BTY v BUA: Stay of Litigation & Arbitration Agreement Scope
In BTY v BUA, the High Court of Singapore addressed an appeal against the stay of litigation in favor of arbitration. BTY, an investment fund, commenced litigation against BUA, a joint venture company, alleging a breach of the company's Articles of Association. The court, presided over by Justice Vinodh Coomaraswamy, allowed the appeal, finding that the dispute arose from the Articles of Association, not the Investment Agreement, which contained the arbitration clause. The court held that the litigation should continue, as the matter pertained to company law rather than the private contractual relationship governed by the Investment Agreement.
1. Case Overview
1.1 Court
High Court of Singapore1.2 Outcome
Appeal Allowed. The court permitted the shareholder’s litigation to continue, finding that the dispute arose out of the Articles of Association and not the Investment Agreement.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court addresses stay of litigation pending arbitration. The key issue is whether a dispute arising from a breach of articles falls under an arbitration agreement.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| BTY | Plaintiff, Respondent | Corporation | Appeal Allowed | Won | Kelvin Koh, Niklas Wong, Nanthini Vijayakumar, Thara Gopalan |
| BUA | Defendant, Appellant | Corporation | Application Dismissed | Lost | Suresh Nair, Bryan Tan |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Vinodh Coomaraswamy | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Kelvin Koh | TSMP Law Corporation |
| Niklas Wong | TSMP Law Corporation |
| Nanthini Vijayakumar | TSMP Law Corporation |
| Thara Gopalan | TSMP Law Corporation |
| Suresh Nair | Nair & Co LLC |
| Bryan Tan | Nair & Co LLC |
4. Facts
- BTY and BUA are shareholders in a joint venture company.
- The shareholders’ agreement contains an arbitration clause.
- The Articles of Association do not contain an arbitration clause.
- A dispute arose regarding the approval of the company’s 2015 accounts.
- BTY commenced litigation alleging a breach of the Articles of Association.
- BUA sought a stay of litigation in favor of arbitration based on the shareholders’ agreement.
- The Assistant Registrar granted the stay, but BTY appealed.
5. Formal Citations
- BTY v BUA and other matters, , [2018] SGHC 213
6. Timeline
| Date | Event |
|---|---|
| Negotiations began between the plaintiff’s parent and the majority shareholder regarding the investment. | |
| The plaintiff’s parent and the majority shareholder signed heads of agreement. | |
| The defendant was incorporated as a joint venture company. | |
| The defendant entered into a shareholders’ agreement with its shareholders. | |
| The majority shareholder and the plaintiff passed a special resolution causing the defendant to adopt new articles. | |
| The defendant tabled its accounts for the year ended 31 December 2015 for approval at a board meeting. | |
| The defendant circulated revised versions of the 2015 Accounts to its directors. | |
| The defendant circulated revised versions of the 2015 Accounts to its directors. | |
| The defendant circulated another version of the 2015 Accounts and tabled that version for approval at a board meeting. | |
| The defendant circulated to its directors a resolution in writing resolving to approve the 2015 Accounts. | |
| The defendant gave notice to its shareholders that its Annual General Meeting would be held on 21 July 2017. | |
| The plaintiff commenced this litigation. | |
| The defendant’s Annual General Meeting was held. | |
| The defendant lodged the 2015 Accounts electronically with the Accounting and Corporate Regulatory Authority. | |
| Arguments heard in court. | |
| Arguments heard in court. | |
| Judgment was delivered. |
7. Legal Issues
- Stay of Litigation
- Outcome: The court held that the dispute did not fall within the scope of the arbitration agreement and allowed the litigation to continue.
- Category: Procedural
- Sub-Issues:
- Applicability of arbitration agreement
- Scope of arbitration agreement
- Scope of Arbitration Agreement
- Outcome: The court found that the arbitration agreement in the Investment Agreement did not extend to disputes arising under the Articles of Association.
- Category: Substantive
- Sub-Issues:
- Interpretation of arbitration clause
- Relationship between shareholders’ agreement and articles of association
- Corporate Capacity
- Outcome: The court determined that the matter in the litigation was whether the defendant had adopted or approved the 2015 Accounts in breach of the Articles.
