Many commercial contracts contain an arbitration clause: a promise that if a dispute arises, the parties will resolve it by private arbitration rather than in open court. But promises are sometimes broken. When one party sues in the Singapore courts despite having agreed to arbitrate, the other can ask the court to stop, or stay, those proceedings and send the parties to arbitration. For companies that deliberately chose arbitration for its confidentiality and cross-border enforceability, knowing how to enforce that choice is essential.
This guide explains what a stay of court proceedings in favour of arbitration is, the statutory basis, who can apply, the step-by-step process, the documents and timeline involved, and what happens after the order. It is written for company directors and business owners, not lawyers, and is general information only. For any actual dispute, engage a Singapore Advocate and Solicitor.
1. What Is a Stay in Favour of Arbitration?
A stay in favour of arbitration is a court order that halts litigation which has been started in breach of an arbitration agreement. Rather than deciding the dispute itself, the court steps back so that the agreed forum, the arbitral tribunal, can decide it. The stay upholds the parties’ bargain: if you agreed to arbitrate, you should arbitrate. It is one of the main ways Singapore, as a leading arbitration hub, gives effect to arbitration agreements.
2. The Legal Basis
The power to stay depends on whether the arbitration is international or domestic. For international arbitration, Section 6 of the International Arbitration Act 1994 provides for a mandatory stay: if there is a valid arbitration agreement, the court must stay the court proceedings, subject only to limited exceptions. For domestic arbitration, Section 6 of the Arbitration Act 2001 gives the court a discretionary power to stay. The practical difference is significant: under the IAA, a stay is the default outcome once the threshold is met.
The leading authority is Tomolugen Holdings Ltd v Silica Investors Ltd, in which the Court of Appeal held that a court hearing a stay application under the IAA should grant a stay if the applicant shows a prima facie case that there is a valid arbitration agreement between the parties and that the dispute falls within it, and that the agreement is not null, void, inoperative, or incapable of being performed. The same case also recognised the court’s power to order a case management stay of related matters that fall outside the arbitration agreement.
3. Who Can Apply?
The application is made by a party to the arbitration agreement who has been sued in court over a matter that the parties agreed to arbitrate. In practice this is the defendant. Timing is critical: the applicant must apply after entering an appearance but before delivering any pleading or taking any other step in the court proceedings. Taking a step in the litigation, such as filing a defence on the merits, can be treated as a waiver of the right to arbitrate and may defeat the stay application.
4. The Step-by-Step Process
A typical stay application proceeds as follows. First, on being served with the court claim, the company enters an appearance to avoid a default judgment, taking care not to take any step in the litigation. Second, it promptly files an application to stay the proceedings, supported by an affidavit exhibiting the contract and the arbitration clause and explaining that the dispute falls within it. Third, at the hearing, the court applies the prima facie test: it does not conduct a full trial of whether the arbitration agreement is valid, but asks whether, on the face of it, the requirements are met. Fourth, if satisfied, the court grants the stay, sometimes on conditions, and the parties proceed to arbitration. If the court refuses, the litigation continues.
5. Documents Required
| Document | Purpose |
|---|---|
| Memorandum of appearance | Enters the company’s appearance without submitting to the merits |
| Application to stay proceedings | Asks the court to halt the litigation |
| Supporting affidavit | Exhibits the contract and arbitration clause and sets out the basis for the stay |
| The contract and arbitration agreement | Proves the parties agreed to arbitrate |
| Written submissions | Sets out the legal argument for the stay |
6. Timeline and Costs
| Stage | Indicative timing |
|---|---|
| Enter appearance after service | Within the deadline stated in the originating process |
| File the stay application | Promptly, and before taking any step in the proceedings |
| Hearing of the application | Typically a few weeks to a few months later |
| Commencing arbitration if stay granted | Per the arbitration agreement and institutional rules |
Costs depend on the complexity of the arguments and whether the validity or scope of the arbitration agreement is contested. They generally comprise court filing fees, affidavit preparation, and legal fees for the hearing. The costs of the stay application are separate from the costs of the arbitration itself.
7. What Happens After the Order
If the stay is granted, the court proceedings are halted and the dispute moves to arbitration, where a tribunal will hear and decide it. The court retains a residual role, for example in granting interim measures in support of the arbitration and, later, in the recognition and enforcement of the arbitral award. Where only part of a dispute falls within the arbitration agreement, the court may order a case management stay of the remaining court proceedings so that everything is resolved coherently. If the stay is refused, the litigation resumes, and a company that fails to defend risks a default judgment, which we discuss in our guide to setting aside a default judgment. Once an award or judgment is obtained, attention turns to recovery, covered in our guides to enforcing a court judgment against a Singapore company and enforcing a foreign judgment in Singapore.
8. Frequently Asked Questions
Is a stay automatic if there is an arbitration clause?
For international arbitration under Section 6 of the IAA, a stay is mandatory once the prima facie threshold is met. For domestic arbitration, the court has a discretion.
What if I have already filed a defence?
Filing a defence on the merits or otherwise taking a step in the litigation can waive the right to a stay. Apply before taking any such step.
Does the court decide whether the arbitration agreement is valid?
At the stay stage the court applies a prima facie test rather than a full trial. The tribunal itself can rule on its own jurisdiction.
Can I still get urgent interim relief?
Yes. The court can grant interim measures, such as injunctions, in support of an arbitration even after a stay is granted.
Need Help With This Matter?
If your company is facing this situation, Raffles Corporate Services can assist with the groundwork, ACRA filings, compliance documentation, and coordinating with experienced Singapore law firms. For matters requiring court proceedings, we work with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice.
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This article is for general information only and does not constitute legal advice. For advice specific to your situation, please consult a qualified Singapore Advocate and Solicitor.
— The Editorial Team, Raffles Corporate Services