Car & Cars v Volkswagen: Stay of Proceedings in Favor of Arbitration

Car & Cars Pte Ltd appealed against the decision to grant a stay of proceedings in favor of arbitration to Volkswagen Group Singapore Pte Ltd. The dispute arose from the termination of a dealership agreement and related agreements. The High Court of Singapore, presided over by Justice Andrew Ang, dismissed the appeal, holding that the International Arbitration Act applies, mandating the stay of proceedings in favor of arbitration. The court found that the arbitration clause in the Termination of Dealership Agreement was valid and applicable.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeal dismissed with costs.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal to stay proceedings in favor of arbitration granted. The court held that the International Arbitration Act applies.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Car & Cars Pte LtdAppellantCorporationAppeal DismissedLost
Volkswagen AGRespondentCorporationNeutralNeutral
Volkswagen Group Singapore Pte LtdRespondentCorporationStay of Proceedings GrantedWon

3. Judges

Judge NameTitleDelivered Judgment
Andrew AngJudgeYes

4. Counsels

Counsel NameOrganization
Lok Vi MingRodyk & Davidson LLP
Koh Kia JengRodyk & Davidson LLP
Vanessa Yong Shuk LinRodyk & Davidson LLP
Chan Kia PhengKhattarWong
Ang Keng LingKhattarWong
Audra BalasingamKhattarWong

4. Facts

  1. Car & Cars was the importer of Volkswagen vehicles between 1999 and 2004.
  2. A Memorandum of Understanding (MOU) was entered into between Car & Cars and Volkswagen AG on 2 November 2004.
  3. The 2004 Agreement terminated the Importer Agreement with regard to Volkswagen passenger cars.
  4. Car & Cars became an authorised dealer of Volkswagen passenger cars from 1 January 2005.
  5. Volkswagen Group Singapore purported to terminate the dealership agreement in November 2006.
  6. Four written agreements were entered into to facilitate the parting of ways in January/February 2007.
  7. Volkswagen AG failed to make a timely payment of $1.2m to Car & Cars.

5. Formal Citations

  1. Car & Cars Pte Ltd v Volkswagen AG and Another, Suit 960/2008, RA 136/2009, [2009] SGHC 233

6. Timeline

DateEvent
Importer Agreement signed between Car & Cars Pte Ltd and Volkswagen AG.
Memorandum of Understanding (MOU) entered into between Car & Cars Pte Ltd and Volkswagen AG.
Formal written agreement (2004 Agreement) entered into between Car & Cars Pte Ltd and Volkswagen AG.
Termination of Importer Agreement with regard to Volkswagen passenger cars took effect.
Car & Cars Pte Ltd assumed status of authorised dealer of Volkswagen passenger cars for Volkswagen Group Singapore Pte Ltd.
Volkswagen Group Singapore Pte Ltd gave Car & Cars Pte Ltd 12 months’ notice of intention to terminate dealership agreement.
Termination of Importer Agreement signed between Car & Cars Pte Ltd and Volkswagen AG.
Termination of Dealership Agreement signed between Car & Cars Pte Ltd and Volkswagen Group Singapore Pte Ltd.
Sale of Assets and VW Parts Agreement signed between Car & Cars Pte Ltd, Group Exklusiv Pte Ltd, and Volkswagen Group Singapore Pte Ltd.
Assignment of Lease Agreement signed between Group Exklusiv Pte Ltd and Volkswagen Group Singapore Pte Ltd.
Car & Cars Pte Ltd settled sum owed to Volkswagen Financial Services Singapore Pte Ltd.
Volkswagen Group Singapore Pte Ltd paid its dues.
Volkswagen AG gave cheque for $1.2m to Car & Cars Pte Ltd.
Suit No 960 of 2008 commenced by Car & Cars Pte Ltd.
Summons No 261 of 2009 filed by Volkswagen Group Singapore Pte Ltd seeking a stay of action in favour of arbitration.
Decision date of the High Court judgment.

