1 : This is an appeal against the decision of the deputy registrar dismissing the plaintiff`s application for Mrs Schenk, Mr Neeman and Mr Van Gool to be appointed `arbitrators in the claim by the plaintiff against the defendant pursuant to an agreement dated 13 November 1995 made between the plaintiff and the defendant`. At the conclusion of the hearing on 28 July 1999 I dismissed the appeal. The plaintiff has given notice of appeal and these are my written grounds.

2 The application was made by originating summons. Order 7 r 3(1) provides that every originating summons must include a statement of the questions on which the plaintiff seeks the determination of the court or as the case may be a concise statement of the relief or remedy claimed in the proceedings. This originating summons states:

3 No question is then stated. Instead an order for the appointment of arbitrators is asked for. This is the relief or remedy claimed. Order 7 r 3(1) goes on to provide that where a statement of the relief or remedy claimed is included there must be sufficient particulars to identify the cause or causes of action. This originating summons has not given such particulars. Nothing turns on these irregularities but I have encountered them very often and I think it is right that attention is drawn to the requirements of O 7 r 3(1).

4 The agreement dated 13 November 1995

5 

6 In this agreement between the parties the plaintiff is referred to as `CAT` and the defendant as `CHS` and I shall refer to them as such. I shall also refer to this agreement as the service agreement. The service agreement provides by way of a recital:

7 `CAD` probably means `cash against documents` but no attempt has been made by either party to say what it stands for. LGC is not a party to the service agreement although it is provided that both CAT and LGC agree to accept the warehouse management services provided by CHS.

8 `Warehouse Management Services` is not defined in the service agreement but in cl 1 these definitions are provided:

9 I think `Warehouse Management Services` is a reference to the services provided or `undertaken` by CHS as stated in the definition of `Warehouse Management`.

10 Clause 3 of the service agreement provides:

11 Clause 7 of the service agreement provides:

12 It is clear that CAT has sold to LGC bulk commodities of Latin American and USA origin which will be stored in warehouses provided by LGC. These warehouses will be leased to CHS but all expenses and charges will be for the account of LGC. In effect the warehouses will be provided by LGC at no cost to CHS `as these cost (sic) are for the account of LGC under the sales or purchase contracts entered between CAT and LGC`. See cl 3.3.

13 It is also clear that although the goods will be in LGC`s warehouses LGC will only receive the documents and be entitled to the goods upon payment to or as directed by CAT. CAT will then issue written instructions to CHS under cl 7.4. The written instructions will name the party to whom the goods are to be released and under cl 7.7 CHS will issue a delivery order for the goods to be released. LGC or the party named in CAT`s written instructions will in all probability retain one set of the delivery order signed on behalf of CHS as evidence of its right to take delivery of the goods from the warehouse and CHS will receive another set or a copy endorsed by LGC or the party named as evidence of the discharge of its duty to release the goods under the service agreement.

14 Clause 8 of the service agreement provides:

15 There are two sets of conditions known as the CHS warehousing conditions and the CHS forwarding conditions. The CHS warehousing conditions (`warehousing conditions`) are conditions printed on a document separate from the agreement of 13 November 1995. The CHS forwarding conditions are not relevant and have not been referred to in these proceedings.

16 Clause 38 of the warehousing conditions provides:

17 Provisions are made for the parties to appoint arbitrators. Clause 38 then provides:

18 `The Company` is a reference to CHS and `the Customer` is defined in the warehousing conditions to include a person with whom CHS has agreed to store or deliver goods and a person to whom CHS has issued a delivery order. `The Customer` will include CAT and LGC if they are bound by the warehousing conditions.

19 The claim

20 

21 LGC has defaulted in its obligations and CAT has recalled the goods stored at the warehouses in Malaysia. It is alleged that there has been a substantial shortfall in the goods and also that the goods have deteriorated. CAT has given notice of its claim `including but not limited to any and all losses and damages suffered on and in connection with the commodities which were handed to [CHS] for storage in the various ports in Malaysia`. Clause 38 of the warehousing conditions has been referred to and a claim to arbitration has been made. CHS has declined arbitration and has taken no step to appoint arbitrators.

