28 May 2020

AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2020] SGCA 33

In AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company), the Court of Appeal held that, in respect of a winding-up application premised on a debt subject to arbitration, the prima facie standard of review applies, as opposed to the triable issue standard. The debtor need only show that there is a valid arbitration agreement between the parties, and that the dispute in relation to the debt falls within the scope of the arbitration agreement unless, in exceptional cases, there is an abuse of court process, or if the dispute raised is not genuine. In applying the prima facie standard of review, the court allowed the appeal and set aside the order for the debtor-appellant to be wound up, in favour of arbitration.

In so holding, the Court of Appeal resolved a legal controversy that has given rise to three recent cases taking two different positions on the above issue.

This prima facie standard of review is lower than the triable issue standard which typically applies to winding-up applications premised on debts which are not subject to arbitration. The effect of this decision is that it may be more difficult to succeed in winding-up applications based on debts subject to arbitration clauses. As a result, creditors should think carefully before incorporating arbitration clauses into their contracts with debtors with uneven or borderline finances. However, even in such cases, the judgment itself contains avenues for creditors to nonetheless succeed in a winding-up application, where an applicant creditor is able to demonstrate legitimate concerns about the solvency of the company as a going concern and no triable issues have been raised by the debtor.


The appellant is AnAn Group (Singapore) Pte Ltd (“AnAn”), a Singapore holding company. The respondent is VTB Bank (Public Joint Stock Company) (“VTB”), a state-owned Russian bank. AnAn and VTB entered into a global master repurchase agreement (“GMRA”) under which AnAn would sell VTB global depository receipts (“GDRs”) of shares in EN+ Group PLC (“EN+”) and then repurchase the GDRs from VTB at a later date at pre-agreed rates. Despite the structure of the transaction as a sale and repurchase, this was in substance a loan from VTB to AnAn where the EN+ GDRs acted as collateral for the loan.

The agreement provided for the following:

  • In situations where the prevailing value of the EN+ GDRs fall below a certain level, AnAn was obliged to maintain sufficient collateral level by providing cash. 
  • Any dispute arising out of or in connection with the agreement was referable to arbitration.    

A few months after VTB’s purchase of the EN+ GDRs from AnAn, the price of the GDRs plummeted, due to sanctions imposed on major shareholders of EN+. VTB subsequently issued a notice to AnAn, requiring AnAn to top up a cash margin of approximately US$85 million to meet the collateral shortfall. Following AnAn’s failure to do so by the stipulated date, VTB sent a calculation notice to AnAn, stating that AnAn owes approximately US$170 million to VTB. In this notice, AnAn was informed that VTB had ascribed a new value of US$2.50 per EN+ GDR.

VTB then served a statutory demand for the sum of approximately US$170 million (“Claimed Sum”) which AnAn failed to repay within the three-week period. On basis of the failure to make repayment, VTB commenced winding-up proceedings against AnAn.

The High Court ordered the winding up of AnAn. The court found that the disputes were not raised bona fide. In coming to its decision, the High Court considered itself bound by the Court of Appeal’s decision in Metalform Asia Pte Ltd v Holland Leedon Pte Ltd [2007] SGCA 6. AnAn appealed against the High Court’s decision, culminating in the present appeal before the Court of Appeal.

Prior to the hearing before the Court of Appeal, AnAn had successfully applied for leave to adduce a valuation report which questioned the valuation of US$2.50 per EN+ GDR purported by VT. The valuation report opined that the EN+ GDRs should have been valued at between US$8.01 to US$8.68, and if such a valuation had been adopted, there would be no debt due from AnAn to VTB. VTB was granted leave to respond to the AnAn valuation report, and it did so with another valuation report of its own expert, opining that the original valuation of US$2.50 was justified.


Court holding and scope of prima facie standard of review

The Court of Appeal held that a prima facie standard of review should apply when a debtor raises a disputed debt or a cross-claim that is the subject of an arbitration agreement to resist a winding-up application. The winding-up proceedings will be stayed or dismissed as long as:

  • there is a valid arbitration agreement between the parties; and 
  • the dispute falls within the scope of the arbitration agreement,


  • there are exceptional circumstances; 
  • the dispute is being raised by the debtor in abuse of the court’s process; or 
  • the debt is not genuinely disputed.

In determining the appropriate measure to check against abuses of this lower standard of review, the court held that if an application for stay amounts to an abuse of process, the court will not grant a stay even if the prima facie standard has been met. An abuse of the court’s process can manifest itself in a multitude of scenarios. Two of examples cited by the court were (a) where the debt is admitted as regards to both liability and quantum, and (b) where the debtor has waived or may be estopped from asserting his rights to insist on arbitration, such as where the parties have agreed subsequently that disputes may be resolved by litigation.

The court emphasised that the abuse of process control mechanism cannot be used as a gateway for parties to introduce arguments on the merits of the underlying dispute, when such arguments are plainly irrelevant under the prima facie standard. As such, the court will not be in a position to determine whether the defence is “so obviously lacking in merit”.

Application of prima facie standard 

On the facts of the case, the Court of Appeal found that there was a clear prima facie dispute in the subject of the VTB winding-up application that would justify allowing the appeal and restraining the winding-up application presented by VTB.

The court was satisfied that there was no abuse of process on AnAn’s part as it did not consider AnAn’s delay in raising its objections to VTB’s claims to be an abuse of process, especially considering the short timelines in the proceedings below, further noting that AnAn had not made any admissions to VTB’s claims. 

Appropriate orders

The Court of Appeal held that, where a prima facie dispute is found, the court should ordinarily dismiss the entire winding-up application as a stay of the winding-up application carries severe consequences for the company.

However, in cases where an applicant creditor is able to demonstrate legitimate concerns about the solvency of the company as a going concern and that no triable issues are raised by the debtor, the court can grant a stay, as opposed to a dismissal, of the winding-up proceedings. The creditor will be given liberty to apply to the court to proceed with the winding up if, for example, it can be shown that the debtor-company has no genuine desire to arbitrate the dispute, and that it is taking active steps to stifle the arbitration.

Such legitimate concerns may be raised by the balance sheet of the company (as another marker of insolvency), or by the fact that there are other winding-up applications against the company by other independent creditors, and there are substantiated concerns that the company is simply seeking to rest on the arbitration clauses to delay payment of legitimate debts. That being said, the court emphasised that these examples are not to be utilised as a backdoor for creditors to resort to the triable issue standard. The merits of the dispute are irrelevant, save in the exceptional case where there are legitimate concerns about the solvency of the company as a going concern.

In the present case, the court found no evidence of legitimate concerns relating to the solvency of AnAn. The court had not been referred to any other winding-up application or claim pending against AnAn, or any evidence that AnAn was balance sheet insolvent (that is, independent of VTB’s claim).

Accordingly, the Court of Appeal allowed AnAn’s appeal against the High Court’s winding-up order, and the winding-up application was dismissed in its entirety.


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