- Category: Substantive
- Sub-Issues:
- Validity of directors’ resolution
- Approval of annual accounts
8. Remedies Sought
- Declaration that the directors’ resolution approving the annual accounts is void
- Declaration that any adoption and approval of the 2015 Accounts at the Annual General Meeting is void
- Injunction restraining the Defendant from distributing and/or disseminating the 2015 Accounts
9. Cause of Actions
- Breach of Articles of Association
10. Practice Areas
- Commercial Litigation
- Arbitration
11. Industries
- Investment
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals | Court of Appeal | Yes | [2016] 1 SLR 373 | Singapore | Cited for the principle that the defendant is entitled to have litigation stayed if it establishes a prima facie case that there is a valid arbitration agreement, the dispute falls within the scope of the agreement, and the agreement is not null and void. |
| ACD Tridon v Tridon Australia | New South Wales Supreme Court | Yes | [2002] NSWSC 896 | Australia | Cited for its approach to determining the 'matter' in litigation when considering a stay application under an international arbitration act. |
| Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters | Singapore Court of Appeal | Yes | [2018] SGCA 33 | Singapore | Cited as ex post facto support for the decision, where the Court of Appeal observed obiter that it was 'not even clear' that the minority’s complaints of oppression fell within the scope of the arbitration agreement. |
| Larsen Oil and Gas Pte Ltd v Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) | Court of Appeal | Yes | [2011] 3 SLR 414 | Singapore | Cited for the principle that arbitration agreements are to be construed generously. |
| Rals International Pte Ltd v Cassa di Risparmio di Parma e Piacenza SpA | Singapore Court of Appeal | Yes | [2016] 5 SLR 455 | Singapore | Cited for the principle that the objective of construing an arbitration agreement is to determine and give effect to the objectively-ascertained intention of the parties. |
| Hickman v Kent or Romney Marsh Sheepbreeders’ Association | Chancery Division | Yes | [1915] 1 Ch 881 | England and Wales | Cited for the principle that a company’s constitution can bind a shareholder only in his capacity as a shareholder and not in any other capacity. |
| Guoh Sing Leong alias Quek Sing Leong the Administrator of the Estate of Guoh Koh Boey (deceased) v Hock Lee Amalgamated Bus Co (Pte) Ltd | Singapore High Court | Yes | [1995] SGHC 279 | Singapore | Cited with approval of Hickman v Kent or Romney Marsh Sheepbreeders’ Association for the principle that a company’s constitution can bind a shareholder only in his capacity as a shareholder and not in any other capacity. |
| Houldsworth v City of Glasgow Bank | House of Lords | Yes | [1874–80] All ER Rep 333 | United Kingdom | Cited for the principle that a shareholder who commences litigation against a company on a claim related to his status as a member cannot at common law recover damages from the company as a remedy for that claim. |
| Webb Distributors (Aust) Pty Ltd v Victoria | High Court of Australia | Yes | (1993) 179 CLR 15 | Australia | Cited for the principle that a shareholder who commences litigation against a company on a claim related to his status as a member cannot at common law recover damages from the company as a remedy for that claim. |
| Scott v Frank F Scott (London) Limited and others | Chancery Division | No | [1940] Ch 794 | England and Wales | Cited for the principle that a company’s constitution can never be rectified. |
| Santos Ltd & Anor v Pettingell & Ors | Supreme Court of New South Wales | No | (1979) 4 ACLR 110 | Australia | Cited for the principle that a company’s constitution can never be rectified. |
| The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd | Singapore High Court | Yes | [2008] 3 SLR(R) 121 | Singapore | Cited for the principle that a company’s constitution, by virtue of s 23(1) of the Companies Act, determines a company’s corporate capacity and therefore the validity of its acts. |
| Fiona Trust & Holding Corporation v Privalov | House of Lords | Yes | [2008] 1 Lloyd’s Rep 254 | United Kingdom | Cited for the principle that the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered to be decided by the same tribunal. |
| Robotunits Pty Ltd v Mennel | Supreme Court of Victoria | Yes | [2015] VSC 268 | Australia | Cited as instructive in determining whether the parties have two agreements which create two separate legal relationships operating on two separate legal planes. |
| Lee Chee Wei v Tan Hor Peow Victor and others and another appeal | Singapore Court of Appeal | Yes | [2007] 3 SLR(R) 537 | Singapore | Cited for the principle that the effect of each entire agreement clause is essentially a matter of contractual interpretation and will necessarily depend upon its precise wording and context. |
| Gulf Hibiscus Ltd v Rex International Holding Ltd and another | Singapore High Court | No | [2017] SGHC 210 | Singapore | Cited to distinguish the considerations which arise when a court is asked to grant a case-management stay from those which arise when a court is asked to stay litigation under s 6(1) of the IAA. |
| Rickshaw Investments Ltd and another v Nicolai Baron von Uexkull | Singapore High Court | Yes | [2007] 1 SLR(R) 377 | Singapore | Cited for the principle that, absent bad faith, a litigant has the freedom to frame his cause of action in any way which is more advantageous to him. |
| Fulham Football Club (1987) Ltd v Richards | English Court of Appeal | Yes | [2012] Ch 333 | England and Wales | Cited to distinguish the present case, as the dispute in Fulham Football was entirely contractual and did not engage the rights of creditors or impinge on statutory safeguards imposed for the benefit of third parties. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act (Cap 143A, 2002 Rev Ed) | Singapore |
| Companies Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Arbitration Agreement
- Stay of Litigation
- Articles of Association
- Shareholders’ Agreement
- Investment Agreement
- Corporate Capacity
- Ultra Vires
- Annual Accounts
- Directors’ Resolution
- ACRA
- Agreed Form Documents
15.2 Keywords
- Arbitration
- Stay of Litigation
- Shareholder Agreement
- Articles of Association
- Singapore
- Company Law
16. Subjects
- Arbitration
- Company Law
- Contract Law
- Civil Procedure
17. Areas of Law
- Arbitration Law
- Company Law
- Contract Law
- Civil Procedure