Star Engineering v Pollisum Engineering: Stay of Proceedings in Favor of Arbitration

Star Engineering Pte Ltd appealed against the High Court's decision to grant a stay of proceedings in favor of arbitration in a dispute with Pollisum Engineering Pte Ltd and Great Eastern General Insurance Limited. The dispute arose from a construction project where Star Engineering was engaged as a contractor and provided a performance bond issued by Great Eastern. Pollisum Engineering made a demand for payment under the bond, leading Star Engineering to seek a restraining order. The High Court granted a stay of proceedings in favor of arbitration, and the Court of Appeal dismissed Star Engineering's appeal, upholding the stay for arbitration.

1. Case Overview

1.1 Court

Court of Appeal of the republic of singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding a stay of court proceedings in favor of arbitration. The court dismissed the appeal, upholding the stay for arbitration.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Star Engineering Pte LtdAppellant, ApplicantCorporationAppeal DismissedLost
Pollisum Engineering Pte LtdRespondentCorporationStay of Proceedings GrantedWon
Great Eastern General Insurance LimitedRespondentCorporationCase Management Stay GrantedNeutral

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeYes
Steven ChongJustice of the Court of AppealNo

4. Counsels

Counsel NameOrganization
Wong Hin Pkin WendellDrew & Napier LLC
Tay Eu-YenDrew & Napier LLC
Lee Pei Hua RachelDrew & Napier LLC
Hsu Bi-Wei Timothy HomerDrew & Napier LLC
Isaac Tito ShaneTito Isaac & Co LLP
Chong Yi MeiTito Isaac & Co LLP
Tan YouliangTito Isaac & Co LLP
Yeo Cai Yun KimberlyTito Isaac & Co LLP
Julia Emma DcruzRamdas & Wong
Li Shunhui DanielRamdas & Wong

4. Facts

  1. Star Engineering was engaged by Pollisum Engineering for a construction project.
  2. Star Engineering provided an unconditional on-demand performance bond issued by Great Eastern.
  3. Disputes arose between Star Engineering and Pollisum Engineering.
  4. Pollisum Engineering made a demand for payment under the performance bond.
  5. Star Engineering commenced OA 1135 seeking to restrain Pollisum Engineering from receiving payment.
  6. Pollisum Engineering sought a stay of OA 1135 in favor of arbitration.
  7. The High Court granted a stay of OA 1135, which Star Engineering appealed.

5. Formal Citations

  1. Star Engineering Pte Ltd v Pollisum Engineering Pte Ltd and another, Civil Appeal No 9 of 2024, [2024] SGCA 30

6. Timeline

DateEvent
Pollisum Engineering engaged Star Engineering for a construction project.
Great Eastern issued Performance Bond No 2019-A0688351-GPB.
Pollisum Engineering gave notice to terminate the Contract.
Pollisum Engineering made a demand for payment under the PB.
Star Engineering filed OA 1135.
Star Engineering filed SUM 3408.
Pollisum Engineering filed SUM 3431.
Chan Seng Onn SJ allowed SUM 3408.
Pollisum Engineering appealed against the decision of the learned AR in SUM 3431, by RA 4.
The High Court judge allowed RA 4 and granted a stay of OA 1135.
Court of Appeal heard the appeal.
Judgment delivered by Sundaresh Menon CJ.

7. Legal Issues

  1. Stay of Court Proceedings in Favor of Arbitration
    • Outcome: The court dismissed the appeal and upheld the stay of proceedings in favor of arbitration.
    • Category: Procedural
    • Sub-Issues:
      • Scope of arbitration agreement
      • Sufficient reason to stay proceedings
      • Readiness and willingness to arbitrate
      • Risk of inconsistent findings
  2. Interference with Payment under an Unconditional Performance Bond
    • Outcome: The court clarified the principles governing interference with payment under an unconditional performance bond, emphasizing the limited grounds for such interference.
    • Category: Substantive
    • Sub-Issues:
      • Fraud
      • Unconscionability

