BWF v BWG: Restraining Winding Up Proceedings for Disputed Debt Subject to Arbitration

In BWF v BWG, the Singapore High Court addressed an application by BWF to restrain BWG from bringing winding up proceedings against it. The dispute arose from a contract for the sale and purchase of crude oil, where BWF allegedly failed to pay BWG's invoice of US$30,245,600. BWF argued that the contract contained an arbitration clause, obliging the parties to resolve their disputes through arbitration. The court, presided over by Valerie Thean J, granted the injunction sought by BWF, finding that the existence of a bona fide prima facie dispute was sufficient to warrant the restraint. BWG has appealed the decision.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Injunction granted to restrain winding up proceedings.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court restrains BWG from winding up BWF over a disputed debt, enforcing the arbitration clause in their crude oil sale contract.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
BWGDefendant, AppellantCorporationApplication dismissedLost
BWFPlaintiff, RespondentCorporationInjunction grantedWon

3. Judges

Judge NameTitleDelivered Judgment
Valerie TheanJudgeYes

4. Counsels

Counsel NameOrganization
Keith HanCavenagh Law LLP
Nish ShettyCavenagh Law LLP
Ting Yong HongRajah & Tann Singapore LLP
Kendall TanRajah & Tann Singapore LLP

4. Facts

  1. BWF and BWG entered into a contract for the sale and purchase of crude oil.
  2. BWG claimed BWF failed to pay an invoice of US$30,245,600.
  3. The contract contained an arbitration clause stipulating disputes should be referred to arbitration in London.
  4. BWF contended it was only obliged to pay BWG upon receiving payment from BWX.
  5. BWG served a statutory demand on BWF.
  6. BWF sought to restrain BWG from bringing winding up proceedings.
  7. BWX did not make payment to BWF.

5. Formal Citations

  1. BWF v BWG, Originating Summons No 1086 of 2018, [2019] SGHC 81

6. Timeline

DateEvent
BWX emailed BWG to propose a deal for the Cargo.
BWX approached BWF to act as an intermediary.
BWG agreed to BWX's proposal.
BWG sent BWF a Deal Recap.
BWG sent its invoice to BWF for US$30,245,600.
BWG and BWX finalized written contract.
BWF and BWG signed the Contract.
BWF-BWX Contract finalized.
BWF sent its invoice to BWX for US$30,253,600.
It became clear that BWX was unable to pay BWF.
BWF and BWG representatives met to discuss payment.
BWX sent a proposed repayment schedule to BWF.
BWF entered into a Settlement Agreement with BWX.
BWX breached the Settlement Agreement with BWF.
BWG served a statutory demand on BWF.
BWF exercised its rights under the Settlement Agreement.
BWF responded to dispute the debt claim.
BWF's solicitors sent BWX a letter requiring payment.
BWF filed an originating summons.
BWF filed CWU 260/2018 to wind-up BWX.
BWG tendered written submissions on CWU 260/2018.
BWG submitted further written submissions.
Hearing of arguments.
Court dealt with the application.
Valerie Thean J furnished grounds of decision.

7. Legal Issues

  1. Restraint of Winding Up Proceedings
    • Outcome: The court held that the existence of a bona fide prima facie dispute was sufficient for the court to grant the injunction sought.
    • Category: Procedural
    • Sub-Issues:
      • Applicable standard for granting an injunction
      • Existence of a bona fide prima facie dispute
      • Abuse of process
  2. Enforceability of Arbitration Clause
    • Outcome: The court emphasized the principle of party autonomy and the need to respect the parties' contractual bargain to arbitrate disputes.
    • Category: Substantive
    • Sub-Issues:
      • Scope of the arbitration clause
      • Party autonomy in arbitration agreements
  3. Breach of Contract
    • Outcome: The court found that there were triable issues regarding BWG's title to the Cargo and the shipping documents used to trigger the payment condition specified in Clause 8.1.
    • Category: Substantive
    • Sub-Issues:
      • Failure to present required shipping documents
      • Lack of title to the cargo
      • Existence of a pay-to-be-paid arrangement
  4. Admissions and Estoppel
    • Outcome: The court found that there was no clear admission by BWF and that CWU 260/2018 had no bearing on the application.
    • Category: Procedural
    • Sub-Issues:
      • Whether BWF made an admission of the Disputed Debt
      • Whether BWF's actions in bringing CWU 260/2018 amounted to an admission or raised an estoppel
  5. Entire Agreement Clause
    • Outcome: The court considered the effect of the entire agreement clause and whether it obviated BWF's argument of a collateral contract.
    • Category: Substantive
    • Sub-Issues:
      • Effect of an entire agreement clause on collateral agreements
      • Applicability of the entire agreement clause in an unsigned contract

