BNA v BNB: Governing Law of Arbitration Agreement & Arbitral Seat

The Singapore Court of Appeal heard an appeal by BNA against BNB and BNC regarding the proper interpretation of an arbitration agreement. The High Court had previously affirmed the tribunal's decision that Singapore was the seat of arbitration. The Court of Appeal allowed the appeal in part, finding that Shanghai was the seat of the arbitration. The court did not decide whether the arbitration agreement was invalid under PRC law, which it determined to be the governing law of the arbitration agreement, stating that this determination should be made by the relevant PRC court.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed in Part

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal judgment regarding the governing law of an arbitration agreement and determination of the arbitral seat, ruling Shanghai as the seat.

1.7 Decision Date

26 December 2019

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
BNA	Appellant	Corporation	Appeal Allowed in Part	Partial	Thio Shen Yi of TSMP Law Corporation Thara Rubini Gopalan of TSMP Law Corporation
BNB	Respondent	Corporation	Appeal Partially Upheld	Partial	Sheryl Lauren Koh Quanli of Allen & Gledhill LLP William Ong of Allen & Gledhill LLP Tan Xeauwei of Allen & Gledhill LLP
BNC	Respondent	Corporation	Appeal Partially Upheld	Partial	Sheryl Lauren Koh Quanli of Allen & Gledhill LLP William Ong of Allen & Gledhill LLP Tan Xeauwei of Allen & Gledhill LLP

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	No
Judith Prakash	Justice of the Court of Appeal	No
Steven Chong	Justice of the Court of Appeal	Yes

4. Counsels

Counsel Name	Organization
Thio Shen Yi	TSMP Law Corporation
Thara Rubini Gopalan	TSMP Law Corporation
Sheryl Lauren Koh Quanli	Allen & Gledhill LLP
William Ong	Allen & Gledhill LLP
Tan Xeauwei	Allen & Gledhill LLP

4. Facts

BNA and BNB entered into a Takeout Agreement on 7 August 2012 for the sale of industrial gases.
On 1 February 2013, BNC took on BNB’s rights and obligations under the Takeout Agreement via an addendum.
The Takeout Agreement stipulated that it would be governed by the laws of the PRC.
The Takeout Agreement's dispute resolution clause stated that disputes would be submitted to the SIAC for arbitration in Shanghai.
BNA failed to make payments under the Takeout Agreement, leading the respondents to file a Notice of Arbitration.
BNA challenged the tribunal’s jurisdiction, arguing that PRC law would invalidate the arbitration agreement.
The majority of the tribunal ruled that it had jurisdiction, finding Singapore to be the seat of the arbitration.

5. Formal Citations

BNA v BNB and another, Civil Appeal No 159 of 2018, [2019] SGCA 84

6. Timeline

Date	Event
2012-08-07	BNA and BNB entered into the Takeout Agreement.
2013-02-01	BNA, BNB and BNC entered into an addendum to the Takeout Agreement.
2016-03-02	Respondents filed a Notice of Arbitration.
2017-07-18	The tribunal gave its decision on jurisdiction.
2018-08-01	The Judge dismissed the jurisdictional challenge in August 2018, giving brief oral grounds.
2019-07-01	The Judge supplemented those grounds with full written grounds on 1 July 2019.
2019-10-15	Court heard the appeal.
2019-12-27	Grounds of decision delivered.

7. Legal Issues

Proper Law of Arbitration Agreement
- Outcome: The court determined that PRC law was the proper law of the arbitration agreement.
- Category: Substantive
Seat of Arbitration
- Outcome: The court determined that Shanghai was the seat of the arbitration.
- Category: Jurisdictional
Admissibility of Pre-Contractual Negotiations
- Outcome: The court held that the pre-contractual negotiations were not admissible.
- Category: Procedural

