BCY v BCZ: Dispute over Arbitral Tribunal Jurisdiction & Arbitration Agreement Governing Law

In BCY v BCZ, the High Court of Singapore addressed an application by BCY to declare that an arbitrator lacked jurisdiction to hear claims advanced by BCZ under a sale and purchase agreement (SPA). The court, presided over by Justice Steven Chong, determined that no independent arbitration agreement existed between the parties prior to the unexecuted SPA. The court allowed BCY's application, concluding that the arbitrator lacked jurisdiction to hear the claims.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Declaration granted that the Arbitrator has no jurisdiction to hear any claim advanced by the defendant.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

The Singapore High Court addressed whether an arbitration agreement existed independently of a SPA, focusing on the governing law and jurisdiction.

1.7 Decision Date

8 November 2016

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
BCY	Plaintiff	Corporation	Judgment for Plaintiff	Won	Colin Liew of TSMP Law Corporation Thio Shen Yi of TSMP Law Corporation Cheryl Ng of TSMP Law Corporation Michelle Chew of TSMP Law Corporation
BCZ	Defendant	Corporation	Claim Dismissed	Lost	Herman Jeremiah of Dentons Rodyk & Davidson LLP Geraldine Yeong of Dentons Rodyk & Davidson LLP

3. Judges

Judge Name	Title	Delivered Judgment
Steven Chong	Judge	Yes

4. Counsels

Counsel Name	Organization
Colin Liew	TSMP Law Corporation
Thio Shen Yi	TSMP Law Corporation
Cheryl Ng	TSMP Law Corporation
Michelle Chew	TSMP Law Corporation
Herman Jeremiah	Dentons Rodyk & Davidson LLP
Geraldine Yeong	Dentons Rodyk & Davidson LLP

4. Facts

The dispute arose from a proposed sale of shares in a company by the plaintiff to the defendant under a sale and purchase agreement.
Seven drafts of the SPA, which incorporated an ICC arbitration clause, were circulated and negotiated but the SPA was not eventually signed.
The defendant commenced ICC arbitration proceedings, purportedly pursuant to the arbitration clause in the SPA, after the plaintiff decided not to proceed with the sale.
The plaintiff raised a preliminary objection to the Arbitrator’s jurisdiction on the basis that no ICC arbitration agreement had been concluded.
The parties agreed that the Arbitrator would only decide the jurisdictional issue without examining whether a valid SPA had been concluded.
The defendant argued that a binding ICC arbitration agreement was concluded before the conclusion of the SPA.
The Arbitrator found that a valid ICC arbitration agreement was concluded between the parties by 18 July 2013.

5. Formal Citations

BCY v BCZ, Originating Summons No 502 of 2016, [2016] SGHC 249

6. Timeline

Date	Event
2012-12-08	Sale of Shares first discussed between the plaintiff’s investment specialist and Mr Z.
2012-12-11	Plaintiff and Y entered into a confidentiality undertaking.
2013-01-08	Plaintiff and Y entered into an exclusivity agreement.
2013-04-29	Defendant incorporated as a special-purpose vehicle.
2013-04-30	Y wrote to the plaintiff offering to purchase the Shares through the defendant via an Offer Letter.
2013-06-17	First draft SPA sent by Mr Z to the plaintiff.
2013-06-24	Meetings held in Washington DC to discuss the SPA.
2013-06-25	Second draft SPA sent by the defendant to the plaintiff and W.
2013-06-26	Third draft SPA was circulated by the defendant to the plaintiff and W.
2013-07-12	Fourth draft SPA was circulated by the plaintiff to the defendant and W.
2013-07-17	Fifth draft SPA was sent by the plaintiff to the defendant and W.
2013-07-18	Sixth draft SPA was sent by the plaintiff’s investment specialist to its external legal counsel, but was copied to the defendant and W.
2013-07-25	Seventh draft SPA was circulated by email by W to the plaintiff and defendant.
2013-08-27	Plaintiff informed Mr Z that it had decided not to proceed with the sale of the Shares.
2013-08-29	Y demanded that the plaintiff proceed to sign the SPA before 30 September 2013.
2015-02-09	Defendant and Y commenced arbitration.
2016-04-15	Arbitrator issued First Partial Award.
2016-08-16	Hearing held.
2016-11-09	Judgment reserved.

7. Legal Issues

Jurisdiction of Arbitral Tribunal
- Outcome: The court declared that the Arbitrator has no jurisdiction to hear any claim advanced by the defendant.
- Category: Jurisdictional
- Sub-Issues:
  - Existence of valid arbitration agreement
  - Governing law of arbitration agreement
- Related Cases:
  - [2013] EWHC 470 (Comm)
  - [2016] 4 SLR 1336
  - [2013] 1 WLR 102
  - [2014] SGHCR 12
Governing Law of Arbitration Agreement
- Outcome: The court held that New York law, as the express choice of law governing the SPA, is also the governing law of the arbitration agreement.
- Category: Substantive
- Sub-Issues:
  - Implied choice of law
  - Law of the seat of arbitration
  - Law of the main contract
- Related Cases:
  - [2013] 1 WLR 102
  - [2014] SGHCR 12
  - [2008] 1 All ER (Comm) 1001

8. Remedies Sought

Declaration that the Arbitrator has no jurisdiction
Damages for breach of the SPA

