Singapore High Court holds mandatory arbitration agreement in company constitution operative despite earlier litigation

The Singapore High Court (“Singapore Court”) has clarified a number of issues concerning the content, scope and operability of arbitration agreements. Of particular note is the Singapore Court’s view on the extent to which a party’s choice to subject a dispute, which may otherwise be the subject of an arbitration agreement, to litigation may act as a bar to that party subsequently choosing to refer the dispute to arbitration as a result of the doctrines of waiver or promissory estoppel. The Singapore Court also considered a number of additional issues which serve as a useful reminder as to best practice in drafting and enforcing arbitration agreements. We discuss the case and the practical issues flowing from it in detail below.

Facts

In BMO v BMP [2017] SGHC 127 the underlying dispute concerned the ownership of shares in a Vietnamese subsidiary of BMP (the “Subsidiary”). The Defendant, BMP, alleged that its shareholding in the Subsidiary had been substantially reduced by a series of unauthorized and unlawful share transfers which had eventually resulted in the Plaintiff, BMO, becoming the Subsidiary’s majority shareholder. The share transfers were purportedly effected by two individual shareholders in the Plaintiff, with the assistance of the Plaintiff itself.

Continued: Singapore High Court holds mandatory arbitration agreement in company constitution operative despite earlier litigation – Lexology