BNA v BNB AND ANOTHER

[2019] SGCA 84, Singapore Court of Appeal, Chief Justice Sundaresh Menon, Justice of Appeal Judith Prakash and Justice of Appeal Steven Chong, 27 December 2019

Arbitration – Law applicable to arbitration agreement – Whether applicable law followed main agreement or seat – Whether seat of arbitration in People’s Republic of China or Singapore

BNA and the second respondent, BNC, both Chinese companies, entered into a Takeout Agreement under which BNC was to supply industrial gases to BNA. The Takeout Agreement was governed by the law of the People’s Republic of China (PRC). The arbitration clause provided that “disputes shall be finally submitted to the Singapore International Arbitration Centre (SIAC) for arbitration in Shanghai, which will be conducted in accordance with its Arbitration Rules”. BNC commenced arbitration in Singapore. BNA contested the jurisdiction of the tribunal on the ground that the arbitration agreement was governed by the law of the PRC and under PRC law it was not permitted for a domestic dispute to be referred to a foreign arbitral tribunal. The tribunal ruled by a 2:1 majority that the arbitration agreement was governed by the law of Singapore in that the seat of the arbitration was Singapore. The reference to Shanghai was the venue for the hearing and not the seat. Accordingly, the arbitration agreement was lawful and the tribunal had jurisdiction.