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Promissory Note Holders Not Bound by Arbitration Clause in Underlying Contract

September 2016 - Litigation & Dispute Resolution. Legal Developments by Drew & Napier LLC .

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This update discusses the recent case of Rals International Pte Ltd v Cassa di Risparmio di Parma e Piacenza SpA [2016] SGCA 53 where the Singapore Court of Appeal upheld the decision of the High Court that the assignee’s claim based on a number of promissory notes did not fall within the scope of the arbitration agreement in the underlying Supply Agreement. The assignee of such notes was therefore free to litigate in the courts.

This decision is of significance given the widespread use of promissory notes and other negotiable instruments, especially for our clients who are involved in international commercial and shipping transactions.

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