13 March 2023

Disputes between shareholders can occur in many forms. Typically, they relate to parties’ rights and obligations under a shareholders’ agreement. In such cases, the disputing parties rely on their contractually agreed dispute resolution mechanism (which in most cases is arbitration) to ventilate their claims. On other occasions, however, the dispute may lead to corporate oppression claims. In such scenarios, shareholders may have a remedy under applicable laws to bring oppression and mismanagement claims before specialised forums established under the applicable laws. The availability of two seemingly overlapping potential avenues, private arbitration and specialised company law forums, may in turn trigger a dispute over the appropriate forum to hear and adjudicate the dispute. To put it another way, would an arbitral tribunal have jurisdiction over corporate oppression claims or conversely, can a company law forum hear disputes that are subject to an arbitration agreement?

Recently, the Singapore Court of Appeal (“CA”) in Anupam Mittal v Westbridge Ventures II Investment Holdings [2023] SGCA 1 provided much needed clarity on whether an arbitration agreement could preclude a party from pursuing corporate oppression claims in a foreign jurisdiction. On the facts, the CA found that the proceedings brought by the appellant before the National Company Law Tribunal (“NCLT”) in India were in breach of the applicable arbitration agreement. Consequently, the CA declined to vacate an anti-suit injunction restraining the appellant from continuing its action before the NCLT.

The practical consequences of the decision are outlined below:

  • Anti-suit injunctions and parallel proceedings: The decision demonstrates that the Singapore courts will not hesitate to issue anti-suit injunctions in cases where an action is initiated in breach of an arbitration agreement. Therefore, while commencing a court action might look attractive as a pressure tactic at first glance, it may be counterproductive if it is brought in breach of an arbitration agreement.
  • Need for relooking at your arbitration agreement: The decision also serves as a timely reminder that arbitration agreements should be drafted with care and caution. Importantly, parties should provide for an express choice of law governing the arbitration agreement, failing which conflict of laws principles will apply and directly influence the legal remedies available.
  • Pre-arbitration assessment of the case: Another important takeaway is the need for a proper assessment of the case at the pre-arbitration stage. Parties may have to satisfy themselves of the arbitrability of the dispute before investing considerable time and effort in commencing the arbitration. Failing to do so could result in wasted time and costs in cases where it is ultimately found that the dispute is non-arbitrable. As such, an early scrutiny of the arbitration agreement and the applicable laws could yield high dividends in the long run.

This article also provides an Indian law perspective on the law governing arbitrability and the arbitrability of oppression and mismanagement claims.

To read the article, please click here.