BXH v BXI: Setting Aside Arbitral Award for Lack of Jurisdiction & Assignment of Arbitration Agreement

In BXH v BXI, the Singapore Court of Appeal heard an appeal regarding an application to set aside an arbitral award. The underlying dispute concerned a distributorship agreement and related agreements involving the assignment, novation, and reassignment of rights to certain debts. The Court of Appeal allowed the appeal in part, finding that the arbitral tribunal exceeded its jurisdiction when adjudicating on matters relating to Debt B, and set aside the arbitral award in part under Article 34(2)(a)(i) of the Model Law.

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

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal sets aside part of an arbitral award, holding the tribunal exceeded its jurisdiction regarding debt reassignment and arbitration rights.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
BXHAppellantCorporationAppeal allowed in partPartial
BXIRespondentCorporationAppeal partially successful againstLost

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Steven ChongJudge of AppealYes
Belinda Ang Saw EanJudgeNo

4. Counsels

Counsel NameOrganization
Khoo Boo Teck RandolphDrew & Napier LLC
Chan Jian DaDrew & Napier LLC
Vanessa Chiam Hui TingDrew & Napier LLC
Toh Chen HanMPillay
Chan Yong NengMPillay
Rakesh NelsonMPillay
Charlotte WangMPillay

4. Facts

  1. The respondent, BXI, is a developer and manufacturer of consumer goods.
  2. The appellant, BXH, distributes and markets the respondent’s goods in Russia.
  3. In December 2010, the appellant and the Parent Company entered into the Distributor Agreement.
  4. The Distributor Agreement contained an arbitration clause.
  5. The Transition Agreement purported to enable the respondent to assume the rights of the Parent Company under a number of agreements, including the Distributor Agreement.
  6. On 25 January 2013, the appellant, the respondent and the Parent Company entered into the Assignment and Novation Agreement.
  7. On 1 October 2015, the respondent issued a notice of arbitration to the appellant.

5. Formal Citations

  1. BXH v BXI, Civil Appeal No 142 of 2018, [2020] SGCA 28

6. Timeline

DateEvent
Distributor Agreement signed
Parent Company sent email regarding transition
Parent Company sent email confirming transition date
Transition Agreement came into effect
Assignment and Novation Agreement signed
Participation Agreement signed
Gold Plan Agreement signed
Debt Transfer Agreement signed
Open Debt Agreement signed
Buy Back Agreement signed
Notice of arbitration issued
Response to notice of arbitration served
Respondent nominated arbitrator
Arbitral tribunal constituted
Appellant filed first memorial in arbitration
SIAC acknowledged notice of challenge to arbitrator
Factor sent letter regarding reassignment
Appellant received letter from Factor
SIAC dismissed challenge to tribunal
Evidential hearing before tribunal began
Tribunal issued award
Judgment reserved
Judgment delivered

7. Legal Issues

  1. Jurisdiction of Arbitral Tribunal
    • Outcome: The Court of Appeal found that the arbitral tribunal exceeded its jurisdiction when adjudicating on matters relating to Debt B.
    • Category: Jurisdictional
    • Sub-Issues:
      • Exceeded jurisdiction
      • Improper party to arbitration
    • Related Cases:
      • [2014] 1 SLR 372
      • [2003] 2 Lloyd’s Rep 430
      • [1987] 1 Lloyd’s Law Rep 424
  2. Assignment of Arbitration Agreement
    • Outcome: The Court of Appeal held that the right to arbitrate in relation to Debt B was assigned to the Factor and only reassigned to the respondent in 2017, after the arbitration commenced.
    • Category: Substantive
    • Sub-Issues:
      • Validity of notice of assignment
      • Reassignment of rights
      • Retrospective vesting of rights
    • Related Cases:
      • [2016] 5 SLR 455
      • [1990] 2 Lloyd’s Rep 11
      • [2009] 2 SLR(R) 769
  3. Interpretation of Contractual Clauses
    • Outcome: The Court of Appeal adopted the Paul Smith approach to reconcile the arbitration and jurisdiction clauses, giving effect to the parties' intention to arbitrate.
    • Category: Substantive
    • Sub-Issues:
      • Inconsistency between clauses
      • Harmonious interpretation
    • Related Cases:
      • [1991] 2 Lloyd’s Rep 127
      • [1968] 1 Lloyd’s Rep 163
  4. Novation of Debt
    • Outcome: The Court of Appeal held that the Debt Transfer Agreement did not relieve the appellant entirely of its obligation to pay the Open Debt.
    • Category: Substantive

8. Remedies Sought

  1. Monetary Damages
  2. Setting aside of arbitral award

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Arbitration
  • Commercial Litigation

