Be Careful What You Draft: Parties' Intention To Arbitrate Will Not Be Given Effect "At All Costs"

In BNA v BNB and Another, [2019] SGCA 84, the Singapore Court of Appeal reversed the ruling of the Singapore High Court and confirmed that the phrase "arbitration in Shanghai" meant that Shanghai was the seat of arbitration, not simply the venue of arbitration. This decision meant that the laws of the People's Republic of China ("PRC"), not Singapore, governed the arbitration agreement. Further, it created a risk that the arbitration agreement would be found invalid under PRC law.

Background

The dispute arose out of an agreement (the "Takeout Agreement") after the appellant buyer failed to make certain payments to the respondent sellers for the products they purchased and delivered under the Takeout Agreement. The Takeout Agreement contained an arbitration agreement in Article 14: