Singapore court endorses one-stop adjudication in context of umbrella agreements (SICC)

Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com.

In Pertamina International Marketing & Distribution v Phoenix Petroleum Philippines [2024] SGHC(I) 19, the Singapore International Commercial Court (SICC) confirmed that an arbitration clause in a framework or umbrella agreement usually covers disputes in other related contracts that do not contain different dispute resolution provisions.

In a recently published judgment, the Singapore International Commercial Court (SICC) has confirmed that an arbitration clause in a framework or umbrella agreement will generally cover disputes in other related contracts that do not contain different dispute resolution provisions.

The claimant and respondent executed a memorandum of understanding (MoU) for the supply and sale of petroleum products. The MoU was intended to serve as an umbrella agreement for the parties' various "partnership workstreams" and included an arbitration agreement that any disputes "arising out of or in connection with" the MoU were subject to arbitration in Singapore.

The parties subsequently entered several sale contracts (Sale Contracts) without dispute resolution provisions. When the respondent failed to pay sums due under the Sale Contracts, the claimant commenced arbitration in reliance on the MoU arbitration agreement.

The arbitral tribunal issued an award in the claimant's favour. Rather than commencing set aside proceedings at the seat of the arbitration (Singapore), the respondent filed a court action in the Philippines seeking a declaration that the award was void.

The claimant responded by seeking a permanent anti-suit injunction from the SICC to prevent the respondent from pursuing the Philippines court action. Before the SICC, the respondent argued that the Sale Contracts were not part of the MoU and fell outside the scope of the MoU's arbitration agreement, thus rendering the award void and any anti-suit relief unjustified.

The SICC rejected the respondent's argument and granted the anti-suit relief, finding that the words "arising out of or in connection with" in the MoU arbitration clause, coupled with the absence of any dispute resolution clause in the Sale Contracts, supported the conclusion that the parties intended the MoU arbitration clause to apply to Sale Contracts disputes. While the respondent was entitled to resist enforcement in the Philippines it could not seek to invalidate the award there.

The SICC's decision is consistent with the "one-stop adjudication" presumption under English and Singapore law that commercial parties prefer to resolve their disputes before a single judge or tribunal, rather than through separate modes of dispute resolution. It also accords with the practical realities of contract negotiation, as parties rarely seek to re-confirm a term already set out in an umbrella agreement, instead focusing their efforts on the key commercial terms of each new transaction. The case also demonstrates the importance of the anti-suit injunction to protect the arbitration process.

Case: Pertamina International Marketing & Distribution v Phoenix Petroleum Philippines [2024] SGHC(I) 19 (28 June 2024) (Sir Henry Bernard Eder).