In the recent decision of PUBG Corp v Garena International I Pte Ltd and others  SGCA 51, the Singapore Court of Appeal helpfully clarified what constitutes “overlapping issues” to justify granting a case management stay in favour of arbitration.
Court proceedings had been commenced by the appellant against the respondents in respect of certain IP infringement claims. Parties then entered into negotiations in an attempt to reach a settlement. The respondents contend that a settlement agreement was concluded which contains an arbitration clause. This was disputed by the appellant who then wished to continue prosecuting the court proceedings it had commenced.
The respondent subsequently commenced arbitration proceedings to determine the validity of the settlement. The High Court ordered a stay of the court proceedings pending resolution of the arbitration. The appellant appealed the High Court’s decision to grant the stay.
The appellant argued that as between the court proceedings and the arbitration, there is no “overlap” in factual or legal issues – the court proceedings do not concern the settlement and the arbitration does not concern the IP infringement claims.
The appellant’s argument was rejected by the Court of Appeal.
The Court of Appeal held that while those disputes concern distinct issues at a superficial level, it was an erroneous analysis which “fails to capture the real essence of the situation” – which is that the validity of the settlement agreement has to be determined first in order to determine whether the court proceedings can proceed. The Court remarked that it made no sense at all for the court proceedings to continue, if there was a valid settlement.
Unsurprisingly, the Court of Appeal determined that the issue whether there was a valid settlement agreement ought to be determined by the arbitral tribunal and therefore upheld the High Court’s decision to grant the case management stay.
The case demonstrates that the Singapore Court of Appeal does not take an unduly narrow view as to what constitutes “overlapping issues” for the purposes of granting a case management stay in favour of arbitration.
This case is significant as it underscores the fact that the Courts will take a holistic view of the facts and circumstances of a case, in particular the nature of the overlapping issues, in order to determine whether to exercise its inherent powers to grant a case management stay.
For the full text of the case, click here.