A request for an extension of time to file a defence does not constitute a step in the proceedings, preserving the right to arbitration under the Arbitration Act 2005.

JUDGMENT

Lee Swee Seng JCA:

[1] It has become an almost reflexive action when appearing for the first case management date by way of e-review for the Counsel for a defendant to invariably ask for an extension of time to file defence, especially when the Statement of Claim has just been served and when it runs into many paragraphs.

[2] Here, the Statement of Claim had been served just 2 days before the first case management hearing, running into no less than 100 paragraphs, consisting of many more sub-paragraphs of technical details with respect to the malfunctioning of a helicopter.

[3] Little did the defendant's Counsel know that such a request would result in the plaintiff vigorously resisting a subsequent application to stay the Court proceedings under s 10(1) of the Arbitration Act 2005 (" AA 2005") ("Stay Application") with the argument being advanced that the defendant had clearly and unequivocally elected to abandon arbitration in favour of litigation before the High Court. Here, no defence was filed, for as soon as the contract documents were made available by the defendant to its solicitors, its solicitors promptly filed the Stay Application.

[4] The High Court agreed with the plaintiff and dismissed the Stay Application and hence, this appeal to the Court of Appeal. Perhaps, the position of the law needs some fine-tuning, appreciating the need to be consistent as far as possible with other jurisdictions that have adopted the UNCITRAL Model Law on International Commercial Arbitration.

[5] Section 10 of the AA 2005 mandates the Court to stay the proceedings before it if the parties have agreed to arbitration to resolve their disputes, unless the party making the stay application has taken other steps in the proceedings or that, on the evidence before it, the Court finds that the arbitration agreement is null and void, inoperative, or incapable of being performed.

[6] Section 10 (1) of the AA 2005 reads as follows:

"10. Arbitration agreement and substantive claim before

(1) A Court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration, unless it finds that the agreement is null and void, inoperative, or incapable of being performed."

[Emphasis Added]

[7] The Courts have moved way past the uncertainty as to whether the entering an unconditional appearance is considered "taking a step in the proceedings." The Federal Court in Sanwell Corporation v. Trans Resources Corporation Sdn Bhd & Anor, 2002 MarsdenLR 1648 had clarified and confirmed that entering an appearance, and an unconditional one at that, is a permitted, excluded, or an exempted step in the proceedings that does not amount to a step in the proceedings within the meaning of the then s 6 of the Arbitration Act 1952 (" AA 1952"), which would prejudice the applicant's right to apply for a stay of the proceedings.

[8] The filing of defence is invariably a step in the proceedings, indicating a clear and unequivocal intention to proceed with litigation. This is so even though there is an arbitration clause in the agreement between the parties where a dispute has arisen out of, or in relation, or in connection thereto. It does not matter even if one has not read the arbitration clause or asked whether there was one, or addressed the issue of whether there was an option to proceed to arbitration.

[9] The Federal Court in Sanwell Corporation (supra) delineated what is clear with respect to what was included in "taking any other steps in the proceedings" where entry of appearance and service of pleadings are concerned and left other actions to be determined by the nature of the action and whether or not it indicates an unequivocal intention to proceed with the suit and to abandon the right to have the dispute disposed of by arbitration. This is how the Federal Court stated t