Sapura Fabrication Sdn Bhd v GAS: Cross-Border Insolvency, Arbitration, and Enforcement of Arbitral Agreements

In [2024] SGHC 241, the Singapore High Court considered applications by Sapura Fabrication Sdn Bhd and Sapura Offshore Sdn Bhd for recognition of Malaysian insolvency proceedings under the Insolvency, Restructuring and Dissolution Act 2018. GAS, a non-party, sought a carve-out to proceed with arbitration against the Sapura Entities. Justice Aedit Abdullah granted the carve-out, allowing arbitration to proceed, subject to a condition that no enforcement action be taken without the court's permission. The court balanced the insolvency moratorium with the policy of enforcing arbitration agreements.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Carve-out granted to GAS to proceed with arbitration against Sapura Entities, subject to condition of no enforcement without court permission.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court addresses recognition of Malaysian insolvency proceedings and grants carve-out for arbitration, balancing insolvency moratorium and arbitration agreement enforcement.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Sapura Fabrication Sdn BhdApplicantCorporationCarve-out granted for arbitration to proceed againstPartial
Sapura Offshore Sdn BhdApplicantCorporationCarve-out granted for arbitration to proceed againstPartial
Mohd Anuar bin TaibApplicantIndividualNeutralNeutral
Chew Seng HengApplicantIndividualNeutralNeutral
Norzaimah binti MaarofApplicantIndividualNeutralNeutral
GASNon-PartyOtherCarve-out grantedWon

3. Judges

Judge NameTitleDelivered Judgment
Aedit AbdullahJudgeYes

4. Counsels

Counsel NameOrganization
Han Guangyuan KeithOon & Bazul LLP
Angela Phoon Yan LingOon & Bazul LLP
Santhiya d/o KulasakeranOon & Bazul LLP
Eunice Chan Swee EnAscendant Legal LLC
Teo Jim YangAscendant Legal LLC

4. Facts

  1. Sapura Entities sought recognition of Malaysian restructuring proceedings in Singapore.
  2. GAS sought a carve-out to proceed with arbitration against the Sapura Entities.
  3. The dispute arose from construction contracts between GAS and the Sapura Entities.
  4. GAS terminated the contracts, citing Insolvency Event and breaches.
  5. The contracts contained an arbitration agreement for Singapore-seated arbitration.
  6. GAS commenced arbitration seeking compensation and declarations.
  7. Sapura Entities argued GAS's claims fell within their proposed schemes of arrangement.

5. Formal Citations

  1. Re Sapura Fabrication Sdn Bhd and another matter, Originating Applications Nos 241 and 242 of 2024, [2024] SGHC 241

6. Timeline

DateEvent
Insolvency, Restructuring and Dissolution Act 2018 enacted
UNCITRAL Model Law on Cross-Border Insolvency finalized
GAS and Sapura Entities entered into construction contract
GAS and Sapura Entities entered into construction contract
Sapura Group applied for First Reorganisation Proceeding in Malaysia
Malaysian High Court granted order for First Reorganisation Proceeding
Singapore High Court granted First Recognition Order
Malaysian High Court granted order for Second Reorganisation Proceeding
GAS served termination notices on Sapura Entities
Sapura Entities responded to termination notices issued by GAS
Sapura Entities responded to termination notices issued by GAS
GAS commenced arbitrations against Sapura Entities
Sapura Entities filed Responses to Notice of Arbitration
Parties agreed to protocol to appoint presiding arbitrator
SIAC consolidated arbitrations into a single arbitration
Singapore High Court granted Second Recognition Order
Orders relating to Third Reorganisation Proceeding granted by Malaysian High Court
Sapura Entities' applications to lift stay arising from Second Recognition Order granted
Orders recognising the Third Reorganisation Proceeding as foreign main proceedings granted
Judgment reserved
Judgment reserved
Judgment issued

7. Legal Issues

  1. Recognition of foreign insolvency proceedings
    • Outcome: The court granted recognition of the Malaysian insolvency proceedings as foreign main proceedings.
    • Category: Substantive
  2. Enforcement of arbitration agreements
    • Outcome: The court allowed the arbitration to proceed, balancing the policy of enforcing arbitration agreements with the insolvency moratorium.
    • Category: Substantive
  3. Automatic moratorium arising on recognition as foreign main proceedings
    • Outcome: The court modified the automatic stay to allow arbitration to proceed, subject to a condition.
    • Category: Procedural

