Cassa di Risparmio v Rals: Stay of Action, Arbitration Agreement, Promissory Notes

In Cassa di Risparmio di Parma e Piacenza SpA v Rals International Pte Ltd, the Singapore High Court addressed Rals' application to stay Cassa di Risparmio's action based on an arbitration agreement in a supply agreement between Rals and Oltremare SRL. Cassa di Risparmio, as the holder of promissory notes issued by Rals to Oltremare, sued Rals after the notes were dishonored. Rals argued that Cassa di Risparmio, as Oltremare's assignee, was bound by the arbitration agreement. The High Court allowed Cassa di Risparmio's appeal, holding that while Cassa di Risparmio was claiming through Oltremare, its claim on the promissory notes did not fall within the scope of the arbitration agreement. The court granted Rals leave to appeal to the Court of Appeal.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court judgment on stay of action involving arbitration, promissory notes, and assignee bank. Appeal allowed.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Rals International Pte LtdDefendant, AppellantCorporationAppeal DismissedLost
Cassa di Risparmio di Parma e Piacenza SpAPlaintiff, RespondentCorporationAppeal AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Vinodh CoomaraswamyJusticeYes

4. Counsels

Counsel NameOrganization
Kenneth ChuaStamford Law Corporation
Adrian TanStamford Law Corporation
Wong Jun MingRajah & Tann Singapore LLP
Elaine TayRajah & Tann Singapore LLP

4. Facts

  1. Rals and Oltremare entered into a Supply Agreement for equipment, with payment via promissory notes.
  2. Rals issued eight promissory notes to Oltremare as deferred payment for the equipment.
  3. Oltremare negotiated the notes to Cariparma without recourse and assigned its right to receive payment.
  4. Cariparma presented the notes for payment, but they were dishonored.
  5. Cariparma sued Rals based on its rights as the holder of the promissory notes.
  6. The Supply Agreement contained an arbitration clause.
  7. Rals sought a stay of the court action, arguing that Cariparma was bound by the arbitration agreement.

5. Formal Citations

  1. Cassa di Risparmio di Parma e Piacenza SpA v Rals International Pte Ltd, Suit No 1173 of 2013 (Registrar's Appeals Nos 166 and 168 of 2014), [2015] SGHC 264
  2. Cassa di Risparmio di Parma e Piacenza SpA v Rals International Pte Ltd, Civil Appeal No 75 of 2015, [2016] SGCA 53

6. Timeline

DateEvent
Supply Agreement signed
Assembling and Commissioning Agreement signed
Promissory notes issued
Discount Contract signed
Notice of assignment given
Declaration of absence of disputes issued
Acceptance certificate delivered
Promissory notes negotiated
Discounted sum paid
Promissory note matured and was dishonoured
Promissory note matured and was dishonoured
Promissory note matured and was dishonoured
Promissory note matured and was dishonoured
Suit commenced
Appeal allowed
Appeal dismissed by Court of Appeal

7. Legal Issues

  1. Stay of Proceedings
    • Outcome: The court held that the stay should be lifted.
    • Category: Procedural
  2. Scope of Arbitration Agreement
    • Outcome: The court held that the claim on the promissory notes did not fall within the scope of the arbitration agreement.
    • Category: Substantive
  3. Rights of Assignee
    • Outcome: The court held that the assignee was claiming through the assignor but the claim was not subject to arbitration.
    • Category: Substantive
  4. Holder in Due Course
    • Outcome: The court considered the requirements for establishing holder in due course status.
    • Category: Substantive
  5. Failure of Consideration
    • Outcome: The court found that there was no evidential basis to support the claim of total failure of consideration.
    • Category: Substantive

8. Remedies Sought

  1. Monetary Damages
  2. Declaration that Cariparma is a holder in due course
  3. Declaration that Rals is liable to pay on the notes

