two procedures must refer to one another to show the chronology.

“Further wording, such as ’amicable settlement‘, must be avoided as too vague. Parties should be mindful that if they attend management meetings that do not strictly follow the pre-arbitration negotiation procedure as stated in the contract, without clarifying their  position or reserving rights to object, they may be deemed to have waived strict compliance - with the consequence that the tribunal will not stay the arbitration commenced in violation of the pre-arbitration step.

“It is advisable to object in this instance to preserve rights.”