THE AUTHOR:
Aayushi Singh, Jurist in International Arbitration
As international businesses increasingly look to Singapore for both dispute resolution and corporate restructuring, the city-state has developed a sophisticated legal framework at the intersection of arbitration and insolvency. The Singapore courts have struck a delicate balance—upholding party autonomy through arbitration agreements while ensuring that insolvency proceedings serve their core purpose: the fair and efficient treatment of creditors. This dynamic is playing out in a series of decisions that are shaping how Singapore navigates cross-border commercial realities.
At the heart of this evolution lies the recent Singapore Court of Appeal (“SGCA”) decision in Sapura Fabrication Sdn Bhd v GAS [2025] SGCA 13 (“Sapura Fabrication”), which signals a clear judicial direction: arbitration will be respected even in the face of foreign insolvency moratoriums, though not at the expense of undermining Singapore’s procedural and public policy interests.
The Core Tension: Arbitration vs Insolvency
Arbitration clauses are based on party autonomy—a cornerstone of international commercial law. Insolvency proceedings, in contrast, serve collective interests by centralizing the debtor’s affairs and ensuring fair treatment of all creditors. When these two systems collide, courts must weigh whether enforcing an arbitration agreement undermines the orderly conduct of insolvency proceedings.
Singapore’s courts have long affirmed their support for arbitration. In AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Co) [2020] SGCA 33 (“AnAn Group”), the SGCA held that when a winding-up application is based on a debt that is disputed and covered by an arbitration agreement, the courts should typically stay or dismiss the application. This reinforced the principle that insolvency mechanisms must not be misused to sidestep agreed dispute resolution processes.
But the Court also drew limits. In Larsen Oil and Gas Pte Ltd v Petroprod Ltd [2011] SGCA 21 (“Larsen Oil”), it held that certain claims—particularly those related to the avoidance of transactions—are non-arbitrable. These claims implicate public policy and third-party interests, placing them within the exclusive domain of the courts. This distinction reflects a broader trend in Singapore: arbitration governs contractual disputes, while statutory insolvency issues remain judicial territory.
Sapura Fabrication: The Cross-Border Challenge
Sapura Fabrication added an important dimension to this jurisprudence. The case concerned arbitration proceedings in Singapore and a concurrent corporate rescue moratorium granted in Malaysia. The Malaysian court’s order purported to stay all proceedings, including arbitration abroad. The key issue was whether the Singapore-seated arbitration had to yield to the foreign moratorium. The SGCA held that the Malaysian moratorium had no extraterritorial effect and did not automatically stay the arbitration. Crucially, it emphasized that Singapore courts retain discretion to grant or refuse a stay, even in the face of foreign insolvency proceedings, based on factors like party autonomy, comity, and the interests of justice.
The Court distinguished this case from AnAn Group, which concerned the non-arbitrability of claims under Singapore’s own insolvency laws. Unlike AnAn and Larsen Oil, which focused on arbitrability, Sapura Fabrication dealt with the procedural impact of foreign insolvency regimes. The decision reinforces Singapore’s control over its arbitral proceedings and underscores its dual role as a pro-arbitration jurisdiction and a thoughtful player in cross-border restructuring.
The SGCA held that the Malaysian moratorium did not have an extraterritorial effect—it could not automatically halt arbitration proceedings in Singapore. More significantly, the Court affirmed that Singapore courts are not required to stay arbitration simply because of a foreign insolvency proceeding. Rather, judges retain discretion, and must consider factors such as:
- The purpose and scope of the foreign insolvency regime;
- The nature of the dispute;
- The interests of justice; and
- The principle of comity.
This represents a nuanced approach: Singapore protects its own jurisdictional integrity while acknowledging the broader restructuring goals of foreign courts. The Court’s reasoning also demonstrates a willingness to engage with comparative jurisprudence, considering decisions from Canada, the UK, and Hong Kong in developing its position.
Comparative Trends: Global Convergence, Local Nuance
Singapore’s evolving jurisprudence is increasingly aligning with that of other common law jurisdictions in striking a balance between the enforcement of arbitration agreements and the integrity of insolvency proceedings. The SGCA’s decision in AnAn Group established that winding-up proceedings should be stayed in favour of arbitration if the debt is disputed and governed by an arbitration agreement. This approach mirrors the English position in Salford Estates (No 2) Ltd v Altomart Ltd (No 2) [2014] EWCA Civ 1575, which held that insolvency proceedings must be stayed where the debt is disputed and subject to an arbitration agreement. However, the recent UK Privy Council decision in Sian Participation Corp (In Liquidation) v Halimeda International Ltd [2024] UKPC 16 has overruled Salford Estates, introducing a more nuanced approach. The Privy Council emphasized that winding-up proceedings should not be automatically stayed merely because the debt is disputed and subject to an arbitration agreement. Instead, the court must assess whether the debt is disputed on genuine and substantial grounds. This decision has prompted Singapore courts to reconsider their stance
In Sapura Fabrications, the SGCA addressed the interplay between insolvency moratoriums and international arbitration. The court granted a carve-out from the moratorium, allowing arbitration to proceed, emphasizing the importance of upholding party autonomy in dispute resolution. Notably, the court distinguished the Sian decision, asserting that it does not apply to restructuring efforts under schemes and arrangements.
