The highest courts of Singapore and the United Kingdom have recently issued decisions regarding the choice of law to govern arbitration agreements.
Singapore Courts’ Approach
In BNA v BNB and another  1 SLR 456;  SGCA 84 (“BNA”), the Singapore Court of Appeal adopted at - the following three-step approach from BCY v BCZ  3 SLR 357 (HC) (“BCY”):
- The parties’ express choice of proper law governing the arbitration agreement is first identified (the “Express Choice of Law”).
- If there is no express choice, the court ascertains the parties’ implied choice of law based on their intentions at time of contracting (the “Implied Choice of Law”).
- If an express or implied choice is absent, the law governing the arbitration agreement is the system of law with the closest and most real connection to it.
This is based on the framework in Sulamerica Cia Nacional de Seguros S.A. v. Enesa Engenharia S.A.  EWCA Civ 638 (“Sulamerica”).
An express choice of the proper law of the main contract does not, in and of itself, also constitute the proper law of the arbitration agreement: BNA at .
There is a presumption that the parties’ choice of law for the entire/main/underlying contract (containing the arbitration clause) also reflects the parties’ implied choice of law governing the arbitration agreement (BNA at ).
However, this presumption can be rebutted. The choice of a seat that is different from the place of the law of the main contract is not by itself sufficient to displace the starting point: BNA at ; BCY at .
The inquiry of whether the presumption is displaced only becomes relevant if the law of the seat is materially different from the (I suppose, putative) law governing the arbitration agreement (lex arbitri): BNA at . E.g. if the seat of arbitration is Singapore but the assumed lex arbitri by that point in the analysis is the law of the People’s Republic of China (PRC).
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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.
Significance: the Singapore High Court (coram: Belinda Ang J) commented obiter dicta on the approach which the Singapore courts will likely take on the applicable law in determining non-contractual obligations e.g. tortious liability and the conflict of laws doctrine renvoi, i.e. whether the reference to a foreign law includes the foreign law’s choice of law rules or not.
In sum, the Court opined that there is large support for the view that the applicable law be the contractually chosen law, which would govern contractual obligations. This approach gives weight to the party’s autonomy in their contractual choice.
As regards renvoi, the Court opined that a case-by-case approach to deciding the issue is uncertain. As for contract-related matters, the approach would likely be that reference to a foreign law only includes the domestic law of the foreign law and not also the choice of law rules. (If the reference includes the foreign choice of law rule, there could be a double renvoi where the choice of law might point to a third set of laws or back to Singapore law).
Legislative Update: Choice of Court Agreements Bill
The Choice of Court Agreements Bill (Bill No. 14/2016) was introduced in the Singapore Parliament on 4 April 2016. This Bill enables Singapore to give effect to the Convention on Choice of Court Agreements done at The Hague on 30 June 2005 (the Convention). The Convention establishes an international legal regime for enforcing an exclusive choice of court agreement concluded in a civil or commercial matter in an international case, and provides for the recognition and enforcement of any foreign judgment given by, and the enforcement of any judicial settlement approved by or concluded before, a court of a Contracting State designated in an exclusive choice of court agreement.
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The court granted a stay of proceedings on the ground of forum non conveniens applying the principles in Spiliada Maritime Corporation v Cansulex Ltd  AC 460 (“Spiliada”), adopted in the Singapore courts: Rickshaw Investments Ltd v Nicolai Baron von Uexkull  1 SLR(R) 377, CIMB Bank Bhd v Dresdner Kleinwort Ltd  4 SLR(R) 543 and JIO Minerals FZC v Mineral Enterprises Ltd  1 SLR 391.
Continue reading “Case Update: Bunge SA v Indian Bank  SGHC 330 – Singapore High Court stayed local proceedings for India Court proceedings on basis of forum non conveniens”
PT Selecta Bestama v Sin Huat Huat Marine Transportation Pte Ltd  SGHC 295
Significance: stay of proceedings, multi-tiered dispute resolution clause, obligation to negotiate prior to legal proceedings and exclusive jurisdiction clause; reliance on exclusive jurisdiction clause despite challenging validity of contract.
Continue reading “Case Update: PT Selecta Bestama v Sin Huat Huat Marine Transportation Pte Ltd  SGHC 295 – stay of proceedings, multi-tiered dispute resolution clause, obligation to negotiate and exclusive jurisdiction clause”