Upholding Parties' Agreement To Arbitrate And Case Management Of Claims Against Multiple Defendants

A case study of Maybank Kim Eng Securities Pte Ltd v Lim Keng Yong [2016] SGHC 68

Executive summary

The appellant, Maybank Kim Eng Securities Pte Ltd (Kim Eng) had commenced an action against its customer and her husband-remisier. The High Court's Assistant Registrar (AR) ordered a stay of proceedings against both the customer and her husband-remisier.

On appeal to the High Court, Kim Eng did not appeal against the decision with respect to the customer. The issue on appeal was whether the court should exercise its case management powers to uphold the stay of proceedings against the customer's husband-remisier as ordered by the AR, pending the resolution of the related arbitration between Kim Eng and its customer.

The judge affirmed the AR's exercise of the case management powers developed by the Court of Appeal in Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2016] 1 SLR 373 (Tomolugen) and upheld the stay of proceedings, thus dismissing the appeal.

Background facts

Kim Eng is a securities brokerage with which the first respondent (customer) maintained a contracts for difference account (the CFD account). The account permitted the customer to enter into contracts for difference (CFDs) with Kim Eng which in turn allowed her to trade on price movements of an underlying reference security without actually acquiring that underlying security. The second respondent is the customer's husband (husband-remisier) and was an appointed remisier pursuant to a remisier's agreement with Kim Eng (the Remisier's Agreement).

Kim Eng brought an action against the customer and her husband-remisier in respect of trading losses exceeding S$8 million. The claim against the customer was brought under the CFDs contract governed by Kim Eng's general terms and conditions which provided that disputes were to be referred to arbitration in Singapore in accordance with the UNCITRAL Arbitration Rules. As for Kim Eng's claim against the husband-remisier, it was brought under an indemnity (the Indemnity) included in the Remisier's Agreement and which had no arbitration clause.

The claims arose from the CFD transactions (the CFD transactions) which the customer entered into with Kim Eng in July 2015. On 24 August 2015, there was a sharp drop in the value of the underlying securities and a closing out of the CFD transactions, leading to substantial losses. The main dispute on the facts was whether either or both of the customer and her husband-remisier authorised the closing out of the CFD transactions on 24 August...