8. Remedies Sought

  1. Monetary Damages
  2. Declaratory Judgment
  3. Indemnity of costs and expenses
  4. Interest on the award

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Arbitration
  • Insolvency

11. Industries

  • Oil and Gas
  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Re IM Skaugen SE and other mattersHigh CourtYes[2019] 3 SLR 979SingaporeCited for the principle that a scheme of arrangement moratorium extends to arbitration proceedings.
The “Engedi”High CourtYes[2010] 3 SLR 409SingaporeCited for the principle that excluding arbitrations would create a gaping exception to preserving assets of an insolvent company.
Wang Aifeng v Sunmax Global Capital 1 Fund Pte Ltd and anotherHigh CourtYes[2023] 3 SLR 1604SingaporeCited for the factors relevant to granting a carve-out from an insolvency law moratorium.
Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte LtdCourt of AppealYes[2024] 1 SLR 130SingaporeCited for affirming the applicability of Wang Aifeng in the context of cross-border corporate insolvency.
Cosco Bulk Carrier Co Ltd v Armada Shipping SA and anotherEnglish High CourtYes[2011] 2 All ER (Comm) 481England and WalesCited as pointing in favor of granting a carve-out for arbitration to proceed.
Kyen Resources Pte Ltd (in compulsory liquidation) and others v Feima International (Hongkong) Ltd (in liquidation) and another matterCourt of AppealYes[2024] 1 SLR 266SingaporeCited for guidance that a liquidator should not attempt to resolve cross-claims and set-off within the proof of debt regime unless it was a “matter of simple arithmetic”.
Stichting Shell Pensioenfonds v Krys and anotherPrivy CouncilYes[2015] AC 616United KingdomCited for the principle that there is generally no objection to a creditor invoking the adjudicatory jurisdiction of a foreign court.
American Energy Group Ltd v Hycarbex Asia Pte Ltd (in liquidation)English High CourtYes[2014] EWHC 1091 (Ch)England and WalesCited for the principle that a clear determination of liabilities would be in the interests of both the entities and their creditors.
AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Co)Court of AppealYes[2020] 1 SLR 1158SingaporeCited for the principle that the principles applicable to stay applications under s 6 of the IAA were generally applicable to the court’s discretion in winding-up petitions based on disputed debts governed by arbitration agreements.
Salford Estates (No 2) v Altomart Ltd (No 2)English Court of AppealYes[2015] Ch 589England and WalesCited for the approach that the principles applicable to stay applications under s 6 of the IAA were generally applicable to the court’s discretion in winding-up petitions based on disputed debts governed by arbitration agreements.
Founder Group (Hong Kong) Ltd (in liquidation) v Singapore JHC Co Pte LtdHigh CourtYes[2023] 2 SLR 554SingaporeCited for the principle that an insolvency court would generally stay or dismiss a winding-up petition based on a disputed debt if it is satisfied on a prima facie basis that there is a valid arbitration agreement between parties and that the dispute falls within the scope of the arbitration agreement.
Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appealsCourt of AppealYes[2016] 1 SLR 373SingaporeCited for the principle that an insolvency court would generally stay or dismiss a winding-up petition based on a disputed debt if it is satisfied on a prima facie basis that there is a valid arbitration agreement between parties and that the dispute falls within the scope of the arbitration agreement.
Sian Participation Corp (in liquidation) v Halimeda International LtdPrivy CouncilYes[2024] UKPC 16United KingdomDiscussed in relation to whether the court’s discretion could take into account the underlying policy of the arbitration legislation in a situation in which the mandatory stay provision of the arbitration legislation was not engaged.
Re Mega Gold Holdings LtdHong Kong Court of First InstanceYes[2024] HKCFI 2286Hong KongDiscussed in relation to whether the court’s discretion could take into account the underlying policy of the arbitration legislation in a situation in which the mandatory stay provision of the arbitration legislation was not engaged.
Re Shandong Chenming Paper Holdings LtdHong Kong Court of AppealYes[2024] 2 HKLRD 1040Hong KongCited as aligned with Salford Estates and AnAn.
Re Simplicity & Vogue Retailing (HK) Co LtdHong Kong Court of AppealYes[2024] 2 HKLRD 1064Hong KongCited as aligned with Salford Estates and AnAn.