11. Industries

  • Manufacturing
  • Distribution

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Paul Smith Ltd v H&S International Holding IncEnglish CourtYes[1991] 2 Lloyd’s Rep 127EnglandCited for the approach to reconcile arbitration and jurisdiction clauses in a contract, interpreting the jurisdiction clause as a submission to the court's supervisory jurisdiction over the arbitration.
EJR Lovelock Ltd v ExportlesEnglish CourtNo[1968] 1 Lloyd’s Rep 163EnglandCited as an example of a case where the dispute resolution clause was found to be meaningless due to irreconcilable inconsistencies.
PT Tri-MG Intra Asia Airlines v Norse Air Charter LimitedHigh CourtYes[2009] SGHC 13SingaporeCited as the only local decision addressing the construction of a contract containing both jurisdiction and arbitration clauses, applying the Paul Smith approach.
Lanxess Pte Ltd v APP Chemicals International (Mau) LtdCourt of AppealYes[2009] 2 SLR(R) 769SingaporeCited for the finding that an email can constitute notice of assignment, even without using the word 'assignment'.
Rals International Pte Ltd v Cassa di Risparmio di Parma e Piacenza SpACourt of AppealYes[2016] 5 SLR 455SingaporeCited for the principle that arbitration agreements are capable of assignment.
Montedipe SpA and another v JTP-RO Jugotanker (The “Jordan Nicolov”)English CourtNo[1990] 2 Lloyd’s Rep 11EnglandCited to demonstrate that an assignor cannot commence arbitration after legal assignment.
PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara International BV and others and another appealCourt of AppealYes[2014] 1 SLR 372SingaporeCited for the distinction between Article 34(2)(a)(i) and Article 34(2)(a)(iii) of the Model Law, relating to the existence and scope of an arbitration agreement, respectively.
Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of PakistanUnited Kingdom Supreme CourtYes[2011] 1 AC 763United KingdomCited in Astro, regarding the interpretation of Article 34(2)(a)(i) of the Model Law.
Aloe Vera of America, Inc v Asianic Food (S) Pte Ltd and anotherHigh CourtYes[2006] 3 SLR(R) 174SingaporeCited for the principle that the question of whether one was a proper party to an arbitration agreement is not to be considered under s 31(2)(d) of the IAA.
The “Jarguh Sawit”Court of AppealNo[1997] 3 SLR(R) 829SingaporeCited for the principle of retrospective vesting of a cause of action in an assignee, but distinguished in the context of arbitration proceedings.
Read v BrownQueen's Bench DivisionNo(1888) 22 QBD 128EnglandCited in Jarguh Sawit, regarding the retrospective effect of vesting, but distinguished in the context of arbitration proceedings.
Central Insurance Co Ltd v Seacalf Shipping CorpCourt of AppealNo[1983] 2 Lloyd’s Rep 25, CAEnglandCited in Jarguh Sawit, regarding the retrospective effect of vesting, but distinguished in the context of arbitration proceedings.
JVL Agro Industries Ltd v Agritrade International Pte LtdHigh CourtYes[2016] 4 SLR 768SingaporeCited for the principle that arbitration is founded entirely upon the parties’ consent.
Kenya Railways v Antares Pte Ltd (“The Antares”) (Nos 1 and 2)English Court of AppealYes[1987] 1 Lloyd’s Law Rep 424EnglandCited for the principle that an arbitral tribunal would not possess a free-standing power to allow for the addition of new causes of action that are independent from the parties’ arbitration agreement.
Internaut Shipping GmbH and another v Fercometal SARL (The “Elikon”)English Court of AppealYes[2003] 2 Lloyd’s Rep 430EnglandCited for the importance of ensuring that the proper parties are involved at the onset of arbitral proceedings.
Bateman and another v Hunt and othersEnglish Court of AppealYes[1904] 2 KB 530EnglandCited for the principle that valid notice of assignment may be provided by either the assignor or the assignee.
James Talcott Ltd v John Lewis & Co Ltd and North American Dress Co LtdEnglish CourtYes[1940] 3 All ER 592EnglandCited for the ability of an assignee to provide valid notice of the assignment to the debtor.
Holt v Heatherfield Trust Ltd and anotherEnglish CourtYes[1942] 2 KB 1EnglandCited for the ability of an assignee to provide valid notice of the assignment to the debtor.
Van Lynn Developments Ltd v Pelias Construction Co Ltd (formerly Jason Construction Co Ltd)English CourtYes[1969] 1 QB 607EnglandCited for the principle that a debtor is entitled to require a sight of the assignment so as to be satisfied that it is valid, and that the assignee can give him a good discharge.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the applicability and utility of the contextual approach of interpretation in allowing the court to ascertain the parties’ objective intentions.
BXH v BXIHigh CourtNo[2019] SGHC 141SingaporeThe High Court decision that was appealed in this case.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Civil Law Act (Cap 43, 1999 Rev Ed)Singapore
International Arbitration Act (Cap 143A, 2002 Rev Ed)Singapore
Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed)Singapore
Law of Property Act 1925 (c 20) (UK)United Kingdom

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration agreement
  • Assignment
  • Novation
  • Reassignment
  • Distributor Agreement
  • Debt
  • Jurisdiction
  • UNCITRAL Model Law
  • Buy Back Agreement
  • Open Debt
  • SIAC

15.2 Keywords

  • Arbitration
  • Assignment
  • Jurisdiction
  • Contract
  • Singapore
  • Debt
  • Award
  • Setting Aside

17. Areas of Law

Area NameRelevance Score
Arbitration95
Assignment Law60
Novation55
Recognition and Enforcement of Foreign Arbitral Awards40
Distributorship Agreements35
UNCITRAL Model Law30
Contract Law30
Breach of Contract30
Commercial Law25
Commercial Litigation20
Performance of Contract15
Variation10
Contracts (Rights of Third Parties) Act5

16. Subjects

  • Arbitration
  • Contract Law
  • Civil Procedure
  • Assignment
  • Debt Recovery