Rals International v Cassa di Risparmio: Arbitration Stay & Promissory Notes
In Rals International Pte Ltd v Cassa di Risparmio di Parma e Piacenza SpA [2016] SGCA 53, the Singapore Court of Appeal dismissed an appeal concerning a stay of court proceedings under Section 6 of the International Arbitration Act. Rals International sought to stay proceedings brought by Cassa di Risparmio to enforce rights under promissory notes issued under a supply agreement between Rals and Oltremare SRL. The primary legal issue was whether the arbitration agreement in the underlying supply contract extended to the promissory notes. The court held that it did not, finding that a negotiable instrument such as a promissory note is not governed by an arbitration agreement in an underlying contract unless the agreement has been expressly incorporated in that instrument.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal held that an arbitration agreement in a supply contract does not automatically extend to promissory notes issued under it.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Rals International Pte Ltd | Appellant | Corporation | Appeal Dismissed | Lost | |
| Cassa di Risparmio di Parma e Piacenza SpA | Respondent | Corporation | Judgment for Respondent | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | No |
| Judith Prakash | Justice of the Court of Appeal | Yes |
| Steven Chong | Judge | No |
4. Counsels
4. Facts
- Rals and Oltremare entered into a Supply Agreement for equipment and an assembling and commissioning agreement.
- Rals issued eight promissory notes to Oltremare as payment under the Supply Agreement.
- The Supply Agreement contained an arbitration clause.
- Oltremare assigned the notes to Cariparma under a Discount Contract.
- Cariparma commenced S 1173 against Rals to enforce its rights under the Notes after Rals dishonored the first four notes.
- Rals applied for a stay of S 1173 under s 6 of the IAA, seeking arbitration.
5. Formal Citations
- Rals International Pte Ltd v Cassa di Risparmio di Parma e Piacenza SpA, , [2016] SGCA 53
- Rals International Pte Ltd v Cassa di Risparmio di Parma e Piacenza SpA, Civil Appeal No 75 of 2015, Civil Appeal No 75 of 2015
6. Timeline
| Date | Event |
|---|---|
| Promissory notes issued to Oltremare | |
| Oltremare offered to sell the Notes to Cariparma | |
| Oltremare notified Rals of assignment of credit to Cariparma | |
| Discount Contract entered into between Oltremare and Cariparma | |
| Oltremare declared no disputes with Rals | |
| Notes negotiated to Cariparma | |
| Certificate of acceptance signed by Rals and Oltremare | |
| Cariparma paid Oltremare for the Notes | |
| First of the Notes presented for payment and dishonoured | |
| Fourth of the Notes presented for payment and dishonoured | |
| S 1173 commenced by Cariparma against Rals | |
| Civil Appeal No 75 of 2015 | |
| Singapore International Arbitration Centre Rules 2016 introduced | |
| Hearing date | |
| Judgment date |
7. Legal Issues
- Stay of Court Proceedings
- Outcome: The court dismissed the appeal, refusing to stay the proceedings.
- Category: Procedural
- Scope of Arbitration Agreement
- Outcome: The court held that the arbitration agreement in the underlying contract did not extend to the promissory notes.