8. Remedies Sought

Arbitration

9. Cause of Actions

Breach of Contract

10. Practice Areas

Arbitration
Commercial Litigation

11. Industries

Industrial Gases

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
BCY v BCZ	High Court	Yes	[2017] 3 SLR 357	Singapore	Cited for the three-stage framework for determining the proper law of an arbitration agreement.
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 for the framework for ascertaining the proper law of any contract.
Dyna-Jet Pte Ltd v Wilson Taylor Asia Pacific Pte Ltd	High Court	Yes	[2017] 3 SLR 267	Singapore	Cited regarding an arbitration agreement found in a contract governed by English law.
BMO v BMP	High Court	Yes	[2017] SGHC 127	Singapore	Cited for providing useful guidance for courts tasked with determining the law governing arbitration agreements.
Marty Ltd v Hualon Corp (Malaysia) Sdn Bhd (receiver and manager appointed)	Court of Appeal	Yes	[2018] 2 SLR 1207	Singapore	Cited to note that the grounds did not question the correctness of BCY.
BQP v BQQ	High Court	Yes	[2018] 4 SLR 1364	Singapore	Cited regarding the admissibility of pre-contractual negotiations.
PT Garuda Indonesia v Birgen Air	Court of Appeal	Yes	[2002] 1 SLR(R) 401	Singapore	Cited to expound on the distinction between the seat of the arbitration, and the venue(s) where arbitration proceedings and hearings may be held.
Naviera Amazonica Peruana SA v Compania Internacional de Seguros del Peru	English Court of Appeal	Yes	[1988] 1 Lloyd’s Rep 116	England and Wales	Cited for adopting the phrase “arbitration in London” as a colloquial way of referring to London as the seat of the arbitration.
ABB Lummus Global Ltd v Keppel Fels Ltd	English High Court	Yes	[1999] 2 Lloyd’s Rep 24	England and Wales	Cited for the expression “arbitration in London” or “arbitration in New York” had been treated by Kerr LJ in Naviera “as ordinary or colloquial language describing the seat of the arbitration”.
Shagang South-Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics	English High Court	Yes	[2015] 1 Lloyd’s Rep 504	England and Wales	Cited for the use of the phrase “to be held in Hong Kong” ordinarily carried with it an implied choice of Hong Kong as the seat of the arbitration.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd	Court of Appeal	Yes	[2008] 3 SLR(R) 1029	Singapore	Cited for making clear that our law does not mandate a blanket prohibition against the admissibility of pre-contractual negotiations.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal	Court of Appeal	Yes	[2013] 4 SLR 193	Singapore	Cited for cautioning that any attempt to rely on such evidence should be made with full consciousness of the concerns we expressed and the pleading requirements we prescribed in that judgment.
Xia Zhengyan v Geng Changqing	Court of Appeal	Yes	[2015] 3 SLR 732	Singapore	Cited for cautioning that draft agreements would rarely establish the clear and obvious context necessary for the evidence of pre-contractual negotiations to be admitted.
BNA v BNB and another	High Court of Singapore	Yes	[2019] SGHC 142	Singapore	The decision below that was appealed. The Court of Appeal disagreed with the High Court's finding that Singapore was the seat of the arbitration.
BXY and others v BXX and others	Court of Appeal	Yes	[2019] 4 SLR 413	Singapore	Cited for the High Court heard the jurisdictional challenge de novo.

13. Applicable Rules

Rule Name
Arbitration Rules of the Singapore International Arbitration Centre (5th Edition, 2013)
Rule 18.1 of the SIAC Rules

14. Applicable Statutes

Statute Name	Jurisdiction
International Arbitration Act (Cap 143A, 2002 Rev Ed)	Singapore
s 10(3) of the International Arbitration Act (Cap 143A, 2002 Rev Ed)	Singapore
s 10(4) of the International Arbitration Act	Singapore
s 24 of the International Arbitration Act	Singapore
Evidence Act (Cap 97, 1997 Rev Ed)	Singapore
s 2(1) of the Evidence Act (Cap 97, 1997 Rev Ed)	Singapore
ss 94 to 99 of the Evidence Act (Cap 97, 1997 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Arbitration Agreement
Seat of Arbitration
Proper Law
Singapore International Arbitration Centre
Takeout Agreement
Jurisdictional Challenge
Pre-Contractual Negotiations
Validation Principle
Effective Interpretation
Separability

15.2 Keywords

arbitration agreement
seat
governing law
jurisdiction
Shanghai
Singapore
PRC law

17. Areas of Law

Area Name	Relevance Score
Arbitration	95
Jurisdiction	80
International Arbitration Act	70
Foreign Law	60
International Commercial Law	50
Contract Law	40
Proper Law of Contract	30

16. Subjects

Arbitration
Contract Law
Civil Procedure
Conflict of Laws