The law applicable to arbitrability - the Singaporean approach

Over the last twenty years we have witnessed the unprecedented and welcome growth of international arbitration in Asia. Next to the already very well-established Hong Kong (and its Hong Kong International Arbitration Centre, HKIAC) and in addition to the traditional arbitral might of China, courtesy of China International Economic and Trade Arbitration Commission (CIETAC), many other arbitral institutions, and arbitral seats either emerged or started to grow. Such institutions include the Beijing International Arbitration Commission (BAC/BIAC), the Shenzhen and Shanghai Arbitration Commissions and institutions in Thailand, Indonesia, Vietnam and other countries across the region. However, no other institution has had as much growth as the Singapore International Arbitration Centre (SIAC) and no other seat has attracted as much attention and praise as Singapore.

The growth of Singapore has been empirically evidenced over the last seventeen years¹ and is also well documented in the number of cases of SIAC.

The undisputed popularity of Singapore is attributed to its geographic location, the excellent transport links, the modern hearing facilities, and its political neutrality. Most importantly, it also has a remarkable legal infrastructure: supporting and efficient courts, including an International Commercial Court, with highly experienced judiciary. Singapore is an UNCITRAL Model Law jurisdiction, it has a very strong record for the enforcement of arbitration agreement by local courts, a robust approach to the judicial review of awards issued locally and general support provided by the courts to arbitral tribunals and disputing parties. 

While Singapore, as a common law jurisdiction as it is, was often inspired by developments in England and Wales, in certain matters, such as arbitrability, it has started developing its own significant jurisprudence.

Arbitrability is one of the issues where the contractual and jurisdictional natures of arbitration collide head on.² It addresses the simple question of what types of issues can and cannot be submitted to arbitration and whether specific classes of disputes are exempt from arbitration proceedings. Hence, arbitrability is an exemption to party autonomy and as such may only be justified in exceptional circumstances with the consequence that arbitration agreements covering non-arbitrable matters will generally be considered invalid and will not establish the jurisdiction of the arbitrators and leave the award unenforceable.³ The law governing the arbitrability is significant: it may be a matter of national law or international law and it could be either the law of the seat of arbitration (lex loci arbitri) or the law governing the arbitration agreement and the jurisdiction of the tribunal. The stage at which the question is also raised (eg pre-award, jurisdictional stage or post-award) may also be relevant.⁴ The 1958 New York Convention links the issues of the arbitrability with the law of the enforcing court at enforcement stage (Article V(2)(a)), while it appears to take a more international approach at the jurisdictional stage (Article II(1) and II(3)). 

In the insight that follows, Prakash Pillai and Junxiang Koh discuss in a concise and lucid fashion a significant recent decision of Singapore Court of Appeal on the question of arbitrability: Anupam Mittal v Westbridge Ventures II Investment Holdings [2023] SGCA 1. The judgment discusses two issues of substantive arbitrability but also addresses the conflict of law issues as to the law applicable to arbitrability. It also impliedly highlights the significance of Singapore as a seat and the important role of local courts. 

Introduction

Subject matter arbitrability concerns whether a dispute can be resolved by arbitration. Generally in this regard, where parties have agreed to submit their dispute to arbitration, the dispute may be determined by arbitration unless it is contrary to public policy to do so. 

Multiple skirmishes have been fought in the Singapore Courts over subject matter arbitrability, with (arguably) a landing reached on whether the more common types of dispute e.g., shareholder oppression and insolvency clawback claims are arbitrable under Singapore law. Yet, new issues continue to crop up, the latest being how to determine the law applicable to subject matter arbitrability. 

This article examines the Singapore Courts’ approach towards this issue, following the recent case of Anupam Mittal v Westbridge Ventures II Investment Holdings [2023] SGCA 1. 

Subject-matter arbitrability

The cornerstone of arbitration is the parties’ consent. Parties agree to submit their disputes to a tribunal for resolution. At the same time however, not everything is left up to the parties to decide. The State retains a role. Certain types of dispute cannot be resolved through arbitration, but only through the court system, e.g., criminal matters. In those circumstances, the subject matter of the dispute is said to not be “arbitrable”. 

