Case Note: Anupam Mittal v Westbridge Ventures II Investment Holdings  SGCA 1
Parties entering into arbitration agreements must be mindful that arbitrability of a dispute will be dependent on the law of the arbitration agreement and the law of the seat. The Court would apply a “composite approach”.
This involves the following steps:
Arbitration agreements are typically negotiated at the last moment before the conclusion of negotiations. It is also common knowledge that arbitral institutions now provide model boilerplate dispute resolution clauses for insertion into transactional contracts. These model boilerplate clauses are useful as a starting point. However, in a situation where a dispute may potentially be non-arbitrable in certain jurisdictions, careful drafting would be necessary to prevent additional hurdles which may prove timely and expensive.
The recent Court of Appeal decision of Anupam Mittal v Westbridge Ventures II Investment Holdings  SGCA 1 (“Anupam Mittal”) highlights a key issue that typical boilerplate clauses would not account for – the law of the arbitration agreement, the law of the seat and its relationship with the arbitrability of a dispute.
The case concerns two parties, the founder of Shaadi.com (the “Appellant”) a popular matchmaking service and another private equity firm (the “Respondent”). The Respondent invested in the Appellant’s company and entered into various agreements including a Shareholders’ Agreement (the “SHA”) and a Supplementary Subscription-Cum-Shareholders’ Agreement (the “SSSA”). Years later, the relationship between the parties deteriorated and was exacerbated by the Respondent’s threat of exit. The failings of the relationship culminated in the Appellant filing a petition for oppression (and mismanagement) before the National Company Law Tribunal (“NCLT”) in Mumbai, India.
The Respondent applied for a permanent anti-suit injunction in the Singapore High Court restraining the Appellant from pursing its claim in the NCLT. The basis of the Respondent’s application was that the arbitration agreement in the SHA had been breached by the NCLT proceedings.
The Appellant then commenced proceedings in the Bombay High Court seeking (a) a declaration that the NCLT was the only competent forum to hear and decide disputes raised in the NCLT petition; and (b) an injunction against continuing with the Singapore proceedings.
The permanent anti-suit injunction was granted, and the Appellants appealed leading to this decision.
KEY ISSUES AND ARGUMENTS ON APPEAL
The main issue before the Court of Appeal was whether the dispute pertaining to oppression and mismanagement was in fact arbitrable and therefore in breach of the arbitration agreement. As a first step, the court had to determine whether arbitrability is determined by the law of the seat or the law of the arbitration agreement.
The key aspects of the arbitration agreement are as follows:
In summary, the Appellant argued against the anti-suit injunction for the following reasons:
The Respondents argued that they were entitled to the anti-suit injunction for the following reasons:
THE “COMPOSITE APPROACH”
The Court of Appeal highlighted its main concerns that:
Accordingly, the Court of Appeal took a “composite approach” in coming to its decision:
1. The courts will first examine what the law of the arbitration agreement is. After all, the arbitration agreement determines parties’ agreement as to what they wish to arbitrate. It followed the three-stage test established in BCY v BCZ  3 SLR 357:
2. Whether the dispute falls within the scope of the arbitration agreement; and
3. Where the seat is Singapore, Singapore courts would examine whether it is contrary to public policy. The Court of Appeal highlighted that “public policy” in section 11 of the International Arbitration Act should be interpreted such that the public policy of Singapore and the foreign jurisdiction would be covered especially in arbitrations with a substantial foreign element.
In the present case, the Court of Appeal applied the “composite approach” and upheld the anti-suit injunction:
SIGNIFICANCE OF THE DECISION FOR COMMERCIAL PARTIES
Dispute resolution clauses should not be treated like a “midnight” clause. In the present case, parties had specifically set out to include management claims within the scope of the arbitration agreement as they foresaw the issue of arbitrability. However, that was still insufficient given the extent to which this matter had been appealed in the Singapore Courts.
While it is helpful for parties to adopt model clauses from arbitral institutions, these only serve as good starting points. Any contentious issues ought to be expressly addressed. Where parties foresee issues of arbitrability which may impede dispute resolution, parties ought to consider expressly stating (a) what the law of the arbitration agreement in the dispute resolution clause; and (b) the scope of disputes to be covered, especially if parties foresee that such disputes would face issues of arbitrability.
Notably, the Court of Appeal’s decision is novel and departs from many established positions of other national courts. These courts apply the law of the seat (at the pre-award stage) to determine subject matter arbitrability.
Ultimately, parties should still be mindful that, even if an arbitral award is made in favour of a party and even if a subject matter is found to be arbitrable, issues of enforcement may still exist in jurisdictions where the subject matter is non-arbitrable. There is therefore still a possibility of any award being deemed unenforceable in a foreign jurisdiction.
The writers are grateful for the contribution of Marcus Tong, Legal Trainee at PDLegal LLC.
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