The High Court has ruled that ongoing arbitration proceedings between Aljunied-Hougang Town Council (AHTC) and its former managing agent firm be suspended pending a separate lawsuit against members of AHTC.

The case was heard in chambers by Justice Kannan Ramesh yesterday. When approached outside the courtroom, lawyers for both sides declined to comment, citing the confidentiality of arbitration proceedings. However, The Straits Times understands the court ruled in favour of AHTC that arbitration proceedings be suspended.

AHTC, acting on the direction of an independent panel, had initiated legal action in July seeking a court order for the arbitration action against it to be put on hold.

The arbitration is over payments that FM Solutions and Services (FMSS) is claiming from AHTC for services it provided under two contracts.The parties began mediation talks in October 2015 and, when mediation failed, went ahead with arbitration proceedings.

The lawsuit brought against AHTC's own town councillors - Workers' Party (WP) chairman Sylvia Lim, WP chief Low Thia Khiang and WP assistant secretary-general Pritam Singh - allege that all payments made to FMSS are void, because town councillors Mr Low and Ms Lim had acted in breach of their fiduciary duties in signing the contracts. Also named in that suit are FMSS; the firm's owner, Ms How Weng Fan; and two other town councillors, Mr Chua Zhi Hon and Mr Kenneth Foo.

AHTC wants the town councillors to account for about $33 million paid to FMSS and a related service provider between July 2011 and July 2015, and to repay any money paid out wrongfully.