22 CAT`s case is that cl 8.3 of the service agreement incorporates by reference the warehousing conditions including cl 38 which provides for arbitration. The service agreement itself contains no agreement to refer any disputes to arbitration and it is not disputed that if cl 38 of the warehousing conditions is not incorporated or is otherwise inapplicable then CAT`s application must fail. It is also not disputed that in cl 38 of the warehousing conditions the reference to arbitration under the Arbitration Act includes a reference to arbitration under the International Arbitration Act (see s 26(3) of the International Arbitration Act) and that the arbitration under cl 38 would be an international arbitration on the ground that the place or places where a substantial part of the obligations under the service agreement are or ought to have been performed are situated outside Singapore (see s 5(2)(b)(ii)).

23 Incorporation of cl 38 by reference

24 

25 In Star-Trans Far East Pte Ltd v Norske-Tech Ltd & Ors [1996] 2 SLR 409 Karthigesu JA (delivering the judgment of the Court of Appeal) said at p 416:

26 The cases referred to were concerned with arbitration clauses in charterparties in relation to disputes between the parties to the contracts evidenced by or contained in the bills of lading issued pursuant to the charterparties. Karthigesu JA then referred to The Varenna; Skips A/S Nordheim & Ors v Syrian Petroleum Co Ltd [1984] QB 599[1983] 2 Lloyd`s Rep 592 where it was held that general incorporating words had to be construed restrictively to incorporate only conditions and exceptions as were appropriate to the carriage and delivery of goods and that as a matter of construction, the words would not extend to a collateral term such as an arbitration clause even if that clause was expressed in terms which were capable of referring to the bill of lading.

27 Later at p 417 His Honour said:

28 The reference to s 2 of the Act in para (b) above was a reference to s 2 of the Singapore Arbitration Act and the omission of `not` was I believe a printing error. See Aughton `s case at p 92 where Sir John Megaw said:

29 Star-Trans was concerned with an arbitration clause in a contract to organize ocean carriage of plant and equipment from various parts of the world to the construction site of a proposed pulp and paper mill in Indonesia in relation to disputes between the parties to a performance guarantee given pursuant to the main contract and with respect I think the Court of Appeal adopted the general policy in respect of which there is this statement in Merkin, Arbitration Law [1991] at para 4.24:

30 Star-Trans was not a bill of lading case and the arbitration clause was contained in another contract. In the case before me the arbitration clause is not contained in another contract but in the warehousing conditions but I think the principle is equally applicable.

31 Ms Ang referred to Mustill & Boyd, The Law and Practice of Commercial Arbitration in England (2nd Ed, 1989) at p 106 which has this statement:

32 and to 2 Halsbury`s Laws of Singapore at para 20.015 which has this statement:

33 I think it is a question of construction in each case. There must be a clear intention to incorporate an arbitration clause. If the words of incorporation are specific that intention may well have been clearly expressed.

34 I turn now to the service agreement. The obligations of CHS include storage of the goods and the delivery or release of these goods to LGC. See cl 3.1. CHS undertakes to exercise due care and skill. See cl 8.1. The goods are to be handled and stored in accordance with the `rules of good warehousing`. See cl 1 and the definition of warehouse management. CHS is to release the goods to the party named by CAT in its written instructions. See cl 7.7. If CAT recalls the goods or gives written directions for the goods to be released to itself (or to any named party) as it has done and CHS cannot deliver either in whole or in part or if any of the goods have suffered deterioration for want of due care or skill or for breach of the rules of good warehousing or otherwise for breach of any of the express or implied terms of the service agreement then it seems to me that CHS would be liable to CAT under the service agreement.

35 Ms Ang submitted that a liability to the extent not specified by the service agreement cannot extend to arbitration. I think it may be helpful to re-state cl 8.3 leaving out the words which are not relevant:

36 I have not heard Mr Pereira`s full submission on this but it is a substantial and compelling point.

37 Liability under the service agreement may extend to areas covered or causes of action and it may also extend to the quantum of damages payable. I have not found any provision as to the quantum of damages either in the service agreement or the warehousing conditions. However cl 8.2 of the service agreement excludes liability for loss or damage or deterioration arising out of a certain number of causes. Clause 20 of the warehousing conditions excludes liability for a wider range of causes.

38 It is possible to say that the service agreement limits liability to a certain extent but the warehousing conditions limit liability to a greater extent so that the further limitation of liability is the extent of liability not specified by the service agreement. The difficulty in the way of such a construction is that I can see no warrant for coming to the conclusion that the express term is to be struck down by a side wind bringing in another term in its wake.

