On 6 January 2023, to kick off the new year, the Singapore Court of Appeal rendered a decision in the matter of Anupam Mittal v Westbridge Ventures II Investment Holdings  SGCA 1 (“Anupam”).
The significance of the decision stems from the Court’s establishment that both the law of the seat and the law of the arbitration agreement must allow for a dispute to be arbitrated before the arbitration agreement can be upheld in the pre-award context (anti-suit injunction, application for stay of court proceedings, etc.). This is a departure from the traditional position taken by foreign jurisdictions which call for the law of the seat to answer such questions of arbitrability.
This decision paves the way for the law of the arbitration agreement to further grow in significance. Previously, the law would govern general issues of validity, however, the decision in Anupam also calls for the law of the arbitration agreement to govern the arbitrability of the dispute.
Westbridge Ventures II Investment Holdings (“Westbridge”) is a private equity fund which sought to acquire People Interactive Pte Ltd, the owner and operator of Shaadi, a popular Mumbai-based online matchmaking website (“People Interactive”).
People Interactive was founded by Anupam Mittal and his cousins, Anand Mittal and Navin Mittal, who served as shareholders when the company was founded in 1997.
As an investor in the company, Westbridge entered into a Shareholders’ Agreement (“SHA”) with Anupam Mittal and his cousins. The SHA contained an arbitration agreement noting Singapore as the law of the seat and India as the law governing the main contract. Furthermore, the agreement stated that disputes “relating to the management of the Company [People Interactive] or relating to any of the matters set out in this Agreement” shall be settled by arbitration.
Notably, the SHA dictated that if an Initial Public Offering (“IPO”) was not completed within five (5) years from the closing date, then Westbridge would be in their right to redeem its shares and – if necessary – “drag” all other shareholders to sell their shares to a third-party.
Westbridge held 44.38% of the shares in People Interactive whilst Anupam Mittal held 30.26% of the shares. Additionally, in accordance with the SHA, Westbridge appointed its nominee director to the board of People Interactive.
After the conclusion of the five (5) year period provided for in the SHA, no IPO was completed. The relationship between the parties soured when Westbridge sought to exit People Interactive due to the lack of IPO completion.
As part of the disengagement, Westbridge sought to divest its interest in People Interactive by selling its shares to an alleged competitor of Shaadi. In addition, Westbridge refused to consent to the reappointment of Anupam Mittal and Anand Mittal as the managing and founding directors of the company, respectively. Hence, the manifestation of the dispute.
Proceedings before the Singapore High Court
In 2021, Anupam Mittal filed a petition before the National Company Law Tribunal in India to, inter alia, injunct Westbridge from interfering in the management of the company on the grounds of corporate oppression.
In response, Westbridge applied for a permanent anti-suit injunction against the founders in Singapore before the Singapore High Court based on the Singapore-seated arbitration agreement within the SHA, seeking to restrain them from continuing the claim before the National Company Law Tribunal in India.
The founders of People Interactive argued that Indian law, which governs the SHA pursuant to a general choice-of-law clause within, also governed the arbitration agreement within the SHA.
And since Indian law applied to the question of arbitrability, the founders argued the dispute would be rendered non-arbitrable because corporate oppression and claims of mismanagement are not arbitrable pursuant to Indian law; as such, the National Company Law Tribunal would have exclusive jurisdiction over disputes of such nature.
Ultimately, the Singapore High Court granted Westbridge the anti-suit injunction.
The Singapore High Court held that it is the law of the seat which governs subject-matter arbitrability. The High Court held that, as the law of the seat in this matter was Singapore, the dispute could be arbitrated as claims of corporate oppression and mismanagement are arbitrable under Singapore Law.
Accordingly, the High Court determined that the proceedings before the National Company Law Tribunal were in violation of the arbitration agreement between the parties, as the agreement required that such disputes be referred to arbitration.
In essence, the High Court found that the parties had in fact intended to refer disputes relating to the management of People Interactive to arbitration due to the arbitration agreement within the SHA (which the High Court noted as broadly worded).
Anupam Mittal appealed the decision of the High Court before the Singapore Court of Appeal.
Proceedings before the Singapore Court of Appeal
Anupam Mittal argued:
In turn, Westbridge argued:
Fashioning a “Composite Approach”
The Singapore Court of Appeal (“SGCA”) disagreed with the position of the High Court and in doing so, fashioned a novel “composite approach” to determining the arbitrability in the pre-award context.
The composite approach dictates that the court must be satisfied that the subject-matter of the dispute is arbitrable under both the law of the seat and the law of the arbitration agreement.
The SGCA justified this approach vis-à-vis two elements:
The BCY 3-Stage Test
To determine what law governs an arbitration agreement, the Singapore courts apply the BCY 3-stage test, derived from BCY v BCZ  3 SLR 357 (“Test”).
The Test is as follows:
Applying the BCY 3-Stage Test to Anupam
With respect to stage 1 of the Test, a general and express choice of law governing the main contract would not suffice as an express choice of law governing the arbitration agreement.
Rather, in Anupam, the SGCA found that the reference to Indian law found at Clause 20.1 of the SHA does not constitute as an express choice of law. Clause 20.1 of the SHA states:
“This Agreement and its performance shall be governed by and construed in all respects and in accordance with the laws of the Republic of India”
Due to the lack of specific language within the clause, the SGCA could not consider that the parties expressly made their choice of law by selecting Indian law.
With respect to stage 2 of the Test, if the parties had failed to expressly choose a law at stage 1, uncertainty arises as to what law governs the arbitration agreement during stage 2 of the Test. In Anupam, the SGCA found that although the law governing the main contract was Indian law as per Clause 20.1 of the SHA, the Court found sufficient implication that the parties intended for a Singapore law to govern the arbitration agreement. This implication stems from the frustration that the parties would face, given that corporate oppression disputes are non-arbitrable under Indian law.
Hence, the SGCA determined that Singapore law is the law governing the arbitration agreement.
Subsequently, once Singapore law had been held as the governing law of the arbitration agreement, the SGCA analyzed whether the proceedings before the National Company Law Tribunal fell within the scope of the arbitration agreement.
The SGCA designated the disputes covered by the arbitration agreement into two categories:
In doing so, it found that all of the claims detailed within Anupam Mittal’s petition before the National Company Law Tribunal fell within one of the two categories above.
Hence, the SGCA determined the proceedings were in breach of the arbitration agreement and upheld the High Court’s anti-suit injunction.
Anupam is a significant decision for any parties that have selected Singapore as their seat of arbitration, in which the issue of arbitrability is in play.
Disputes would be found arbitrable only if both the law of the seat and the law of the arbitration agreement stipulate that they are.
When choosing Singapore as the seat of arbitration, parties would benefit from specifying their choice of law for the arbitration agreement, preferably within the arbitration agreement itself. It would also be beneficial to select a choice of law which is ‘pro-arbitration’ to minimize the lack of frustration on the arbitrability of the subject-matter, such as France (Paris) or the United Kingdom (London).
Furthermore, it is prudent to note, as per Article V(2)(a) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the final award may still be deemed unenforceable due to non-arbitrability under the laws of the enforcing country.
This is because the “composite approach” taken by the SGCA is a departure from the standard practice of many national courts, which typically apply the law of the seat on pre-award issues of arbitrability.
It remains to be seen whether other arbitration-heavy jurisdictions will adopt the “composite approach”, but ultimately, an express selection of the choice of law governing the arbitration agreement will benefit the parties in achieving greater certainty vis-à-vis the arbitrability of the dispute.
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