This is an application by the plaintiff by way of summons-in-chambers dated 3 February 1989 (encl 14) for the defence and counterclaim of the defendant to be stayed so that the disputes alleged therein may be referred to arbitration in Singapore.

On 3 February 1989 itself, the plaintiff filed yet another summons-in-chambers (encl 12) wherein the plaintiff sought that all proceedings be stayed pending the outcome of the application by the plaintiff as per encl 14, for the defence and counterclaim to be stayed so that the disputes alleged in the defence and counterclaim be referred to arbitration in Singapore. According to the plaintiff, any attempt to file or request for extension of time to file a reply and defence to counterclaim may be construed as taking a step in the proceedings thereby prejudicing the plaintiff to have the matter arbitrated. When this application was heard by me on 9 February 1989, after submissions, both counsel finally, by consent, agreed to the following order:

By consent, the plaintiff given extension of time to file defence to counterclaim and reply to defence within three weeks after the outcome of the substantive application to be heard on 13 March 1989 and such extension not to be construed as taking steps in the proceedings by the plaintiff. Costs of this application to abide by the outcome of the substantive application on 13 March 1989.

On 13 March 1989 I directed that the application (encl 14) be adjourned for hearing in open court as counsel may take some time for arguments. It was adjourned to 22 April 1989.

On 22 April 1989, Miss Phang, counsel for the defendant, submitted that from the authorities, it is very clear that there is no such remedy to stay a defence. The remedy of a stay being only available in respect of legal proceedings, it cannot be used so as to prevent a defendant from raising, by way of defence to an action, an issue falling within the arbitration agreement (see p 419 of Commercial Arbitration by Mustill). She went on in support thereof to quote a passage from Bulk Oil (Zug) AG v Trans-Asiatic Oil Ltd SA [1973] 1 Lloyd's Rep 129 at p 135:

Before dealing with the authorities which provide some guidance in the present situation as to how the court's discretion is to be exercised, I must deal with one point which the defendants take at the outset on the plaintiffs' summons. They say that the court can only stay the counterclaim and that it has in any event no jurisdiction to impose a stay which would have this effect of preventing the defendants from relying on any matter arising out of the transportation agreement by way of defence. This was ultimately rightly conceded by the plaintiffs. There is obviously no rule or principle which prevents a person who is a party to an agreement containing an arbitration clause from relying on that agreement and on matters arising out of it by way of defence to an action. The defendants therefore point out that they cannot be prevented from involving the plaintiffs' alleged breaches and repudiation of the transportation agreement as defences to the claim for damages under the charterparty. I agree with this.

It would seem clear, in my view, that the remedy of stay of defence is clearly not available and hence should not be allowed. I asked Mr Lai, counsel for the plaintiff, to address me on this issue. Mr Lai could not at that time do so and prayed that he be given time to look into this issue. As I reserved my judgment on the application I agreed for Mr Lai to look up the law and the authorities, if any, to rebut Miss Phang's submission.

Subsequently on 11 May 1989, Mr Lai submitted by way of a letter, with a copy to counsel for the defendant, conceding that in view of the case of Bulk Oil (Zug) AG [1973] 1 Lloyd's Rep 129, the court should only stay the counterclaim and should not impose a stay on the defence. He went on to say:

1 If the court finds there is no dispute as to the first part of the plaintiff's claim, the filing