The rights of a chargee under the National Land Code are distinct and statutory, and are not subject to arbitration under the Arbitration Act 2005.

[1] The main issue between the parties in this appeal is whether the right of the chargee under the National Land Code (' NLC ') to foreclose the security under the charge can be stayed under s 10 of the Arbitration Act 2005 pending arbitration pursuant to an arbitration clause in an earlier agreement ('the underlying agreement') between the same parties.

[2] The underlying agreement in question is the subscription agreement dated 16 May 2013. The chargee is the appellant and the chargor is the respondent. The security under the charge is a mining lease under Mining Certificate NO 482, Lot 2556, Mukim Gali, Daerah Raub, Pahang ('mining lease'). The charge was registered on 5 June 2013.

Background Facts

[3] The respondent is the issuer of secured senior non-convertible bonds ('the bonds') under the subscription agreement. The appellant is an investor. The appellant had agreed to subscribe to the bonds issued by the respondent priced at US$6,000,000 according to the terms and conditions contained in the subscription agreement. The bonds were issued in two tranches:

(i) Bonds with an aggregate principal amount of US$1,000,000; and

(ii) Bonds with an aggregate principal amount of US$5,000,000.

[4] The appellant's agreement to subscribe to the bonds is subject, among others, to the condition that the bonds shall be secured by a security, namely, a first legal charge under the NLC over the said mining lease.

[5] The respondent proposed to utilise the proceeds from the issuance of the bonds for purposes of repayment of the UOB loan and exploration and development of the mining lease and other general corporate purposes.

[6] Clause 26.1 of the subscription agreement provides that the agreement shall be governed by, and construed in accordance with the laws of Singapore, without regard to principles of conflict of laws thereunder. Clause 26.2 states that resolution of any controversy, dispute or claim between the parties shall be by arbitration:

26.2. Resolution of any controversy, dispute or claim between the parties regarding or in connection with this Agreement (including the interpretation, performance, breach, termination or validity of this Agreement... shall initially be resolved through friendly consultation in good faith with a view to achieving a resolution between the parties. If such friendly consultation fails to resolve the Dispute within ten Business Days from the commencement of such consultation any party may submit the Dispute for arbitration in accordance with this cl 26.

[7] Clause 26.3 of the subscription agreement stipulates that any dispute between the parties shall be settled by arbitration in Singapore. It states:

The Dispute shall be settled by arbitration in Singapore, in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (SIAC) for the time being in force. There shall be three arbitrators. Each party to the Dispute shall appoint one arbitrator and the third arbitrator shall be jointly appointed by the parties and Chairman of the arbitration. The arbitration shall be conducted in the English language. If the arbitrator is not qualified to practice law in Singapore, the arbitration tribunal shall engage an expert qualified to practice law in Singapore, to provide advice on Singapore laws. The arbitral tribunal shall decide any Dispute submitted to arbitration strictly in accordance with the substantive laws of Singapore (without regard to principles of conflict of laws thereunder) and shall not apply any other substantive law.

[8] The terms and conditions of the issuance of the bonds are contained in schedule 1 of the subscription agreement. Condition 3.2 of the bonds states that the holder of the bonds, upon re