Deborshi Sarkar
The author is a student at Symbiosis Law School NOIDA (Symbiosis International Deemed University)
Abstract
The Singapore High Court in its order dated 25.03.2021 had inter alia granted an urgent interim ex-parte relief to Westbridge. This order effectively restrained Anupam Mittal from proceeding before the National Company Law Tribunal, Mumbai, and commencing any further proceedings with respect to any dispute pertaining to the Share Holders’ Agreement between them. In granting the same the Court decided that at a pre-award stage, the issue of subject matter arbitrability was essentially a question of the tribunal’s jurisdiction and the law of the seat (Singapore Law) had to be applied in deciding the same. However, this ruling was entirely devoid of any consideration to the governing law of the arbitration agreement. Therefore, the Singapore Court of Appeal while hearing the appeal in Anupam Mittal v. Westbridge besides adjudicating on vacating of the injunction, leaned towards addressing some pertinent jurisdictional questions particularly the law governing the subject matter arbitrability and determining the proper law of the arbitration or the lex arbitri. Against this background, the author aims at analysing the points of law in this judgment and its implication for Indian parties choosing Singapore as a seat of arbitration.
Keywords: Arbitrability, Proper Law, Enforcement
I. INTRODUCTION
In Anupam Mittal v. Westbridge Ventures II Investment Holdings [2023] SGCA 1, the Singapore Court of Appeal (SGCA) adjudicated on vacation of the anti-suit injunction passed by the Singapore High Court against Anupam Mittal. The Singapore High Court on 25.03.2021 had granted an urgent interim ex-parte relief to Westbridge restraining Anupam Mittal from proceeding before the National Company Law Tribunal, Mumbai, and commencing further proceedings with respect to any dispute pertaining to the Share Holders’ Agreement. The High Court found such proceedings to be in breach of the parties' arbitration agreement. Further, while granting the injunction, the Court decided that at a pre-award stage, the issue of subject matter arbitrability was essentially a question of the tribunal’s jurisdiction and the law of the seat (Singapore Law) had to be applied in deciding the same. However, such a view was devoid of any consideration of the proper law governing the arbitration. Therefore, the Singapore Court of Appeal in the present appeal besides adjudicating on vacation of the injunction leaned towards addressing some pertinent jurisdictional questions particularly the law governing the subject matter arbitrability and determining the proper law of the arbitration or the lex arbitri. Against this background, the author aims at analysing the points of law in this judgment and its implication for Indian parties choosing Singapore as a seat of arbitration.
II. ANALYSING THE JUDGMENT
i. Determining the law governing the subject matter arbitrability:
The Singapore Court of Appeal (SGCA) held that at a pre-award stage, the subject matter arbitrability will be determined by the proper law. At a pre-award stage, the question of arbitrability is attributed to the arbitration agreement along with the law that the parties have been subjected to. In upholding the same, the Court iterated that the procedural aspects of an arbitration are evidently guided by the law of the forum, however, substantial questions including arbitrability essentially fell within the ambit of the proper law. This stems from the fact that if a particular subject matter has been made non-arbitrable by the parties owing to their choice of proper law, the same cannot be made arbitrable.
However, this reasoning interposes an anomaly owing to the different laws applicable to the subject-matter arbitrability in a pre and post-award scenario. Considering the views of the amicus curiae, the Court inferred that post declaration of an award, the subject matter of the dispute is bound to be tested on the anvil of the lex fori. The same is evident from Article 34(2)(b)(i) of the Model Law, which grants to the courts in Singapore the right to set aside an award if the same is non-arbitrable in Singapore. Such an instance had been dealt by the UK Supreme Court inEnka Insaat Ve Sanayi AS v. OOO Insurance Company Chubb, [2020] 1 WLR 4117 where the Court held that “it would be … illogical if the law governing the validity of the arbitration agreement were to differ depending on whether the question of validity is raised before or after an award has been made. To ensure consistency and coherence in the law, the same law should be applied to answer the question in either case.”
In order to scotch any such anomaly in a Singapore seated arbitration, the Court adopted the ‘compact’ approach. The approach finds its roots in public policy and arbitrability as postulated under Section 11 of the International Arbitration Act, 1994. Embarking on the same, the Court deviated from the settled position of law in Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals, [2016] 1 SLR 373 and held that public policy in Section 11 extends to foreign public policies as well and not only that of Singapore. This interpretation is in consonance with Article 34(2)(b)(i) of the Model Law and would effectively render a subject matter in contravention of the public policy of Singapore as non-arbitrable at a pre-award stage. Further, extending the ambit of foreign public policy would also require the subject matter to be arbitrable according to the proper law that the parties have subjected the arbitration agreement to. Thereby, for an arbitration to proceed in Singapore, the ruling mandates that at a pre-award stage, the subject matter should be arbitrable according to the proper law that the parties have subjected the arbitration agreement to as well as the law of the seat.
ii. Determining the proper law:
In determining the proper law, the Court drew inference from the three tests laid down in BCY v. BCZ, [2017] 3 SLR 357 (“BCY”). After perusing the pertinent clauses of the Share Holders’ Agreement, the Court inferred that the arbitration agreement in the main contract was devoid of an express choice in no uncertain terms choosing Indian law as the proper law. Furthermore, implied choice of the parties had to be considered. An implied choice of proper law is based on the premise that non-withstanding the doctrine of separability, when an arbitration agreement is part of a contract, the lex contractus results in a strong presumption for the law governing the arbitration agreement. However, such a presumption can be refuted in cases where the effectiveness of the arbitration agreement is affected by the choice of proper law. Inference for the same had been drawn from Sulamérica Cia Nacional de Seguros SA and others v. Enesa Engelharia SA and others, [2013] 1 WLR 102.