9. Cause of Actions

  • Claim on Promissory Notes

10. Practice Areas

  • Commercial Litigation
  • Arbitration
  • Banking Law

11. Industries

  • Manufacturing
  • Banking

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Tjong Very Sumito and others v Antig Investments Pte LtdSingapore Court of AppealYes[2009] 4 SLR(R) 732SingaporeCited for the principle that Rals is entitled to a stay if it is at least arguable that the prerequisites of s 6 have been met.
Rumput (Panama) SA And Belzetta Shipping Co SA v Islamic Republic of Iran Shipping Lines (The Leage)English CourtYes[1984] 2 Lloyd’s Rep 259EnglandCited for the principle that an assignee does not become a party to the assignor's contract.
Schiffahrtsgesellschaft Detlev Von Appen GmbH v Voest Alpine Intertrading GmbH (The Jay Bola)English CourtYes[1997] 2 Lloyd’s Rep 279EnglandCited for the principle that an assignee does not become a party to the assignor's contract.
Roussel-Uclaf v GD Searle & Co LtdEnglish CourtYes[1978] 1 Lloyd’s Rep 225EnglandCited for the principle of whether a subsidiary is claiming through or under a parent company.
The Mayor and Commonalty & Citizens of the City of London v Ashok SanchetiEnglish Court of AppealYes[2008] EWCA Civ 1283EnglandCited for the principle of whether a litigant is claiming under or through a party to an arbitration agreement.
Tanning Research Laboratories Inc v O’BrienHigh Court of AustraliaYes(1990) 169 CLR 332AustraliaCited for the principle that “through” and “under” imply a derivative cause of action or ground of defence.
Fiona Trust and Holding Corporation and others v Privalov and othersUnknownYes[2007] Bus LR 1719UnknownCited for the principle that arbitration is a consensual dispute resolution procedure.
Sulamérica Cia Nacional de Seguros SA and others v Enesa Engelharia SA and othersUnknownYes[2013] 1 WLR 102UnknownCited for the principle that the proper law of the arbitration agreement is the same as the broader agreement.
Cottage Club Estates Limited v Woodside Estates Company (Amersham) LimitedEnglish CourtYes[1928] 2 KB 463EnglandCited for the initial approach that an arbitration agreement was a personal covenant.
Shayler v WoolfEnglish Court of AppealYes[1946] 1 Ch 320EnglandCited for the principle that arbitration agreements are, as a class, capable of assignment.
Montedipe SpA and another v JTP-RO Jugotanker (The Jordan Nicolov)English CourtYes[1990] 2 Lloyd’s Rep 11EnglandCited for the principle that an assignee of a cause of action takes the benefit of all the remedies associated with that cause of action.
Linden Gardens Trust Ltd v Lenesta Sludge Disposals LtdHouse of LordsYes[1994] 1 AC 85EnglandCited for the principle that contractual benefits may be transferred by assignment, but contractual burdens cannot be transferred by assignment but only by novation.
Tito v Waddell (No. 2)English CourtYes[1977] 1 Ch 106EnglandCited for the principle of conditional benefit by which a successor in title of a right takes the benefit of that right subject to all of the burdens which are annexed ab initio to that right.
Firma C-Trade SA v Newcastle Protection and Indemnity Association (The Fanti)UnknownYes[1991] 2 AC 1UnknownCited for the principle that an agreement to arbitrate is inevitably transferred to a transferee of rights under a contract because it was “inseparably connected with” those rights.
CKR Contract Services Pte Ltd v Asplenium Land Pte Ltd and another and another appeal and another matterSingapore Court of AppealYes[2015] 3 SLR 1041SingaporeCited for the principle that it is contrary to public policy to enter into a private agreement which ousts the jurisdiction of the courts.
Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways LtdSupreme Court of New South WalesYes(1996) 39 NSWLR 160AustraliaCited for the principle that when parties agree to refer disputes to arbitration, their agreement should not be construed narrowly.
Larsen Oil & Gas Pte Ltd v Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore)Singapore Court of AppealYes[2011] 3 SLR 414SingaporeCited for the principle that arbitration clauses should be generously construed such that all manner of claims should be regarded as falling within their scope, unless there is good reason to conclude otherwise.
International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and anotherSingapore Court of AppealYes[2014] 1 SLR 130SingaporeCited for the principle that the question of whether parties intended to incorporate an arbitration agreement is purely a question of ascertaining the parties’ objective intention through the usual process of contractual interpretation applying the contextual approach.