Under the arbitration laws of most States, including Singapore, if the subject matter of the dispute is contrary to the State’s public policy, the dispute is not arbitrable. But here, the issues can get quite complex. It is (hopefully) uncontroversial that a dispute involving child-trafficking is contrary to public policy and therefore not arbitrable, but what about disputes that sit at the intersection of statute and contract? Two often recurring examples are shareholder oppression⁵ and insolvency clawback claims,⁶ which are governed by statute but at the same time, tend to overlap with private contracts such as shareholder agreements. 

In Singapore at least, the question of whether shareholder oppression and insolvency clawback claims are arbitrable has been resolved. The Singapore Court of Appeal has definitively held that under Singapore law, (a) shareholder oppression claims are generally arbitrable (ref. Tomolugen Holdings Ltd and anor v Silica Investors Ltd and or appeals [2016] 1 SLR 373);⁷ and (b) insolvency clawback claims are generally not arbitrable (ref. Larsen Oil and Gas Pte Ltd v Petroprod Ltd [2011] 3 SLR 414).⁸ 

However, the position is not consistent across jurisdictions. In England for example, the English High Court⁹ has expressly declined to follow Larsen, holding that avoidance claims brought by a receiver were arbitrable under English law. In India, minority oppression claims are not arbitrable and must be resolved by the National Companies Law Tribunal, a specialist court. 

In the above context therefore, the law governing subject matter arbitrability becomes of importance. This was amply demonstrated in the case of Anupam Mittal v Westbridge Ventures II Investment Holdings [2023] SGCA 1.

Anupam Mittal v Westbridge Ventures II Investment Holdings 

In this case, a dispute arose between shareholders of a company incorporated in India (the “Company”), specifically, between Anupam Mittal (“AM”), the flamboyant founder of an Indian marriage website, Shaadi.com, and Westbridge Ventures (“Westbridge”). The Shareholders’ Agreement (“SHA”) was expressly governed by Indian law and had an arbitration clause providing for arbitration seated in Singapore. In this regard, AM filed a petition in the National Company Law Tribunal, Mumbai (“NCLT”) against inter alia the Company and Westbridge, seeking remedies for shareholders oppression. Subsequently, Westridge sought an urgent ex parte interim anti-suit injunction (“ASI”) from the Singapore Courts, preventing AM from pursuing the NCLT petition in breach of the arbitration agreement in the SHA. 

Decision of the Singapore Court of Appeal – In favour of arbitration

Before the Singapore Courts, a permanent ASI against AM was granted by the Singapore High Court, which was subsequently upheld by the Singapore Court of Appeal. In this regard, it was common ground that under Indian law, oppression disputes were non-arbitrable, whereas under Singapore law, such disputes were arbitrable. 

The Singapore Court of Appeal’s key findings were as follows.

First, the question of subject-matter arbitrability at a pre-award stage should be determined by applying a “composite” approach. In the first instance, arbitrability of a dispute should be determined by the law governing the arbitration agreement. If the governing law of the arbitration agreement provided that the subject matter of the dispute cannot be arbitrated, the Singapore court would not allow the arbitration to proceed. Further, where a dispute might be arbitrable under the law of the arbitration agreement but Singapore law (as the law of the seat) considers the dispute to be non-arbitrable, then arbitration would also not be able to proceed. 

Second, although the SHA was governed by Indian law, it was Singapore law that governed the arbitration agreement. In this regard, under Singapore law, if parties had not expressly provided for the law of the arbitration agreement, the governing law of the contract would be a “strong indicator” on the law of the arbitration agreement. 

