Singapore High Court: Insolvency and the Arbitration Agreement

In Aryan (SEA) Pte Ltd v. Pure Group (Singapore_ Pte Ltd [2025] SGHC 99, the Singapore High Court dealt with a dispute regarding a statutory demand and winding up proceedings.

The main question was what standard of review applies when a company seeks to resist winding up proceedings where there's an arbitration agreement covering the disputed debt.

Arbitration Agreement: The court found that despite confusing drafting in the contract, there was a valid arbitration agreement covering disputes "arising out of or relating to" the agreement. The supply of manpower and tools, though outside the original scope, was held to "relate to" the agreement since it was for the same project.

Standard of Review: The court applied the "prima facie" standard established in AnAn Group v VTB Bank, rather than the higher "triable issues" standard. Under this approach, winding up proceedings should be stayed if there's a valid arbitration agreement covering the dispute, unless the debtor's position is an abuse of process.

Abuse of Process: While the judge was sympathetic to Pure Group's position (noting Aryan's refusal to pay seemed commercially unfair), he found this didn't constitute abuse of process. Aryan was solvent with over SGD2.37 million in the bank, so insolvency proceedings were unnecessary.

The High Court granted an injunction restraining Pure Group from filing a winding up application based on the statutory demand. The matter had to proceed to arbitration instead.

The judgment illustrates the court's reluctance to allow the insolvency process to be used as a debt collection mechanism when there are arbitration agreements in place, even where the debtor's position may appear weak on the merits.