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Arbitration agreement not repudiated by commencement of administrative legal proceedings

In CLQ v CLR [2021] SGHC(I) 15, the Singapore International Commercial Court rejected a challenge to a jurisdiction award, finding that the underlying arbitration agreement had not been repudiated by the commencement of separate legal proceedings.

The plaintiff was the government of “Ruritania”. The defendant was a developer incorporated in the British Virgin Islands. The parties signed a joint venture agreement (“JVA”) to develop a site in Ruritania. They also agreed to incorporate a joint venture company (“JVC”) under Ruritanian law. Thereafter, the government would enter a "master lease agreement" (“MLA”) to lease the site to the JVA for an initial period of 50 years.

After the relevant Ruritanian ministry (“MOC”) failed to register the JVC, the developer initiated legal proceedings in Ruritania against the MOC and two other Ruritanian ministries.

The JVC was subsequently registered, but the MLA was not executed so the project never took off. As such, the developer commenced arbitration, claiming for loss of profits and wasted expenses from the government's repudiation of the JVA. The government raised a jurisdictional challenge that the developer had repudiated the arbitration agreement by commencing the Ruritanian proceedings and the government had accepted the repudiation by participating in the Ruritanian proceedings.

The Court held that the developer's commencement and continuation of the Ruritanian proceedings did not amount to a repudiatory breach of the arbitration agreement. The main reason being that the scope of the Ruritanian proceedings was limited to obtaining administrative relief that would support the preliminary steps in the performance of the JVA as the documents filed in the Ruritanian proceedings showed that the claim was about seeking administrative relief against the MOC in its capacity as the corporate regulator, and not a remedy against the government for a breach of the JVA.  

Therefore, the commencement and continuation of administrative proceedings would not alone constitute a repudiation of an arbitration agreement.  

Parties have to bear in mind that the question of whether there is a repudiation of an arbitration agreement, is a factual enquiry to which the context and conduct of the court proceedings in question are relevant. 

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