Case Update: Shanghai Turbo Enterprises Ltd v Liu Ming [2018] SGHC 172 – floating governing law and jurisdiction clause held unenforceable

Significance: Singapore High Court held that a floating governing law and jurisdiction clause was invalid and unenforceable. Citing Prof Yeo Tiong Min’s Halsbury’s Laws of Singapore volume on Conflict of Laws, the Court held that if the proper law of a contract cannot be determined from a governing law clause at the time of the formation of the contract, then that clause does not satisfy as an express proper law. The Court then found that it could not sever the unenforceable governing law portion from the jurisdiction clause. The clause in the case effectively said that the governing law and jurisdiction was “laws of Singapore /or People’s Republic of China” and “Courts of Singapore /or People’s Republic of China”. It would do well for parties take proper legal advice on the validity of such important clauses, and not assume they can simply gamble this as a compromise of some sort or as some option for one party later on.

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