9. Cause of Actions

Breach of Contract
Promissory Estoppel
Unjust Enrichment

10. Practice Areas

Arbitration
Commercial Litigation

11. Industries

Banking
Finance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Hyundai Merchant Marine Company Ltd v Americas Bulk Transport Ltd	English High Court	Yes	[2013] EWHC 470 (Comm)	England and Wales	Cited for the principle that the validity of the arbitration agreement and the existence of a binding contract would “stand or fall together”.
Jiangsu Overseas Group Co Ltd v Concord Energy Pte Ltd and another matter	High Court	Yes	[2016] 4 SLR 1336	Singapore	Cited for the principle that the validity of the arbitration agreement and the existence of a binding contract would “stand or fall together”.
Sulamérica Cia Nacional de Seguros SA and others v Enesa Engelharia SA and others	English Court of Appeal	Yes	[2013] 1 WLR 102	England and Wales	Cited as the basis for the Arbitrator’s decision on the governing law of the arbitration agreement.
FirstLink Investments Corp Ltd v GT Payment Pte Ltd and others	High Court	Yes	[2014] SGHCR 12	Singapore	Cited by the plaintiff as representing the law in Singapore regarding the governing law of the arbitration agreement.
C v D	Court of Appeal	Yes	[2008] 1 All ER (Comm) 1001	England and Wales	Cited regarding the law of the arbitration agreement being different from the law of the seat of the arbitration.
Piallo GmbH v Yafriro International Pte Ltd	High Court	Yes	[2014] 1 SLR 1028	Singapore	Cited as a decision of the High Court where the governing law of the arbitration agreement was implied from that of the main contract.
Cassa di Risparmio di Parma e Piacenza SpA v Rals International Pte Ltd	High Court	Yes	[2016] 1 SLR 79	Singapore	Cited as a decision of the High Court where the governing law of the arbitration agreement was implied from that of the main contract.
Arsanovia Ltd and others v Cruz City 1 Mauritius Holdings	English High Court	Yes	[2013] 2 All ER (Comm) 1	England and Wales	Cited as support for the Sulamérica approach.
Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Coy Ltd	English High Court	Yes	[2013] EWHC 4071	England and Wales	Cited as support for the Sulamérica approach.
The “Chem Orchid”	High Court	Yes	[2015] 2 SLR 1020	Singapore	Cited for the principle that it is unnecessary to introduce and prove foreign law if the application of foreign law would lead to the same result as applying the law of the forum.
Sanum Investments Ltd v Government of the Lao People’s Democratic Republic	Court of Appeal	Yes	[2016] 5 SLR 536	Singapore	Cited for the principle that the court undertakes a de novo review of the issue of whether an arbitral tribunal has jurisdiction over any particular dispute.
Viscous Global Investments Ltd v Palladium Navigation Corporation “Quest”	English High Court	Yes	[2014] EWHC 2654	England and Wales	Cited as an example of a freestanding arbitration agreement.
Fiona Trust & Holding Corporation and others v Privalov and others	England and Wales	Yes	[2007] 2 All ER (Comm) 1053	England and Wales	Cited regarding the doctrine of separability.
Bazak International Corp v Tarant Apparel Group	United States District Court for the Southern District of New York	Yes	491 F Supp 2d 403, 408 (SDNY 2007)	United States	Cited for the principles of contract formation under New York law.
Jordan Panel Systems Corp v Turner Construction Company	Appellate Division of the Supreme Court of New York, First Department	Yes	45 AD 3d 165, 183, 841 NYS 2d 561 (1st Dept 2007	United States	Cited for the principle that under New York law, the court will give effect to a “subject to contract” reservation unless there is conduct which is inconsistent with that reservation or could be construed as a waiver.
Marion Coal Co v Marc Rich & Co International Ltd	United States District Court for the Southern District of New York	Yes	539 F Supp 903, 907 (SDNY 1982)	United States	Cited for the principle that under New York law, the mere exchange of written draft agreements containing an arbitration clause does not indicate that a binding arbitration agreement was formed prior to the execution of a formal written agreement.
Barnmore Demolition and Civil Engineering Ltd v Alandale Logistics Ltd and others	Irish High Court	Yes	[2010] IEHC 544	Ireland	Cited as a case where an arbitration clause in an “unexecuted draft contract” was not a binding arbitration agreement.
APC Logistics Pty Ltd v CJ Nutracon Pty Ltd	Federal Court of Australia (Queensland)	Yes	[2007] FCA 136	Australia	Cited as a case where there was nothing “amounting to a confirmation or acceptance by the parties that they were in agreement on all terms and [considered] themselves to be bound to perform it”.
Norcast S.AR.L. v Castle Harlan, Inc	United States District Court for the Southern District of New York	Yes	No 12 Civ 4973 (PAC) (SDNY 2014)	United States	Cited in holding that Article 9.11 of the SPA would disentitle Y from relying on the doctrine to advance claims in the arbitration against the plaintiff.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
International Arbitration Act	Singapore
s 10(3) of the International Arbitration Act (Cap 143A, 2002 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Arbitration agreement
Sale and purchase agreement
Jurisdiction
Governing law
Separability
ICC arbitration
Seat of arbitration
Mutual assent
Subject to contract

15.2 Keywords

arbitration
jurisdiction
agreement
contract
law

17. Areas of Law

Area Name	Relevance Score
Arbitration	95
Jurisdiction	80
Contract Law	70
Choice of Law	65
International Commercial Law	60
Separability Doctrine	50

16. Subjects

Arbitration
Contract Law
Civil Procedure