Judgment Name: Anupam Mittal v. Westbridge Ventures II Investment Holdings
Citation:  SGCA 1
Court: Court of Appeal of the Republic of Singapore
Coram: Sundaresh Menon CJ, Judith Prakash JCA, and Steven Chong JCA
Date: 6th January 2023
Keywords: Singapore, Pre-Award, Subject Matter Arbitrability, Public Policy, Section 11, International Arbitration Act 1994 (2020 Rev ED) (the ‘IAA’), UNCITRAL Model Law on International Commercial Arbitration (“Model Law”).
In dealing with a threshold question that was previously undecided in Singapore, the Court of Appeal of the Republic of Singapore (“Court of Appeal/ Court”) has ruled that the system of law governing subject matter arbitrability at the pre-award stage is the law of the arbitration agreement.
The dispute relates to a Shareholders’ Agreement (“SHA”) that was entered into by Anupam Mittal (“Appellant”), his co-founder cousins, and Westbridge Ventures II Investment Holdings (“Respondent”), as part of the Respondent’s investments in the Company in 2006. Clause 20 of the SHA provided for Indian law to be the governing law of the agreement and contained an arbitration clause that nominated Singapore as the seat of arbitration.
A few years later, certain disagreements between the parties led to the Appellant filing a petition at the National Company Law Tribunal (“NCLT”) seeking remedies for corporate oppression. This induced the Respondent to rely on the arbitration agreement and approach the Singapore High Court, which granted an ex parte interim anti-suit injunction against the Appellant. Later, the Singapore High Court issued a permanent anti-suit injunction against the Appellant restraining him from pursuing the company petition at the NCLT and commencing other proceedings for disputes relating to the management of the Company. The Singapore High Court ruled on the basis that the law of the seat determined subject matter arbitrability, and since Singapore law considered oppression and mismanagement disputes to be arbitrable, the arbitration agreement was enforceable.
The Appellant appealed to the Court of Appeal, primarily making two contentions. Both were premised on the claim that Indian law governed the arbitration agreement. The first ground was that the claims fell outside the scope of the arbitration agreement, and even if the agreement covered them, the governing law of the arbitration agreement, i.e., Indian law (as per the Appellant) would render such an agreement null and void. The second ground was that the governing law of the arbitration agreement, i.e., Indian law, which determined subject matter arbitrability, considered such disputes to be non-arbitrable.
The Respondent inter alia contended that subject matter arbitrability was determined by the law of the seat, i.e., the law of Singapore and that even if it was to be determined by the law of the arbitration agreement, then Singapore law would still apply as the governing law of the arbitration agreement.
i) Whether subject matter arbitrability at the pre-award stage is to be determined by the law of seat or proper law of the arbitration agreement?
ii) What was the proper law of the arbitration agreement in the case?
Subject Matter Arbitrability at the Pre-Award Stage
While the Court considered the views of the amicus curiae that the drafting history of the Model Law indicates that at the pre-award stage, the law applicable to determine subject matter arbitrability is the same law that will be used by the seat court at the proceedings to set aside an award and also noted examples of several other jurisdictions that apply the lex fori at the pre-arbitral stage, it observed that when dealing with issues of subject matter arbitrability, the aspect of the public policy merits closer attention. In this regard, the Court emphasised Section 11 of the IAA which provides that an arbitration agreement must be abided by, unless contrary to public policy. Here, it stated that Section 11 of the IAA referred to not only Singapore’s public policy but also foreign public policy and it justified its approach on the basis that the drafters of the IAA consciously chose to not limit the scope of Section 11 by restricting the ambit of public policy to that only of Singapore.
On the point of applicable law, the Court observed that an arbitration agreement results from the consensus of parties and it is this agreement read with the law that governs it which determines the matters they had agreed to arbitrate. Hence for this reason among others, the Court held that the appropriate system of law to determine subject matter arbitrability at the pre-award stage is the law governing the arbitration agreement. If such law (including foreign law) considers a dispute non-arbitrable, then it is contrary to public policy to enforce the agreement. However, it held that pursuant to Section 11 of the IAA itself, even in the case of Singapore-seated arbitrations, courts could refuse to enforce the arbitration agreement if it contravened the public policy of Singapore.
Governing Law of the Arbitration Agreement
Here, the Court referred to the three-stage test in BCY v. BCZ , which enquires whether there was an express choice and if not, then whether there was an implied choice of law in the arbitration agreement. If neither, the arbitration agreement is governed by the system of law with which it has the closest and most real connection. In this case, firstly, there was no express choice of law for the arbitration agreement. Secondly, the Court proceeded to see whether there was an implied choice. It relied on the principle laid down in Sulamérica Cia Nacional de Seguros SA and others v. Enesa Engelharia SA and Others , whereby the general rule is that the law governing the main contract is a strong indicator that the same law is the governing law of the arbitration agreement. However, this implication will be displaced if choosing the governing law of the main contract as the law governing the arbitration agreement would negate the latter, despite the clear intention of the parties to resolve the dispute by arbitration.
On a collection of various factors, the Court noted that the parties had clearly evinced their intention to arbitrate all disputes under the agreement, including disputes relating to the management of the company. Therefore, the Court held that declaring Indian law as the law of the arbitration agreement would frustrate the parties’ clear intention to arbitrate their disputes relating to the management of the Company, as oppression disputes, often intertwined with management disputes, are non-arbitrable in India. Thus, the implication that Indian law was chosen by the parties to govern the arbitration agreement was displaced.
Hence, turning to the third prong of the test, the Court held that Singapore, as the chosen law of the seat, had the most real and substantial connection with the arbitration agreement. Thus, the dispute was arbitrable. Therefore, the Court dismissed the appeal and maintained the anti-suit injunction.
In dealing with a previously unanswered question, the Court of Appeal has held that the system of law governing the subject matter arbitrability at the pre-award stage is the law of the arbitration agreement. However, for Singapore-seated arbitrations, this will not render Singapore law meaningless. If the dispute is contrary to public policy under Singapore law, then the courts will refuse to enforce the arbitration agreement.