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Sinagpore Court of Appeals Rules_SOCIAL

Singapore: Winding-Up Proceedings Should Be Stayed When There is a Valid Arbitration Agreement

The winding-up process in Singapore is no longer available in respect of debt claims that are subject to a valid arbitration clause, except in extremely limited circumstances.

On April 7, 2020, the Singapore Court of Appeal handed down its judgment in AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2020] SGCA 33. In this judgment, the court held that winding-up proceedings will be stayed or dismissed where (i) there is a valid arbitration agreement between the parties; and (ii) there is a dispute that falls within the scope of the arbitration agreement.

The Court of Appeal's decision means that, except in extremely limited circumstances, the winding-up process in Singapore is no longer available in respect of debt claims that are subject to a valid arbitration clause, and attempts to circumvent the arbitration process by presenting a winding-up petition will not be permitted. One of the court's reasons for rejecting the "triable issue" standard was that it required a thorough examination of the evidence, which in the court's view, would offend the principle of party autonomy.

While the court recognized a limited exception for situations where the dispute raised by the debtor is an abuse of process, it cautioned that the threshold for

this exception is "very high." The court commented that the threshold may be met where liability and the quantum of the underlying debt are admitted, and where the creditor can persuade the court that there are substantiated concerns justifying the invocation of the insolvency regime (e.g. an urgent need to appoint administrators to recover the debtor's assets).

Different jurisdictions have different ways of reconciling the inherent tension between giving effect to party autonomy in the context of arbitration agreements, and considerations of procedural efficiency in the context of winding-up proceedings. The Court of Appeal's decision in AnAn Group (Singapore) clarifies that, at least in Singapore, the courts will require the parties to refer disputes to arbitration except in exceptional circumstances amounting to an abuse of process.

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