On the above-mentioned considerations, the Court held that Indian law could not serve the purpose of proper law as the same would go beyond the consent of the parties and negate the arbitration agreement. The Court construed the arbitration agreement to include in its ambit all disputes pertaining to the Share Holders’ Agreement and its performance which included disputes pertaining to the management of the company (oppression and mismanagement). The Court rightly inferred that the parties would evidently have been aware that a dispute arising in connection with the management of a company would naturally contain disputes pertaining to oppression and mismanagement, being non-arbitrable in India. Nonetheless, proceeding with Singapore as a seat of arbitration evidently portrays the intention of the parties to arbitrate on the aforementioned subjects. Thereby, oppression and mismanagement as a subject matter are not arbitrable in India, the Singapore Court of Appeal (SGCA) held that choosing Indian law as the proper law would negate the arbitration agreement and frustrate the intention of the parties to arbitrate. The law of the seat was thus decided to be the proper law.
iii. Analysing the possible breach of the Arbitration Agreement:
In adjudicating the issue immediately preceding, the Singapore Court of Appeal (SGCA) had already inferred that the arbitration agreement was inclusive of disputes pertaining to oppression and mismanagement. However, the present issue dealt in-depth with whether the claims filed in the National Company Law Tribunal fell within the ambit of the arbitration agreement thereby resulting in a breach of the same. After analysing the six claims filed in the National Company Law Tribunal, the Court construed them to have essentially stemmed from the management of the company and could only incidentally contribute to a finding of oppression. The complaints made by Anupam Mittal in the National Company Law Tribunal proceedings substantially pertained to the interpretation of the Share Holders’ Agreement and other contractual rights. Additionally, a dispute pertaining to mismanagement evidently pertained to the management of the company itself and was arbitrable under the agreement. The Court rightly construed the complaint filed, to be in breach of the arbitration agreement and dismissed the appeal to discharge the anti-suit injunction.
III. IMPLICATION FOR INDIAN PARTIES/CONCLUDING REMARKS
The judgment by the Singapore Court of Appeal (SGCA) in Anupam Mittal v. Westbridge Ventures II Investment Holdings does not particularly have any implications on Indian parties, unless they choose Singapore as a seat of arbitration. However, following the judgment in PASL Wind Solutions Pvt Ltd v. GE Power Conversion India Pvt Ltd, (2021) 7 SCC 1 where the Apex Court held that, “Nothing stands in the way of party autonomy in designating a seat of arbitration outside India even when both parties happen to be Indian nationals, as has been held hereinabove.”, two Indian parties can evidently choose a foreign seat of arbitration. As Singapore is increasingly becoming a popular seat for dispute resolution, Indian parties before choosing such seat must cautiously ensure that the subject matter of the dispute is arbitrable both under the proper law (Indian law in this case) and the law of the seat i.e., Singapore.
This would be imperative in averting an anomaly when the subject matter of the dispute is arbitrable under the chosen proper law, however, the laws of Singapore refrain arbitrations of such disputes. This inference is drawn under the light of this ruling where the SGCA held, “However, the conclusion that we have come to avoids these anomalous results because it means that at the pre-award stage, whenever the subject matter of the dispute is not arbitrable either under the proper law of the arbitration agreement or under Singapore law, the arbitration would not be able to proceed in Singapore (or anywhere else for that matter) and thus the outcome that the Judge finds objectionable would never arise.” Such cautious drafting would further be pertinent in averting any form of satellite litigation by parties.
Also, parties shall be mindful and cautious while drafting the arbitration agreement and an approach towards arbitration agreements as a “midnight clause” must be desisted from. This is primarily because owing to the doctrine of separability, arbitration agreements are construed separately from the underlying contract in which they are contained. The same has also been upheld by the Apex Court in India. Additionally, an arbitration agreement drafted in no uncertain terms and not in explicit language leaves doubt pertaining to the applicable proper law or the lex arbitri. Under the light of the judgment in Anupam Mittal v. Westbridge, a clearly drafted arbitration agreement would have resulted in the Indian law being adjudicated as the governing law leading to non-arbitrability of the dispute.
Further, due care must be mated out to the enforcement fora in consonance with the potential place of enforcement. Arbitral awards concerning subject matter not arbitrable in India cannot be enforced and courts in India cannot directorially exercise discretion on the same. The same has also been upheld by the Apex Court in Vijay Karia and others v. Prysmian Cavi E Sistemi SRL and others, [2020] SCC Online SC 177. Although the judgment by the Singapore Court of Appeal (SGCA) points out that, “an arbitration of these disputes cannot be unequivocally held to be a fruitless endeavor and a waste of resources”, in practice, an award may prove to be only as good as its enforcement. The arbitration's proceedings may prove to be futile in cases where such an award is intended to be enforced against a party having its assets only in a country where such claims are non-arbitrable. The pro-arbitration approach of the SGCA would only be relevant in cases where the Indian counterparties have assets in jurisdictions like Singapore where such claims are considered arbitrable.