7. Legal Issues

  1. Applicability of International Arbitration Act versus Arbitration Act
    • Outcome: The court held that the International Arbitration Act (IAA) applied, mandating a stay of proceedings in favor of arbitration.
    • Category: Procedural
    • Related Cases:
      • [2009] SGCA 45
      • [2004] 4 SLR 19
  2. Interpretation of 'for the time being in force' in arbitration clause
    • Outcome: The court interpreted the phrase to refer to the rules of the Singapore International Arbitration Centre (SIAC) in force at the time of the commencement of the arbitration.
    • Category: Substantive
    • Related Cases:
      • [2009] SGCA 45
      • [1958] 1 WLR 16
      • [1902] 2 KB 125
  3. Exercise of judicial discretion to deny stay of proceedings under the Arbitration Act
    • Outcome: The court found that even if the Arbitration Act applied, there was no sufficient reason to deny the stay of proceedings.
    • Category: Procedural
    • Related Cases:
      • [2005] 4 SLR 398
      • [1973] 1 Lloyd’s Rep 129
      • [2008] 3 MLJ 872

8. Remedies Sought

  1. Loss and damages arising from the breach of the Importer Agreement
  2. Loss and damages arising from the breach of an agreement to appoint the appellant as the exclusive or sole dealer of Volkswagen vehicles

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Arbitration
  • Commercial Litigation

11. Industries

  • Automotive

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Navigator Investment Services Ltd v Acclaim Insurance Brokers Pte LtdCourt of AppealYes[2009] SGCA 45SingaporeCited to support the interpretation that 'rules for the time being in force' refers to the rules at the time of commencement of arbitration.
National Coal Board v GalleyEnglish CourtYes[1958] 1 WLR 16EnglandCited to support the interpretation that 'agreement for the time being in force' means the agreement in force at the time the dispute arose.
Mayor, &c., of Westminster v The Army and Navy Auxiliary Co-Operative Supply, LimitedEnglish CourtYes[1902] 2 KB 125EnglandCited to support the interpretation of 'the valuation list for the time being in force' as the one in force at the time of the dispute arising.
Black & Veatch Singapore Pte Ltd v Jurong Engineering LtdCourt of AppealYes[2004] 4 SLR 19SingaporeCited to support the position that where the rules contained mainly procedural provisions, then the rules in force at the time of commencement of arbitration would be the ones that applied to the arbitration.
Bunge SA v KruseUnknownYes[1979] 1 Lloyd’s Rep 279UnknownCited for the prima facie inference that procedural rules in force at the time of commencement of arbitration apply.
Peter Cremer v Granaria BVUnknownYes[1981] 2 Lloyd’s Rep 583UnknownCited for the rationale that arbitrators should apply procedures in force at the date of their appointment.
Jurong Engineering Ltd v Black & Veatch Singapore Pte LtdHigh CourtYes[2004] 1 SLR 333SingaporeCited for the rule that SIAC Domestic Arbitration Rules apply to domestic cases where parties agree to adopt SIAC's rules generally, but distinguished in the present case.
NCC International AB v Alliance Concrete Singapore Pte LtdUnknownYes[2008] 2 SLR 565SingaporeCited to support the holding that s 5(1) of the IAA contemplates agreements adopting institutional rules which in turn expressly stipulate that the IAA shall apply.
Taunton-Collins v CromieUnknownYes[1964] 1 WLR 633EnglandCited for the principle that parties should normally be held to their contractual agreements.
Yee Hong Pte Ltd v Tan Chye Hee AndrewUnknownYes[2005] 4 SLR 398SingaporeCited for the principle that a stay of proceedings can be granted despite the risk of multiplicity of proceedings when the needs of justice outweigh the risk of multiplicity.
Bulk Oil (Zug) AG v Trans-Asiatic Oil Ltd SAUnknownYes[1973] 1 Lloyd’s Rep 129UnknownCited for the principle that parties should be held to their contractual bargains even with the risk of multiplicity and inconsistent decisions.
Sunway Damansara Sdn Bhd v Malaysia National Insurance BhdMalaysian High CourtYes[2008] 3 MLJ 872MalaysiaCited to support granting a stay of proceedings in favor of arbitration because the court found that any risk of multiplicity had been brought about by the plaintiff’s own actions.
Cars & Cars Pte Ltd v Volkswagen AGHigh CourtYes[2009] SGHC at 77SingaporeThe current case being appealed.

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
  • Stay of Proceedings
  • Importer Agreement
  • Dealership Agreement
  • Termination of Agreement
  • Global Settlement
  • SIAC Rules
  • International Arbitration Act
  • Arbitration Act
  • Repudiation

15.2 Keywords

  • arbitration
  • stay of proceedings
  • contract
  • volkswagen
  • car & cars

17. Areas of Law

Area NameRelevance Score
Arbitration90
Contract Law75
Breach of Contract70
Commercial Disputes60
Asset Recovery30

16. Subjects

  • Arbitration
  • Contract Law
  • Civil Procedure