Merrill Lynch v Harjani: Stay of Proceedings Under International Arbitration Act

In Merrill Lynch Pierce, Fenner & Smith Inc v Prem Ramchand Harjani and Renaissance Capital Management Investment Pte Ltd, the High Court of Singapore addressed an appeal by Renaissance Capital Management Investment Pte Ltd against the Assistant Registrar's decision to dismiss their application for a stay of proceedings in a debt claim brought by Merrill Lynch. The claim arose from transactions executed by Prem Ramchand Harjani on behalf of Renaissance Capital. The court dismissed the appeal, finding that Renaissance Capital had admitted to the debt, and therefore no arbitrable dispute existed. The court also found that the terms of the agreement expressly prohibited set-off.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The High Court addressed a stay application under the International Arbitration Act, concerning a debt claim and the applicability of an arbitration agreement.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Merrill Lynch Pierce, Fenner & Smith IncPlaintiffCorporationAppeal DismissedWon
Renaissance Capital Management Investment Pte LtdDefendant, AppellantCorporationAppeal DismissedLost
Prem Ramchand HarjaniDefendantIndividualAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Lee Seiu KinJudgeYes

4. Counsels

Counsel NameOrganization
Hri Kumar NairDrew & Napier LLC
James LowDrew & Napier LLC
Pua Lee SiangBih Li & Lee
Anthony Lee Hwee KhiamBih Li & Lee
Shermaine LimBih Li & Lee
Denis TanToh Tan LLP

4. Facts

  1. Merrill Lynch sued Prem Ramchand Harjani and Renaissance Capital for US$11,712,452.47.
  2. The claim arose from transactions entered into by Harjani on behalf of Renaissance Capital.
  3. Renaissance Capital applied for a stay of proceedings under the International Arbitration Act.
  4. The account opening form contained an arbitration agreement.
  5. Renaissance Capital failed to pay for PTTI Shares purchased on its instructions.
  6. Merrill Lynch liquidated assets in the account to reduce the outstanding amount.
  7. Renaissance Capital claimed a right to set-off due to an alleged breach regarding a credit facility.

5. Formal Citations

  1. Merrill Lynch Pierce, Fenner & Smith Inc v Prem Ramchand Harjani and Another, Suit 773/2008, RA 7/2009, [2009] SGHC 133

6. Timeline

DateEvent
Account Opening Form executed
Credit facility of US$6m granted
Credit facility increased to US$17m
Order placed for 120 million PTTI Shares
Settlement Date for PTTI Shares purchase
Part payment of US$50,000 made
Part payment of US$1.95m made
Writ filed to recover Outstanding Sum
Mareva Injunction granted
Application to stay suit filed
Application heard by Assistant Registrar Then Ling
Court of Appeal dismissed the Mareva Appeal
Appeal dismissed with costs
Decision Date

7. Legal Issues

  1. Stay of Court Proceedings
    • Outcome: The court held that there was no dispute as the defendant had admitted to the debt, and therefore a stay was not warranted.
    • Category: Procedural
    • Sub-Issues:
      • Applicability of arbitration agreement
      • Existence of a dispute
  2. Set-off
    • Outcome: The court held that the terms of the agreement expressly prohibited set-off.
    • Category: Substantive

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Debt
  • Fraud
  • Conspiracy

10. Practice Areas

  • Arbitration
  • Commercial Litigation

11. Industries

  • Financial Services

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Dalian Hualiang Enterprise Group Co Ltd and another v Louis Dreyfus Asia Pte LtdHigh CourtYes[2005] 4 SLR 646SingaporeCited for the principle that the court has jurisdiction to determine if the matter before the court is the subject of an arbitration agreement between the parties.
Getwick Engineers Ltd v Pilecon Engineering LtdN/AYes[2002] HKCU 1020Hong KongCited for the principle that a clear and unequivocal admission of liability and quantum can take a variety of forms.
London and North Western Railway Co v JonesN/AYes[1915] 2 KB 35England and WalesCited for the principle that a mere refusal to pay an amount that is indisputably due will not constitute a dispute entitling the defaulting party to an arbitration.
Baltimar Aps Ltd v Nalder & Biddle LtdN/AYes[1994] 3 NZLR 129New ZealandCited for the principle that resort to arbitration in respect of a mere refusal to pay an amount indisputably due could amount to an abuse of process.
Citibank NA v. Lee Hooi Lian & AnorN/AYes[1999] 4 SLR 469SingaporeCited for the principle that where the terms of an agreement expressly prohibit set-off, a counterclaim cannot be set-off against the plaintiff’s claim.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
International Arbitration Act (Cap 143A, 2002 Rev Ed)Singapore
Arbitration Act (Cap 10, 2002 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration Agreement
  • Stay of Proceedings
  • International Arbitration Act
  • PTTI Shares
  • Credit Facility
  • Settlement Date
  • Outstanding Sum
  • Account Opening Form

15.2 Keywords

  • arbitration
  • stay of proceedings
  • international arbitration act
  • debt
  • singapore

17. Areas of Law

Area NameRelevance Score
Arbitration90
Commercial Law60
Contract Law50

16. Subjects

  • Arbitration
  • Contract Law
  • Financial Services