Vincent Ng J:

[1] In the above originating summons filed on 21 August 2006 (encl 1) the plaintiff bank (the bank) had prayed, inter alia, for declarations as to:

(i) the validity of the extension of Amendment No: 12 (if it has been validly extended and as to whether it has been cancelled by the second Defendant); and

(ii) the validity of the purported demand/call made by the first Defendant under the Retention Bond.

The 2nd Defendants Case

[2] Now before me for decision is the second Defendants application (Vide encl 6) pursuant to s 10 of the Arbitration Act 2005 and/or under the inherent jurisdiction of the court for the following orders:

1. that all the proceedings in this action be stayed and the first and second Defendants be referred to arbitration;

2. that the second Defendant be granted an extension of time of two (2) weeks to file and serve an affidavit in opposition to the originating summons in the event that prayer (1) is dismissed;

3. that the costs of this action and this application be provided for;

4. such other or further relief which this court deems fit and proper.

[3] As soon as encl 6 was filed, the bank took the very proper course of notifying both the defendants that they would abide by any order which the court might make.

Common Ground

[4] The common ground between all parties are as follows:

(a) the plaintiff is agreeable to abide with whatever directions and decisions of this court in respect of the above proceedings;

(b) the subject matter of the current proceedings is the irrevocable unconditional Retention Bond (Retention Bond) issued by the plaintiff in favour of the first Defendant Vide letter of guarantee dated 14 January 2004 pursuant to a Construction Contract dated 15 August 2002 (Construction Contract);

(c) there is already an ongoing arbitration proceedings between the first Defendant and the second Defendant in respect of disputes arising out of the construction contract and the plaintiff is neither a party to the arbitration contract nor a party in the arbitration;

(d) the plaintiff has taken a neutral stance on encl 6, and the facts surrounding the disputes sought to be referred to arbitration are not in dispute.

(e) the said Retention Bond was extended twelve (12) times until it was purportedly cancelled by the second Defendants Vide exh PC7 of encl 1.

The Respective Arguments

The 2nd Defendants Arguments

[5] It is submitted by the second Defendant that the disputes are matters that arise out of or incidental to the Construction Contract entered into between the first and second Defendant. And, the disputes, including the dispute on the Retention Bond are clearly within the purview of the arbitration cl 34 of the said contract. Further, the first and second Defendants have submitted these other disputes to arbitration and the Retention Bond issue ought to be also determined in the ongoing arbitration proceedings. The applicable law is s 10 of the Arbitration Act 2005 by virtue of the arbitral proceedings having been commenced after the coming into operation of this Act. Unlike the previous provision in s 6 of the 1952 Act, where the court could exercise its discretion in deciding whether a stay pending arbitration ought to be granted, it is now mandatory that proceedings be stayed. In acknowledging that the Retention Bond has expired and that its claim is now limited to damages for breach of contract between the parties, the first Defendant has in effect submitted the disputes encompassed in encl 1 herein into the ambit of the arbitration proceedings (see the defence and counterclaim dated 6 February 2007, filed in arbitral proceedings, which was exhibited in the second Defendants points of claim dated 22 December 2006, under exh LCM4 of encl 10, at pp 47 and 72).

[6] It is also contended by the second Defendant that the same questions and issues now before this court would arise in the arbitration proceedings if a stay is not granted. Aside from the fact that this could lead to inconsistent and co