However, that initial presumption could be, as was the case here, displaced by the facts. In this regard, whilst the SHA was governed by Indian law, the Court of Appeal found that in entering into the SHA, parties would have contemplated the usual gamut of shareholders’ disputes, including claims of oppression. The broad nature of the arbitration clause also showed parties’ desire for all their disputes to be resolved in the same forum i.e., by arbitration and, given the non-arbitrability of oppression claims under Indian law, it would be inconsistent for parties to have intended Indian law to govern the arbitration agreement. Instead, Singapore law was found to apply given that Singapore law had the closest and most real connection to the arbitration agreement. In this regard, the Court of Appeal considered its earlier decision in BNA v BNB [2020] 1 SLR 456, where it had held that parties impliedly chose PRC law as the proper law of the arbitration agreement even though the arbitration agreement would have been invalid under PRC law, and distinguished that case on the basis that “the parties’ desire for all disputes to be resolved by arbitration” was “much more strongly” demonstrated on the facts in the Anupam Mittal dispute. 

Flowing from the findings above, the Court of Appeal held that institution of the NCLT proceedings was in breach of the arbitration agreement, and upheld the permanent ASI. 

As a coda to the above, AM had argued before the Court of Appeal that allowing the arbitration to continue in Singapore was effectively pointless, because any arbitration award would be unenforceable in India, for it would breach India’s public policy. The Court dismissed the argument, essentially holding that enforceability in India was not a relevant consideration for the purposes of determining the question of arbitrability in Singapore. 

Decisions of the Indian Court and tribunal – Restrained the arbitration proceedings

However, the dispute between the parties did not end with the Singapore Court of Appeal’s decision.

Despite the grant of the permanent ASI by the Singapore Courts, AM pursued proceedings in the Mumbai High Court for an injunction restraining Westbridge from enforcing the ASI, which it had commenced shortly after Westbridge sought the ASI. On 11 September 2023, the Bombay High Court granted injunctions restraining Westbridge from relying on the ASI (ref. Anupam Mittal vs People Interactive (India) Pvt. Ltd. and ors in Suit No. 95 of 2021). 

The Mumbai High Court found that the non-arbitrability of oppression disputes under Indian law was a significant factor, and observed that where the subject matter of the dispute was non-arbitrable, the Indian Courts had no discretion to enforce any such arbitration award. Therefore, if AM were forced to only seek redress for his grievances by way of arbitration, he would be effectively rendered “remediless”.

Shortly thereafter, the NCLT issued an interim injunction on 15 September 2023 restraining the final hearing of the arbitration in Singapore (ref. In the matter of Anupam Mittal vs People Interactive (India) Pvt. Ltd. and ors in CP/92(MB) 2021). 

Concluding thoughts

The Anupam Mittal dispute showcases the significance of subject matter arbitrability in disputes with a cross-border element. Whilst the Singapore Court of Appeal’s decision is a positive development of arbitration jurisprudence in Singapore – this being the first time that the Singapore Court of Appeal has considered the question of the law governing the issue of subject matter-arbitrability at a pre-award stage, we now have a cross-jurisdictional impasse with the Singapore Courts injuncting the litigation in India and the Indian Courts injuncting the arbitration in Singapore! This exemplifies the practical problem that ensues when differing approaches are taken by different jurisdictions. How the saga concludes remains to be seen. 

^{1 In 2006, neither SIAC nor Singapore featured in the top institutions / seats, while in 2021 Singapore is joint top seat choice (with London) and SIAC is featured as second most popular institution. See further Research - School of International Arbitration (qmul.ac.uk).}

^{2 Julian Lew, Loukas Mistelis and Stefan Kroell, Comparative International Commercial Arbitration, para 9-1 (Kluwer Law International 2003).} 

^{3 Loukas Mistelis, in Loukas Mistelis & Stavros Brekoulakis (eds), Arbitrability – International and Comparative Perspectives, paras 1-6 and 1-8 (Kluwer Law International 2009).} 

^{4 Loukas Mistelis, in Loukas Mistelis & Stavros Brekoulakis (eds), Arbitrability – International and Comparative Perspectives, paras 1-25 and 1-38 (Kluwer Law International 2009).} 

^{5 Governed by s. 216 of the Singapore Companies Act 1967.} 

^{6 Governed by ss. 224 and 225 of the Singapore Insolvency, Restructuring and Dissolution Act 2018.} 

^{7 At [84], [88].} 

^{8 At [46].}

^{9 Riverrock Securities Limited v International Bank of St Petersburg (Joint Stock Company) [2020] EWHC 2483 (Comm).}