- Category: Substantive
- Assignability of Arbitration Agreements
- Outcome: The court did not make a conclusive decision on this issue.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Declaration that Cariparma is a holder in due course
9. Cause of Actions
- Enforcement of Promissory Notes
10. Practice Areas
- Commercial Litigation
- Arbitration
11. Industries
- Banking
- International Trade
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Cassa di Risparmio di Parma e Piacenza SpA v Rals International Pte Ltd | High Court | Yes | [2016] 1 SLR 79 | Singapore | The High Court decision being appealed against, regarding the stay of proceedings in favor of arbitration. |
| Piallo GmbH v Yafriro International Pte Ltd | High Court | Yes | [2014] 1 SLR 1028 | Singapore | Cited for the principle that parties intended disputes over notes to be subject to the arbitration agreement unless specifically excluded, but distinguished by the court. |
| Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals | Court of Appeal | Yes | [2016] 1 SLR 373 | Singapore | Cited for the prima facie standard of review when hearing a stay application under s 6 of the IAA. |
| Larsen Oil and Gas Pte Ltd v Petroprod Ltd | Court of Appeal | Yes | [2011] 3 SLR 414 | Singapore | Cited for the principle that arbitration clauses ought to be construed generously, but distinguished on the facts. |
| Lim Eng Hock Peter v Lin Jian Wei and another and another appeal | Court of Appeal | Yes | [2010] 4 SLR 331 | Singapore | Cited to clarify the meaning of 'decision' in O 57 r 9A(5) of the Rules of Court. |
| Ang Sin Hock v Khoo Eng Lim | Court of Appeal | Yes | [2010] 3 SLR 179 | Singapore | Cited regarding the reliance on a new point on appeal pursuant to O 57 r 13(4) of the ROC. |
| Wong Fook Heng v Amixco Asia Pte Ltd | Court of Appeal | Yes | [1992] 1 SLR(R) 654 | Singapore | Cited for the principle that a bill of exchange evidences a contract independent of any underlying contract and is to be treated as cash. |
| Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbH | House of Lords | Yes | [1977] 1 WLR 713 | England | Cited for the principle of cash equivalence and the commercial expectations of parties regarding bills of exchange. |
| Fiona Trust & Holding Corporation and others v Privalov and others | House of Lords | Yes | [2007] 2 All ER (Comm) 1053 | England | Cited for the principle that arbitration clauses should be generously construed. |
| ACD Tridon Inc v Tridon Australia Pty Ltd | Supreme Court of New South Wales | Yes | [2002] NSWSC 896 | Australia | Cited for the principle that the intention of the parties will steer courts away from any narrow construction of arbitration clauses. |
| International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another | Court of Appeal | Yes | [2014] 1 SLR 130 | Singapore | Cited regarding the question of whether there had to be a clear and express reference to an arbitration clause before it could apply. |
| Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd | Court of Appeal | Yes | [2008] 3 SLR(R) 1029 | Singapore | Cited regarding the task of contractual interpretation. |
| T W Thomas & Co, Limited v Portsea Steamship Company, Limited | House of Lords | Yes | [1912] AC 1 | England | Cited with regard to bills of lading. |
| CA Pacific Forex Limited v Lei Kuan Ieong | Hong Kong High Court | Yes | [1999] 1 HKLRD 462 | Hong Kong | Cited for the principle that it is difficult to see why any right-thinking merchant would choose to give up his rights in respect of bills of exchange. |
| Travis Coal Restructured Holdings LLC v Essar Global Fund Limited | England | Yes | (2014) 155 Con LR 61 | England | Cited regarding the availability of summary judgment procedures in international arbitration. |
| Shayler v Woolf | Court of Appeal | Yes | [1946] Ch 320 | England | Cited for the proposition that arbitration agreements are, as a class, capable of assignment. |
| Tito v Waddell (No 2) | Chancery Division | Yes | [1977] 1 Ch 106 | England | Cited for the principle of conditional benefit. |
| Schiffahrtsgesellschaft Detlev Von Appen GmbH v Voest Alpine Intertrading GmbH (The “Jay Bola”) | Court of Appeal | Yes | [1997] 2 Lloyd’s Rep 279 | England | Cited regarding the reason that an assignee of a contract containing an arbitration agreement may be bound by that agreement. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act (Cap 143A, 2002 Rev Ed) | Singapore |
| Bills of Exchange Act (Cap 23, 2004 Rev Ed) | Singapore |
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Promissory Notes
- Arbitration Agreement
- Stay of Proceedings
- International Arbitration Act
- Holder in Due Course
- Discount Contract
- Supply Agreement
- Bills of Exchange
- Cash Equivalence Principle
- Negotiable Instrument
15.2 Keywords
- arbitration
- promissory notes
- stay of proceedings
- international arbitration
- bills of exchange
- Singapore
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Arbitration | 90 |
| Promissory Notes | 90 |
| Bills of Exchange | 80 |
| International Arbitration Act | 70 |
| Contract Law | 70 |
| Banking Law | 60 |
| Assignment Law | 60 |
| Commercial Law | 50 |
| Breach of Contract | 40 |
16. Subjects
- Arbitration
- Bills of Exchange
- Contract Law
- Civil Procedure