Additionally, the SGCA’s decision in Founder Group (Hong Kong) Limited and Singapore JHC Co Pte Ltd [2023] SGCA 40 clarified that a creditor cannot present a winding-up petition based on a disputed debt subject to an arbitration agreement unless the debt has been established through arbitration and remains unsatisfied. This underscores the necessity for a valid and enforceable arbitration agreement before resorting to insolvency proceedings.
Hong Kong’s approach, as articulated in Re Simplicity & Vogue Retailing (HK) Co., Limited [2024] HKCA 299 (Hong Kong), aligns with the previous English position, prioritizing arbitration agreements in the context of winding-up petitions. In Guy Kwok-Hung Lam v Tor Asia Credit Master Fund LP [2023] HKCFA 9, the Hong Kong Court of Final Appeal emphasized that while the existence of an arbitration agreement is relevant, it is not the decisive factor in opposing winding-up petitions. The court underscored the importance of considering public interest in maintaining an efficient insolvency system, advocating for a pro-arbitration approach that balances this with the need to preserve effective insolvency procedures.
Canada offers a further instructive point of comparison in the interplay between arbitration and insolvency. In Sapura Fabrication, the SGCA explicitly considered Canadian jurisprudence when assessing whether arbitration agreements become inoperative during a restructuring moratorium. (paras 45, 46, 101-104). The appellants had relied on the earlier Ontario decision in Attorney General of Canada v Reliance Insurance Co (2007) 87 OR (3d) 42, which took the position that arbitration agreements are rendered “inoperative” or “incapable of being performed” during a stay. However, the Court acknowledged that this view had been substantially qualified by the Supreme Court of Canada in Peace River Hydro Partners v Petrowest Corp [2022] SCC 41. The Canadian apex court adopted a nuanced, discretionary framework: arbitration agreements may be held inoperative only where their enforcement would compromise the orderly and efficient resolution of insolvency proceedings. The Court enumerated factors to guide this determination, including the impact on the integrity of the insolvency process, prejudice to parties, urgency, and the applicability of bankruptcy-related stays.
While the Singapore Court ultimately declined to adopt the Peace River framework in full—reasoning that the existing Wang Aifeng test already provided a sufficiently discretionary and context-sensitive basis for determining whether a carve-out should be granted—the detailed engagement with Canadian authority reflects Singapore’s openness to comparative insights. This balanced stance aligns Singapore with other leading common law jurisdictions while preserving jurisdiction-specific nuances embedded in its statutory framework, particularly the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”). One such nuance is Singapore’s codified moratorium regime, as outlined in sections 64 and 65 of the IRDA, which provides for both automatic and court-ordered moratoriums during debt restructuring, including third-party stays — a feature not commonly found in the UK or Hong Kong. Additionally, the IRDA empowers the court to grant “super priority” rescue financing (section 67), thereby promoting restructuring over liquidation. These provisions are designed to foster a debtor-friendly environment while still respecting creditor rights, and they reflect Singapore’s hybrid approach that blends elements from both US Chapter 11-style restructuring and traditional creditor-led models. This statutory architecture interacts directly with the court’s discretion in handling arbitration agreements during insolvency, demonstrating how Singapore’s unique insolvency legislation coexists with its pro-arbitration ethos.
Practical Takeaways for Businesses
Singapore’s evolving position offers valuable insights for commercial parties navigating cross-border risk:
1. Thoughtful Clause Drafting
Businesses should draft arbitration clauses that clearly express their intent to arbitrate, even in the event of insolvency. Reference to instruments like the SIAC Insolvency Arbitration Protocol—or tailored wording that anticipates restructuring scenarios—can help ensure that arbitral rights are upheld.
2. Strategic Decision-Making for Creditors
Creditors must weigh the benefits of initiating arbitration versus pursuing insolvency remedies. Attempting to use insolvency proceedings to pressure a counterparty in the face of a valid arbitration agreement may backfire, as courts are increasingly alert to such abuse.
3. Navigating Judicial Discretion
The courts’ discretion will be central in determining whether arbitration can proceed. Factors such as prejudice, efficiency, and cross-border comity all come into play. Businesses should be prepared to make principled arguments for or against arbitration based on the specific context.
Conclusion: A Delicate Balance
Singapore’s case law—particularly as developed through AnAn Group, Larsen Oil, and Sapura Fabrication—demonstrates a careful calibration between upholding contractual autonomy and ensuring the effectiveness of the insolvency regime. What distinguishes Singapore is not simply its pro-arbitration posture, but the clarity and flexibility with which it navigates exceptions.
By engaging with global jurisprudence while preserving its distinct legislative features, Singapore reinforces its status as a leading destination for dispute resolution and restructuring. Its courts are not merely following trends—they are helping to shape a global standard.
For businesses and practitioners, Singapore offers a legally predictable and commercially astute environment—one where arbitration and insolvency do not compete but coexist under a thoughtfully integrated framework.
ABOUT THE AUTHOR
Aayushi Singh is a Jurist at a boutique arbitration firm in Paris. Aayushi’s experience includes commercial arbitration under SIAC, ICC, and DIAC Rules seated in London, Singapore, Zurich, and New Delhi. She pursued the National University of Singapore-MIDS Geneva Double Degree Programme on a full scholarship by the Aga Khan Development Network and also received a full scholarship to pursue the Austrian Arbitration Academy. She presently serves as the Young ITA (India) Co-Chair and a Senior Rapporteur for Young OGEMID/TDM. She frequently writes on different themes under arbitration in India and Singapore.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