8. Remedies Sought

  1. Restraining Order
  2. Injunction

9. Cause of Actions

  • Breach of Contract
  • Restraining Order

10. Practice Areas

  • Commercial Litigation
  • Arbitration
  • Construction Law
  • Performance Bonds

11. Industries

  • Construction
  • Insurance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Kuvera Resources Pte Ltd v JPMorgan Chase Bank, NASingapore Court of AppealYes[2023] 2 SLR 389SingaporeCited regarding payment under a confirmed letter of credit and the independence of contracts in a compound letter of credit transaction.
Chian Teck Realty Pte Ltd v SDK Consortium and anotherSingapore Court of AppealYes[2024] 3 SLR 1031SingaporeCited for the principle that an on-demand bond is 'as good as cash' and provides certainty of payment.
Shanghai Electric Group Co Ltd v PT Merak Energi Indonesia and anotherSingapore Court of AppealYes[2010] 2 SLR 329SingaporeCited for the principle that an on-demand bond is intended to provide certainty of payment.
Master Marine AS v Labroy Offshore Ltd and othersSingapore Court of AppealYes[2012] 3 SLR 125SingaporeCited for the nature of an on-demand performance bond and the independence of the bank's obligation to pay from the underlying contract.
Arab Banking Corp (B.S.C.) v Boustead Singapore LtdSingapore Court of AppealYes[2016] 3 SLR 557SingaporeCited for the principle that the court will only grant an injunction interfering with the obligation of the financial institution to honour the demand where the demand is made fraudulently.
GHL Pte Ltd v Unitrack Building Construction Pte Ltd and anotherSingapore High CourtYes[1999] 3 SLR(R) 44SingaporeCited for the principle that the court will grant an injunction where it would be unconscionable for the party to make a demand under the performance bond.
Bocotra Construction Pte Ltd and others v Attorney-GeneralSingapore Court of AppealYes[1995] 2 SLR(R) 262SingaporeCited for the principle that the burden of proof falls on the party seeking to restrain payment to establish a clear case of fraud or unconscionability.
Bintai Kindenko Pte Ltd v Samsung C&T Corp and anotherSingapore Court of AppealYes[2019] 2 SLR 295SingaporeCited for the requirements to make out the fraud exception in relation to performance bonds.
BS Mount Sophia Pte Ltd v Join-Aim Pte LtdSingapore High CourtYes[2012] 3 SLR 352SingaporeCited for the standard of proof required for obtaining a temporary restraining order that interferes with the performance of rights and obligations arising under an unconditional bond.
Potton Homes Ltd v Coleman Contractors LtdEngland and Wales Court of Appeal (Civil Division)YesPotton Homes Ltd v Coleman Contractors Ltd (1984) 28 Build LR 19England and WalesDiscussed regarding the distinction between restraining a bank from making payment and restraining the beneficiary from receiving payment under a bond.
Royal Design Studio Pte Ltd v Chang Development Pte LtdSingapore High CourtYes[1990] 2 SLR(R) 520SingaporeDiscussed regarding the distinction between restraining a bank from making payment and restraining the beneficiary from receiving payment under a bond.
Meritz Fire and Marine Insurance Co Ltd v Jan de Nul NVEngland and Wales High Court (Commercial Court)YesMeritz Fire and Marine Insurance Co Ltd v Jan de Nul NV [2011] 2 Lloyd’s Rep 379England and WalesCited regarding the lack of requirement for assertions in documents to be correct in law when payment is to be made against documents.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Arbitration Act 2001Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Performance Bond
  • Unconditional On-Demand Bond
  • Arbitration
  • Stay of Proceedings
  • Fraud
  • REDAS Conditions
  • Payment Demand

15.2 Keywords

  • arbitration
  • construction
  • performance bond
  • stay of proceedings
  • Singapore
  • contract law

17. Areas of Law

Area NameRelevance Score
Performance Bond90
Arbitration75
Contractual terms50
Breach of Contract40
Building and Construction Contracts35
Jurisdiction30

16. Subjects

  • Arbitration
  • Construction Dispute
  • Contract Law
  • Civil Procedure