Wong Fook Heng v Amixco Asia Pte LtdSingapore Court of AppealYes[1992] 1 SLR(R) 654SingaporeCited for the principle that a bill of exchange, once given, is to be treated as cash and is to be honoured unless there is some good reason to the contrary.
Thomson Rubbers (India) Pte Ltd v Tan Ai HockSingapore High CourtYes[2012] 1 SLR 772SingaporeCited for the principle that the court will give summary judgment for the claimant save in exceptional circumstances in respect of a claim on a bill of exchange, cheque or promissory note.
Nova (Jersey) Knit Ltd v Kammgarn SpinnereiHouse of LordsYes[1977] 1 WLR 713EnglandCited as compelling authority establishing the overriding commercial purpose of a bill of exchange and the fundamental importance of upholding the cash equivalence principle in order to meet commercial expectations.
CA Pacific Forex Ltd v Lei Kuan IeongHong Kong Court of AppealYes[1999] 2 HKC 571Hong KongCited as compelling authority establishing the overriding commercial purpose of a bill of exchange and the fundamental importance of upholding the cash equivalence principle in order to meet commercial expectations.
Paharpur Cooling Towers Ltd v Paramount (WA) LtdSupreme Court of Western AustraliaYes[2008] WASCA 110AustraliaCited for the principle that there is no rule of public policy which channels parties and disputes more readily to arbitration by construing arbitration agreements liberally.
ACD Tridon Inc v Tridon Australia Pty LtdSupreme Court of New South WalesYes[2002] NSWSC 896AustraliaCited for the principle that there is no rule of public policy which channels parties and disputes more readily to arbitration by construing arbitration agreements liberally.
Piallo GmbH v Yafriro International Pte LtdSingapore High CourtYes[2014] 1 SLR 1028SingaporeCited for the principle that the modern trend is for the commercial purpose of an arbitration agreement to prevail over the commercial purpose of a bill of exchange.
Rickshaw Investments Ltd and another v Nicolai Baron von UexkullSingapore Court of AppealYes[2007] 1 SLR(R) 377SingaporeCited for the principle that a litigant with multiple causes of action has the freedom to maximize its substantive or procedural advantage by choosing the cause of action which it asserts.
Henderson v Merrett Syndicates LtdHouse of LordsYes[1995] 2 AC 145EnglandCited for the principle that the mere presence of a contractual relationship does not in itself preclude the existence of an independent duty of care in tort.
The Jian HeSingapore Court of AppealYes[1999] 3 SLR(R) 432SingaporeCited for the principle that the mere presence of a contractual relationship does not in itself preclude the existence of an independent duty of care in tort.
Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a firm)English CourtYes[1979] Ch 384EnglandCited for the principle that liability can exist concurrently in tort and contract, and provided that the latter does not expressly limit or exclude the former, a plaintiff is free to choose whichever is more advantageous to him.
Elliott v CrutchleyUnknownYes[1906] AC 7UnknownCited for the principle that where there is a total failure of consideration, the drawer has no liability on the bill at all.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
International Arbitration Act (Cap 143A, 2002 Rev Ed)Singapore
Bills of Exchange Act (Cap 23, 2004 Rev Ed)Singapore
Bills of Exchange Act (Cap 23, 2004 Rev Ed)Singapore
Bills of Exchange Act (Cap 23, 2004 Rev Ed)Singapore
Bills of Exchange Act (Cap 23, 2004 Rev Ed)Singapore
Bills of Exchange Act (Cap 23, 2004 Rev Ed)Singapore
Civil Law Act (Cap 43, 1999 Rev. Ed)Singapore
Bills of Exchange Act (Cap 23, 2004 Rev Ed)Singapore
Bills of Exchange Act (Cap 23, 2004 Rev Ed)Singapore
Bills of Exchange Act (Cap 23, 2004 Rev Ed)Singapore
Bills of Exchange Act (Cap 23, 2004 Rev Ed)Singapore
Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Promissory Note
  • Arbitration Agreement
  • Holder in Due Course
  • Assignment
  • Stay of Proceedings
  • Bills of Exchange Act
  • Cash Equivalence Principle
  • Failure of Consideration
  • Negotiable Instrument
  • International Arbitration Act

15.2 Keywords

  • arbitration agreement
  • promissory notes
  • stay of proceedings
  • holder in due course
  • assignment
  • bills of exchange
  • cash equivalence

17. Areas of Law

Area NameRelevance Score
Bills of Exchange95
Arbitration90
Contract Law75
Commercial Law60
International Commercial Law50

16. Subjects

  • Arbitration
  • Contract Law
  • Commercial Law
  • Bills of Exchange
  • Negotiable Instruments
  • Civil Procedure