A Notice to Produce is not a step in the proceedings disentitling a stay of proceedings on case management grounds in favour of arbitration

The recent decision of Heartronics Corporation v EPI Life Pte Ltd and Others [2017] SGHCR 17 ("Heartronics v EPI") deals with a number of novel issues pertaining to the repudiation of arbitration agreements and mediation-arbitration clauses under Singapore law.

However, for the purposes of this post, I want to focus on a narrow point, which is whether a defendant's filing of a notice to produce documents referred to in the plaintiff's statement of claim, constitutes a step in the proceedings which disentitles the defendant from obtaining a stay of court proceedings on case management grounds .

In Heartronics v EPI, the plaintiff successfully resisted a stay application by the defendants, whose application had been made both on statutory grounds as well as the court's inherent powers of case management (see my earlier article on Incorporation of arbitration clause by course of conduct and stay of proceedings on case management grounds for more on the court's powers).

However, one of the unsuccessful arguments raised by the plaintiff was that certain of the defendants had sought inspection of various documents referred to in the plaintiff's statement of claim (see paragraph [198]) through the filing of a Notice to Produce Documents Referred to in Pleadings pursuant to Order 24 Rule 10(1) of the Rules of Court ("Notice to Produce" or "NTP").

The plaintiff duly complied and subsequently argued that the defendants' conduct and acts constituted a "step" in the proceedings and thereby precluded those defendants from obtaining a stay on case management grounds. The plaintiff argued that (see paragraph [202]),

226. … If a party to an arbitration agreement has taken a step in the proceedings, it cannot apply to the Court under section 6 of the [International Arbitration Act ("IAA")] to seek a stay of the proceedings.

227. It would be extremely incongruous if, notwithstanding that, that party could nonetheless obtain from the Court, on a case management basis, the very stay it could not obtain under section 6 of the IAA.

228. If so, it is difficult to see why the position should be any different vis-à-vis a party that is not privy to an arbitration agreement. If anything, the matter should be a fortiori as regards such a litigant: by taking a step in the proceedings, it has already unequivocally submitted to, invoked and signalled its acceptance of the Court’s jurisdiction.

The learned Assistant Registrar rejected the plaintiff's argument as "without merit" (see paragraph [213]). The learned Assistant Registrar reasoned that section 6 of the IAA explicitly provided that an applicant for a stay should not take a step in the proceedings, this was on the basis inter alia that "a party should not be permitted to in effect ask a court to refrain from exercising its jurisdiction to adjudicate on a dispute if the party making such a request has itself already accepted the court’s jurisdiction to do so" (see paragraph [208]).

However, this was not a concern for case management stays (see paragraph [209] and [210]) citing BC Andaman Co Ltd & Ors v Xie Ning Yun & Anor [2017] SGHC 64 at [102],

"A case management stay only affects the plaintiff’s choice of the sequence in which he pursues proceedings against different defendants, and involves no more on the part of the court in which the proceedings are brought than declining to hear the proceedings before it until some other time."

The Honourable Court further reasoned at [212] that insofar as applicants for case management stays do not dispute the court's jurisdiction, then "whether a party seeking a stay on case management grounds has taken a step in the proceedings, thereby expressly acknowledging the court’s jurisdiction over the dispute in question, is surely not a relevant consideration on the issue of whether a case management may be granted."

With respect, the parties and the court might also have been assisted by considering the case of Amoe Pte Ltd v Otto Marine Ltd, [2013] SGHC 240. In Amoe v Otto Marine, the defendant had successfully obtained a statutory stay of court proceedings in favour of arbitration notwithstanding that it too had filed a Notice to Produce. The Honourable High Court held that a NTP was not the equivalent of discovery and did not evince an intention on the part of the defendant to submit to the jurisdiction of the court.

There is language in the case which suggests such conduct and act would only be permissible if the request for documents was to ascertain whether there was in fact a valid arbitration clause to sustain a statutory stay application. However, if one approaches the query from the following overarching principle, I would submit that the case should not be read narrowly and on its facts. The learned judge in Amoe v Otto Marine held at [7] as follows:

A party takes a “step in the proceedings” under s 6(1) of the [Arbitration] if by its conduct it evinces an intention to submit to the court’s jurisdiction rather than seek recourse by way of arbitration and so advances the hearing of the matter in court: Carona Holdings Pte Ltd and others v Go Go Delicacy Pte Ltd [2008] 4 SLR(R) 460 (“Carona Holdings”). Whether an act should be regarded as a step in the proceedings should be decided in a practical and commonsensical way (Carona Holdings at [52]) and this should be seen in light of the circumstances surrounding the act (Carona Holdings at [93]).

Takeaway: Stays application, especially on case management grounds, can be rather factually intensive. A defendant who cannot resort to the court's coercive powers to determine the documents and their contents being used against it could be at a severe disadvantage in such applications. It is therefore heartening that the courts are willing to take a practical and sensible approach in allowing for NTPs and holding that such applications do not disentitle an applicant for a statutory or case management stay.