8. Remedies Sought

  1. Injunction to restrain winding up proceedings
  2. Setting aside the Statutory Demand

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Arbitration
  • Insolvency
  • Winding Up Proceedings

11. Industries

  • Oil and Gas
  • Commodities Trading

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
BDG v BDHHigh CourtYes[2016] 5 SLR 977SingaporeApplied the standard for determining whether an injunction should be granted to restrain the commencement of winding up proceedings when a claim for a disputed debt falls within the scope of an arbitration clause.
Mohd Zain bin Abdullah v Chimbusco International Petroleum (Singapore) Pte LtdHigh CourtYes[2014] 2 SLR 446SingaporeCited for the standard of a triable issue in resisting a summary judgment application.
VTB Bank (Public Joint Stock Co) v Anan Group (Singapore) Pte LtdHigh CourtYes[2018] SGHC 250SingaporeApplied the triable issue standard for injunctions to restrain winding up proceedings.
Salford Estates (No 2) Ltd v Altomart Ltd (No 2)English Court of AppealYes[2015] Ch 589England and WalesCited for the approach that so long as there was a prima facie dispute that was subject to an arbitration agreement, and there were no indications that issues were not raised bona fide, the court should grant an injunction to restrain winding up proceedings.
Lasmos Ltd v Southwest Pacific Bauxite (HK) LtdHong Kong Court of First InstanceYes[2018] HKCU 702Hong KongTook the same position as BDG in applying the prima facie dispute standard.
Metalform Asia Pte Ltd v Holland Leedon Pte LtdCourt of AppealYes[2007] 2 SLR(R) 268SingaporeDiscussed in relation to the standard of proof required for an injunction to restrain a winding up application where there is a bona fide cross-claim.
Vinmar Overseas (Singapore) Pte Ltd v PTT International Trading Pte LtdCourt of AppealYes[2018] 2 SLR 1271SingaporeFollowed from Vinmar that the relevant standard ought in principle to be that of a bona fide prima facie dispute.
Tjong Very Sumito and others v Antig Investments Pte LtdCourt of AppealYes[2009] 4 SLR(R) 732SingaporeEmphasized party autonomy and judicial non-intervention in arbitration.
Hayter v Nelson and Home Insurance CoN/AYes[1990] 2 Lloyd’s Rep 265N/ACited in Tjong Very Sumito for the principle that a dispute exists as long as one party disputes or denies a claim, regardless of how easily that party can be proven wrong.
The Jian HeN/AYes[1999] 3 SLR(R) 432SingaporeDiscussed in relation to the strong cause test and whether the party seeking a stay had a genuine defence.
Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal (The Hannah Blumenthal)N/AYes[1983] 1 A.C. 854N/ADescribes the task of distinguishing between ratio decidendi and obiter dicta as “formidable” and, in certain cases where appellate courts write single judgments, “exceedingly difficult” for lower courts.
Eco Measure Market Exchange Ltd v Quantum Climate Services LtdChancery DivisionYes[2015] BCC 877England and WalesExplaining the effect of Salford at [10] of Eco Measure Market Exchange Ltd v Quantum Climate Services Ltd [2015] BCC 877, Alan Steinfeld QC sitting as a deputy High Court judge in the Chancery Division stated: What the Court of Appeal decided in clear terms in the Salford Estate case was that, where there is an arbitration clause, it is sufficient to show that the debt is ‘disputed’ and for that it is sufficient to show that the debt is not admitted.
MWB Business Exchange Centres Ltd v Rock Advertising LtdN/AYes[2018] 2 WLR 1603N/AStated that the purpose of an entire agreement clause is to nullify prior collateral agreements relating to the same subject matter.