Ronelp Marine Ltd and others v STX Offshore and Shipbuilding Co Ltd and anotherEnglish High CourtYes[2016] EWHC 2228 (Ch)England and WalesDistinguished on the basis that it did not involve an international arbitration agreement but a non-exclusive jurisdiction clause.
Re Lam Kwok Hung Guy, ex p Tor Asia Credit Master Fund LPHong Kong Court of Final AppealYes(2023) 26 HKCFAR 119Hong KongCited for the principle that the enforcement of international arbitration agreements is a “non-discretionary” matter.
Hex Technologies Ltd and others v DCBX LtdEnglish High CourtYes[2023] 2 BCLC 683England and WalesCited for the principle that the enforcement of international arbitration agreements is a “non-discretionary” matter.
Larsen Oil and Gas Pte Ltd v Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore)Court of AppealYes[2011] 3 SLR 414SingaporeCited for the principle that the entry of a party to an arbitration agreement into insolvency proceedings does not cause an arbitration agreement to cease to have effect, at least in relation to disputes concerning the parties’ pre-insolvency rights.
Philpott and another (as joint liquidators of WGL Realisations 2010 Ltd) v Lycee Francais Charles de Gaulle SchoolNot specifiedYes[2016] 1 All ER (Comm) 1Not specifiedCited as foreign authority holding that an arbitration agreement continues to operate even after the lodging of a proof of debt by a creditor.
Tanning Research Laboratories Inc v O’BrienHigh Court of AustraliaYes(1990) 169 CLR 332AustraliaCited as foreign authority holding that an arbitration agreement continues to operate even after the lodging of a proof of debt by a creditor.
Manharlal Trikamdas Mody and another v Sumikin Bussan International (HK) LtdHigh CourtYes[2014] 3 SLR 1161SingaporeCited for the principle that a creditor’s lodging of a proof of debt can amount to a submission to the jurisdiction of the court having supervisory jurisdiction over the foreign insolvency proceedings.
Rubin and another v Eurofinance SA and others (Picard and others intervening)House of LordsYes[2013] 1 AC 236United KingdomCited for the principle that a creditor’s lodging of a proof of debt can amount to a submission to the jurisdiction of the court having supervisory jurisdiction over the foreign insolvency proceedings.
Sapura Energy Bhd & Ors v Martin Bencher (Malaysia) Sdn BhdMalaysian High CourtYes[2024] 3 CLJ 159MalaysiaCited for the principle that a proof of debt submitted in the First Reorganisation Proceeding constituted a submission to the subsequent Reorganisation Proceedings.
Giant Light Metal Technology (Kunshan) Co Ltd v Aksa Far East Pte LtdHigh CourtYes[2014] 2 SLR 545SingaporeCited for the principle that a submission to an earlier proceeding can constitute a submission to a subsequent proceeding if there is a sufficient nexus between both proceedings.
Humpuss Sea Transport Pte Ltd (in compulsory liquidation) v PT Humpuss Intermoda Transportasi TBK and anotherHigh CourtYes[2016] 5 SLR 1322SingaporeCited for the principle that the Malaysian courts’ view on the issue of submission is relevant and can legitimately be taken into account.
Gulf International Holding Pte Ltd v Delta Offshore Energy Pte LtdHigh CourtYes[2023] 5 SLR 1455SingaporeDiscussed in relation to whether the principle established in Salford Estates and AnAn ought not to be applied as strictly in judicial management applications due to their focus on rescue and rehabilitation.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 252 of the Insolvency, Restructuring and Dissolution ActSingapore
Third Schedule of the Insolvency, Restructuring and Dissolution ActSingapore
International Arbitration Act 1994Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Cross-border insolvency
  • Arbitration agreement
  • Automatic moratorium
  • Carve-out
  • Schemes of arrangement
  • Proof of debt
  • Restraining order
  • Insolvency Event
  • Designated Contingent Claims

15.2 Keywords

  • insolvency
  • arbitration
  • cross-border
  • moratorium
  • Sapura
  • GAS
  • Singapore
  • Malaysian
  • restructuring
  • carve-out

17. Areas of Law

Area NameRelevance Score
Insolvency Law95
Restructuring and Dissolution90
Recognition of foreign insolvency proceedings85
Cross-Border Insolvency80
International Arbitration70
Arbitration65
International Commercial Arbitration60

16. Subjects

  • Insolvency
  • Arbitration
  • Conflict of Laws
  • Restructuring