Contractual dispute over enforcement of arbitral award triggers arbitration (Singapore International Commercial Court)

Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com.

In DKB v DKC [2025] SGHC(I) 11, the Singapore International Commercial Court (SICC) granted a conditional stay of enforcement of an award, holding that a dispute over whether a post-award settlement agreement precluded enforcement fell within scope of that agreement's arbitration clause and had to be resolved through arbitration before continuing enforcement proceedings. In a related judgment, DKB v DKC [2025] SGHC(I) 14, the SICC found the respondent did not comply with the condition of the stay to commence arbitration within a deadline but granted the respondent additional time to commence.

The Singapore International Commercial Court (SICC) has issued two related judgments involving a dispute over the enforcement of an arbitral award.

The case involved the assignment of an award arising from a Swiss-seated arbitration by the successful party to DKB under the terms of a stay and settlement deed (Settlement Deed). Under the Settlement Deed, DKC, as the losing party, agreed to pay DKB a sum of money over several instalments to satisfy the award, while DKB agreed in return to stay enforcement of the award. The Settlement Deed contained an arbitration clause providing for disputes to be settled in accordance with the Expedited Arbitration Rules of the SCC Arbitration Institute.

DKC allegedly failed to comply with its payment obligations under the Settlement Deed, and DKB responded by filing an application in the SICC to enforce the award pursuant to section 29 of Singapore's International Arbitration Act 1994 (IAA 1994).

DKC resisted enforcement, arguing that US sanctions prevented it from making lawful payments and that the dispute regarding its payment obligations must be arbitrated in Stockholm under the Settlement Deed's arbitration clause. In the first decision, the SICC found that:

• The stay application was governed by Singapore procedural law under section 6 of the IAA 1994 (which expressly permits any party to seek a stay where there are court proceedings in respect of any matter which is the subject of the arbitration agreement).
• It was enough that a dispute existed that prima facie fell within the scope of the arbitration agreement and the court would not look into its merits.
• Section 31 of the IAA 1994, which sets out exhaustive grounds to refuse enforcement of a foreign award, did not prevent the court from staying proceedings to uphold the parties' post-award contractual obligations.

Therefore, the SICC ordered a stay of enforcement but made it conditional on DKC commencing an expedited arbitration within ten days of its order and to diligently prosecute it. No security was required from DKC, given the anticipated expedited resolution. In the second decision, the SICC noted that DKC did not comply with the ten-day deadline to commence arbitration in Stockholm and remarked that this was without any real justification. However, having regard to the quantum of the claim, the parties' agreement to arbitrate their dispute and the limited prejudice against DKB, the SICC granted DKC additional time to commence.

These important decisions highlight the need to draft settlement clauses carefully, ensuring clarity on how breaches can affect rights to enforce awards. Further, consideration should be given to explicitly addressing potential sanction risks or force majeure events.

• Singapore law mandates a stay on mere assertion of a dispute which is prima facie covered by an arbitration agreement; courts will not assess the merits of the dispute on a stay application.
• Although section 31 purports to contain exhaustive grounds for refusing enforcement, there is effectively an additional ground where, post-award, the parties have agreed to conditions affecting enforcement and a dispute has arisen about compliance with those conditions.

Cases: DKB v DKC [2025] SGHC(I) 11 (16 April 2025); DKB v DKC [2025] SGHC(I) 14 (2 May 2025) (Thomas Bathurst IJ).