39 Another construction is that where the extent of liability is not specified by the service agreement then the liability will be `subjected to` the warehousing conditions. This is the construction I prefer of the two. Looked at in this way I think what cl 8.3 means is that where the extent of liability of CHS for the stated class of claims is not specified by the service agreement then such liability is `subjected to` the warehousing conditions.

40 A third way of construing cl 8.3 is to read `the extent` as qualifying the warehousing conditions so that the concluding words will have the effect of subjecting the liability of CHS to such only of the clauses in the warehousing conditions as are not specified by the service agreement. Such clauses in the warehousing conditions would include the arbitration clause but the question still to be answered is whether the liability of CHS is subjected to the arbitration clause.

41 In Thomas & Co Ltd v Portsea SS Co Ltd [1912] AC 1 the bill of lading contained this clause:

42 The charterparty contained an arbitration clause. Lord Loreburn LC said at p 6:

43 Lord Gorell said at p 8:

44 Mr Pereira submitted that liability must include the method of adjudication in respect of the rights of the parties. His argument is that liability can only be established when it has been adjudicated upon so that cl 8.3 means that the liability of CHS including the method of adjudication upon the same shall be `subjected to` the warehousing conditions. He referred to art 7(2) of the Model Law which provides that the reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement but this does not take the argument any further as the proviso to this part of art 7(2) is that the reference is such as to make the arbitration clause part of the contract.

45 There may well be an exceptional case where `liability` may have this extended meaning. If the relevant clause goes something like this:

46 then I should have no doubt that `liability` does in this context include the means of resolving disputes as to liability. See The Nerarno; Daval Aciers D`Usinor et de Sacilor & Ors v Armare Srl [1996] 1 Lloyd`s Rep 1 where the words of incorporation specifically referred to the arbitration clause. It is the specific reference to the arbitration clause which points to the intention of the parties notwithstanding the use of the phrase `the liability of the parties`. However what cl 8.3 says is quite different.

47 The liability of CHS is what CHS is liable for. The arbitration clause in the warehousing conditions contains an agreement between the parties bound by it to refer their disputes to arbitration. It provides a means of resolving their disputes. It is no part of the liability of any one of the parties. I do not think `liability` includes the method of adjudication or the way the parties have agreed that disputes between them should be settled. In the context of cl 8.3 of the service agreement it does not.

48 Ms Ang submitted that this clause is not sufficiently clear or specific to incorporate the arbitration clause. I agree. It is the liability to the extent not specified by the service agreement that is `subjected to` the warehousing conditions. Whether it bears the `further limitation` meaning or the construction I have expressed a preference for it seems quite clear that only the warehousing conditions relevant to the extent of liability will apply. Such clauses in the warehousing conditions as are not specified by the service agreement to which the liability of CHS is subjected to do not include the arbitration clause. The arbitration clause does not apply to the service agreement or to any disputes between the parties.

49 Ms Ang also submitted that cl 8.3 only operates one way. It applies only to the liability of CHS but not to the liability of CAT. Apart from its liability for fees and other charges CAT is also liable to indemnify CHS in respect of a range of claims. See cll 8.4 and 9.1. CHS cannot refer to arbitration any dispute as to such claims. If cl 8.3 incorporates the arbitration clause in the warehousing conditions and a claim made by CAT is referred to arbitration CHS may not be able to raise a counterclaim in the arbitration. Ms Ang`s argument is that an arbitration clause must be there for the benefit of both parties and that in the context it would not be appropriate to construe cl 8.3 as incorporating the arbitration clause.

50 I do not think that the `one way operation` argument is relevant to the construction of cl 8.3 but it may well be a matter to take into account in the exercise of a discretionary power. That is not before me. The question before me is whether the arbitration clause contained in the warehousing conditions has been incorporated in the service agreement by reference. The arbitration clause itself has not been referred to at all. The warehousing conditions have been referred to but only in regard to the liability of CHS and to the extent not specified in the service agreement.

51 In my judgment cl 8.3 of the service agreement does not incorporate the arbitration clause in the warehousing conditions. The words relied on are not sufficiently clear or specific for this purpose. I agree with the deputy registrar and would dismiss this appeal.

52 Outcome:

53 Appeal dismissed.