AXA Sun Life Services plc v Campbell Martin Ltd and othersUK Court of AppealYes[2011] EWCA Civ 133England and WalesStated that an entire agreement clause in a signed written agreement is effective in accordance with its terms.
Springwell Navigation Corporation v JP Morgan Chase BankN/AYes[2010] EWCA Civ 1221N/AA party is taken to have read and understood the terms and conditions in an entire agreement clause when it signs it.
UAM v UANN/AYes[2018] 4 SLR 1086SingaporeIt was common ground that three requirements were necessary before waiver by election could apply: (i) a concurrent existence of two inconsistent sets of legal rights; (ii) knowledge of the facts which have given rise to the two sets of rights as a prerequisite to election; and (iii) an unequivocal representation by the party making the election in relation to the right or remedy being waived
Treasure Valley Group Ltd v Saputra Teddy and another (Ultramarine Holdings Ltd, intervener)N/AYes[2006] 1 SLR(R) 538SingaporeThere is no dispute that the doctrine of approbation and reprobation, as stated by Belinda Ang J in Treasure Valley Group Ltd v Saputra Teddy and another (Ultramarine Holdings Ltd, intervener) [2006] 1 SLR(R) 538 at [31], entails that a person who, “having accepted a benefit given him by a judgment cannot allege the invalidity of the judgment which conferred the benefit”.
Express Newspapers v News (UK) LtdN/AYes[1990] 1 WLR 1320N/ABWG argued that following the English decisions such as Express Newspapers v News (UK) Ltd [1990] 1 WLR 1320, and Twinsectra Limited and Haysport Properties Limited v Lloyds Bank Plc [2018] EWHC 672 (Ch), English law has embraced a version of the doctrine of approbation and reprobation that has been extended to be of general application (“the extended doctrine”).
Twinsectra Limited and Haysport Properties Limited v Lloyds Bank PlcN/AYes[2018] EWHC 672 (Ch)N/ABWG argued that following the English decisions such as Express Newspapers v News (UK) Ltd [1990] 1 WLR 1320, and Twinsectra Limited and Haysport Properties Limited v Lloyds Bank Plc [2018] EWHC 672 (Ch), English law has embraced a version of the doctrine of approbation and reprobation that has been extended to be of general application (“the extended doctrine”).
Likpin International Ltd v Swiber Holdings Ltd and anotherN/AYes[2015] 5 SLR 962SingaporeReliance was also placed on the decision of Likpin International Ltd v Swiber Holdings Ltd and another [2015] 5 SLR 962 where Steven Chong J (as he then was) frowned upon inconsistent positions being taken across cases even where the doctrine did not strictly apply.
EC Investment Holding Pte Ltd v Ridout Residence Pte Ltd and others and another appealN/AYes[2012] 1 SLR 32SingaporeTo make such an argument, BWG must demonstrate that BWF’s conduct was related to the equity sued for, and reflected “a depravity in the legal as well as moral sense” (see the Court of Appeal’s guidance in EC Investment Holding Pte Ltd v Ridout Residence Pte Ltd and others and another appeal [2012] 1 SLR 32 at [92]).
Beckkett Pte Ltd v Deutsche Bank AG and anotherN/AYes[2011] 1 SLR 524SingaporeTo support contentions on abuse of process, BWG sought to rely upon Beckkett Pte Ltd v Deutsche Bank AG and another [2011] 1 SLR 524, where a party commenced Indonesian proceedings in order to undermine the pending judgment of the Court of Appeal
Chandra Winata Lie v Citibank NAN/AYes[2015] 1 SLR 875SingaporeTo support contentions on abuse of process, BWG sought to rely upon Chandra Winata Lie v Citibank NA [2015] 1 SLR 875, where a plaintiff attempted inconsistent pleadings, in circumstances where he knew or ought to know the facts, in a manner that offends common sense.
