By Christelle Sim
The Singapore High Court issued a landmark decision on determining the subject-matter arbitrability in Westbridge Ventures II Investment Holdings v Anupam Mittal [2021] SGHC 244. It was decided that the law of seat of arbitration applies when determining whether the parties’ dispute is arbitrable at the pre-award stage, rather than the law of the arbitration agreement.
Key Facts of Westbridge Ventures II Investment Holdings v Anupam Mittal
Both parties were shareholders in People Interactive, a Mumbai-based company. They had entered into a shareholders' agreement under Indian law, which contained an arbitration clause stating that any dispute relating to the management of the company or to any matter in the agreement was to be referred to arbitration. Singapore was the seat of arbitration.
The defendant commenced legal proceedings in India over, among other things, alleged minority oppression and mismanagement of the company. The plaintiff then sought an anti-suit injunction through Singapore courts against the Mumbai proceedings, arguing that the dispute fell within the scope of the arbitration clause in the shareholders' agreement and should therefore be resolved through arbitration. The defendant opposed the injunction, contending that the law governing the arbitration agreement was Indian law and disputes relating to oppression and mismanagement are not arbitrable under Indian law.
The court ruled in favour of the plaintiff. On arbitrability, the court held that the law of the seat (which the plaintiff established to be Singapore law), instead of the law of the arbitration agreement (which the defendant argued to be Indian law) determines subject matter arbitrability at the pre-award stage.
The court reasoned as follows:
(1) Issue of jurisdiction: The subject matter arbitrability at the pre-award stage is essentially a question of jurisdiction. Since it is the law of the seat that restricts party autonomy (and thus the tribunal’s jurisdiction), by prescribing what disputes are arbitrable, the law of the seat should apply to determine the subject matter arbitrability at the pre-award stage.
(2) Consistency: At the post-award stage, the seat court applies the law of the seat when considering an application to set aside the award on the grounds of non-arbitrability. The same law should therefore be applied to determine arbitrability issues at the pre-award stage to avoid potential anomalies.
(3) Policy: Singapore courts have consistently given broad effect to international arbitration agreements. Therefore, giving effect to foreign non-arbitrability rules would potentially hinder Singapore's policy of supporting international commercial arbitration. Applying the law of the seat at the pre-award stage is thus more in line with Singapore’s policy of promoting international commercial arbitration.
(4) Existing authority: Existing case law and academic authority support the law of the seat being applied at the pre-award stage. These include academic materials such as Gary Born’s International Commercial Arbitration and Comparative International Commercial Arbitration, as well as cases such as Fincantieri – Cantieri Navali Italiani SpA and Oto Melara SpA v. Ministry of Defence, Armament and Supply Directorate of Iraq, Republic of Iraq (1996) XXI YBCA 594 and BBA and others v BAZ and another appeal [2020] SGCA 53.
Legal Significance
This is the first time the Singapore courts have decided this issue, thus adding clarity on the approach that will be applied to arbitration agreements. This decision strengthens Singapore’s stance on pro-arbitration. It reassures commercial parties that arbitration agreements in shareholder agreements will be upheld, thus boosting their confidence in choosing Singapore as the seat of arbitration.