Singapore Winding Up Proceedings Dismissed With Costs Because Applicant Should Have Arbitrated First

The Singapore High Court has dismissed a winding-up application by a prospective creditor where the basis of the alleged outstanding debt was subject to a contract containing arbitration clauses (Founder Group (Hong Kong) Ltd (in liquidation) v Singapore JHC Co Pte Ltd [2023] SGHC 159).

In doing so, the High Court sounded multiple notes of caution to creditors seeking to apply to wind up a company in such situations.

• First, it is paramount to satisfy the Court on the issue of standing of the applicant. In other words, the Court must be satisfied that the applicant is in fact a creditor of the company.
• Where contracts are governed by arbitration clauses, and the arbitration process is not exhausted, the applicant runs the risk of the Court refusing to substitute its substantive judgment which the parties had agreed to reserve to the arbitral tribunal.