Subject Matter

Arbitration and Anti-Suit Injunctions: Singapore Court Issues Landmark Decision on the Proper Law for Determining Subject Matter Arbitrability

Introduction

When a claim is filed in Courtroom in breach of an arbitration settlement, the defendant’s critical recourse is to seek out an anti-go well with injunction at the nationwide courts of the seat of the arbitration to restrain the counterparty. These kinds of apps are commonly intensely contested as the counterparty would invariably increase several defences as to why the court motion should move forward. If the claimant’s position is that the dispute is not arbitrable, how really should the Courtroom think about these types of an argument? Should the Courtroom take into account the issue of arbitrability underneath the regulation governing the arbitration settlement or the legislation of the seat of arbitration?

In Westbridge Ventures II Investment decision Holdings v Anupam Mittal [2021] SGHC 244 (“Westbridge“), the Singapore Large Courtroom was confronted with the correct concern above. The defendant in Westbridge commenced motion in the Indian courts for a claim of shareholder oppression and organization mismanagement. The plaintiff sought an anti-accommodate injunction in Singapore on the grounds that the dispute should to be arbitrated. The defendant sought to oppose the injunction on the ground that minority oppression is not arbitrable beneath the governing law of the arbitration arrangement, which he submitted to be the legislation of India.

The Singapore Superior Court held that subject make a difference arbitrability is identified by the law of the seat of arbitration at the pre-award stage. As the legislation of the seat in this circumstance was Singapore legislation, under which the difficulty of minority oppression is arbitrable, the Courtroom observed that the dispute was arbitrable and so granted an anti-go well with injunction towards the court docket proceedings.

The final decision is novel as this is the first time that the Singapore Courts or the Courts of the Commonwealth jurisdictions have decided this difficulty. In this Update, we emphasize the important factors of the Court’s judgment.

Quick Information

The plaintiff and the defendant have been shareholders in Men and women Interactive, a company registered in Mumbai, India. The get-togethers had entered into a Shareholders’ Agreement, which contained an arbitration clause furnishing that any dispute “relating to the administration of the Company or relating to any of the matters set out in this Agreement… shall be referred to arbitration“. Singapore was specified as the seat of arbitration.

The defendant initiated court proceedings in Mumbai versus the plaintiff, alleging, amid other statements, minority oppression and mismanagement. The plaintiff then utilized to the Singapore Courts looking for, inter alia, an anti-go well with injunction from the Mumbai proceedings in favour of arbitration, on the ground that the dispute fell in just the arbitration clause in the Shareholders’ Settlement.

The defendant sought to oppose the injunction, arguing that the law governing the arbitration arrangement was Indian regulation, and that disputes relating to oppression and mismanagement are not arbitrable less than Indian legislation.

The Singapore Court docket hence had to establish the arbitrability of the dispute. In undertaking so, it had to think about whether or not, at this pre-award stage, the applicable regulation for analyzing matter make any difference arbitrability was: (a) the legislation of the arbitration agreement (which the defendant argued to be Indian law) or (b) the legislation of the seat of arbitration (which the plaintiff recognized to be Singapore law).

Keeping of the Substantial Court

The Court held in favour of the plaintiff, granting the anti-fit injunction against the Mumbai proceedings.

Arbitrability of dispute

The Court docket held that it is the law of the seat that applies to figure out the difficulty of subject matter issue arbitrability at the pre-award stage, fairly than the legislation of the arbitration arrangement.

In coming to its final decision, the Court docket reasoned as follows:

  1. Issue of jurisdiction – The Courtroom reasoned that matter subject arbitrability, when raised at the pre-award stage right before the seat Court, is in essence an difficulty of whether or not the arbitral tribunal has jurisdiction to hear the dispute. As it is the legislation of the seat that restrictions get together autonomy (and thus the tribunal’s jurisdiction) by prescribing what form of disputes are arbitrable, it is the legislation of the seat that should apply to figure out matter matter arbitrability at the pre-award stage. 
  2. Consistency – Arbitrability is appropriate at the two the initial and terminal levels of an arbitration (i.e. the enforcement of the arbitral award). It is uncontroversial that, at the terminal stage, the seat Courtroom applies the legislation of the seat when considering an software to set aside an award on grounds of non-arbitrability of the dispute. Implementing the same legislation to the challenge of arbitrability at the pre-award phase would as a result prevent potential anomalies.
  3. Policy – Making use of the regulation of the seat at the pre-award phase would be much more dependable with the plan to market international professional arbitration. Singapore Courts have specified wide influence to worldwide arbitration agreements, and supplying result to international non-arbitrability policies would possibly undermine Singapore’s plan of supporting global commercial arbitration.
  4. Current authority – The Courtroom thought of the educational authority and present scenario regulation on the situation, and discovered that it weighed in favour of the law of the seat staying used.

Breach of arbitration arrangement

On the facts, the Court docket identified that all the disputes amongst the get-togethers brought right before the Mumbai Court fell in just the scope of the arbitration settlement, as they relevant to the administration of Individuals Interactive. Hence, in commencing the Mumbai proceedings, the defendant experienced breached the arbitration arrangement.

Grant of anti-accommodate injunction

Applying the applicable authorized concepts, the Court docket found that it was ideal to grant an anti-go well with injunction in this case.

The Courtroom rejected the defendant’s argument that he was not amenable to the jurisdiction of the Singapore Courts. Getting located that the Mumbai proceedings had been in breach of the arbitration agreement, the Court docket also uncovered that there was no solid rationale not to grant the anti-suit injunction.

Concluding Words and phrases

Anti-accommodate injunctions are important instruments for preventing a disputant from reneging on an arrangement to post a dispute to arbitration. The reasons and steering presented by the Court docket in the Westbridge final decision is therefore a welcome advancement. The Westbridge selection additional underscores the Singapore Court’s pro-arbitration plan, giving professional get-togethers wonderful self-confidence in deciding on Singapore as the seat of any arbitration that they may perhaps be concerned in.

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