Denmark Skibstekniske Konsulenter A/S I Likvidation (formerly known as Knud E Hansen A/S) v Ultrapolis 3000 Investments Ltd (formerly known as Ultrapolis 3000 Theme Park Investments Ltd)N/AYes[2011] 4 SLR 997SingaporeIn Metalform Asia, there was a cross-claim that was to be referred to arbitration; it was on this basis that the court decided that winding up proceedings should be restrained to allow for the arbitrator to first determine the quantum of the cross-claim, and whether it was equal to or in excess of the undisputed debt (see Metalform Asia at [89]). The Court of Appeal decided that the applicable standard to stay court proceedings in situations where there was a genuine cross-claim, was the “unlikely to succeed” standard (see Metalform Asia at [87]), which has been subsequently noted to be no different from the triable issues standard (see Denmark Skibstekniske Konsulenter A/S I Likvidation (formerly known as Knud E Hansen A/S) v Ultrapolis 3000 Investments Ltd (formerly known as Ultrapolis 3000 Theme Park Investments Ltd) [2011] 4 SLR 997 at [26]); VTB at [55]).
APL Co Pte Ltd v Voss PeerN/AYes[2002] 2 SLR(R) 1119SingaporeUnder Singapore law, an original bill of lading serves as a document of title (see APL Co Pte Ltd v Voss Peer [2002] 2 SLR(R) 1119 at [48]; The “Cherry” and others [2003] 1 SLR(R) 471 at [27]).
The “Cherry” and othersN/AYes[2003] 1 SLR(R) 471SingaporeUnder Singapore law, an original bill of lading serves as a document of title (see APL Co Pte Ltd v Voss Peer [2002] 2 SLR(R) 1119 at [48]; The “Cherry” and others [2003] 1 SLR(R) 471 at [27]).
BNP Paribas v Jurong Shipyard Pte LtdN/AYes[2009] 2 SLR(R) 949SingaporeBWF’s additional prayer for the Statutory Demand to be set aside was not granted as this is a remedy appropriate to individuals confronting the threat of bankruptcy proceedings (as permitted by Rule 97(1) of the Bankruptcy Rules (Cap 20, R 1, 2006 Rev Ed)), rather than to companies dealing with threatened insolvency proceedings (see BNP Paribas v Jurong Shipyard Pte Ltd [2009] 2 SLR(R) 949 at [5] and [9]).
A v B (No 2)N/AYes[2007] 1 Lloyd’s Rep 358N/AThe premise for the Court of Appeal’s position, explained by Colman J in A v B (No 2) [2007] 1 Lloyd’s Rep 358 at [15] (and referred to in Tjong Very Sumito at [19]), is that a defendant who deliberately ignores an arbitration clause so as to derive from its own breach of contract an unjustifiable procedural advantage misuses judicial facilities; and such behaviour merits judicial discouragement.

13. Applicable Rules

Rule Name
Bankruptcy Rules (Cap 20, R 1, 2006 Rev Ed) Rule 97(1)

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed)Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 254Singapore
International Arbitration Act (Cap 143A, 2002 Rev Ed)Singapore
International Arbitration Act (Cap 143A, 2002 Rev Ed) s 6Singapore
Evidence Act (Cap 97, Rev Ed 1997)Singapore
Evidence Act (Cap 97, Rev Ed 1997) s 17Singapore
Evidence Act (Cap 97, Rev Ed 1997) s 31Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration clause
  • Winding up proceedings
  • Statutory demand
  • Disputed debt
  • Pay-to-be-paid arrangement
  • Entire agreement clause
  • Shipping documents
  • Title to cargo
  • Bona fide prima facie dispute
  • Triable issue
  • CWU 260/2018
  • Settlement Agreement
  • Abuse of process

15.2 Keywords

  • arbitration
  • winding up
  • injunction
  • contract
  • oil
  • Singapore

17. Areas of Law

Area NameRelevance Score
Winding Up95
Arbitration90
Company Law70
Restraint of Proceedings70
Breach of Contract60
Contract Law60

16. Subjects

  • Arbitration
  • Contract Law
  • Company Law
  • Insolvency