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Minority Oppression claims arbitrable-Singapore Court of appeal

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In a recent judgment L Capital Jones Ltd Vs Maniach Pte Ltd, dated 09th January 2017, Singapore Court of Appeal dealt with the question of arbitrability of minority oppression claims with particular reference to whether there is a public policy exception to the General Rule stated in its earlier judgment of Tomolugen Holdings Ltd Vs Silica Investors Ltd and other appeals (2016)1SLR37, that minority oppression claims are generally arbitrable.

 The respondent Maniach Pte Ltd is a Singapore Company owned and controlled by John Manos (“Manos”). It owns 37% of the shares in the second appellant. The First Appellant, L Capital Jones, is a Mauritius Company wholly owned by a private equity firm L capital Asia LLC  (“L CAPITAL ASIA”). L Capital Jones owns the remaining 63% of the shares in JtGGH. JtGGH is a Singapore incorporated Company and was essentially the vehicle through which L Capital Jones and the Respondent carried out their Joint venture. Prior to April 2015, JtGGH owned 100% of the shares in Jones Holdings Pty Limited (“JGH”), a company incorporated in Australia. JGH owns and runs the entire “Jones the Grocer” business in Singapore, Australia and other countries.

 Manos was one of two founding partners of the “Jones the Grocer” business. he bought his partner out in 2010 and became the sole owner of the business. acting through the Respondent, he then entered into a joint venture with L Capital Jones pursuant to two shareholder agreements that were entered into between L Capital Jones, the Respondent, Maos and JtGGH in July 2012 and November 2013 (collectively “ the Shareholder Agreement). Pursuant to the Shareholder Agreement, L Capital Jones invested a total of US$21m into the “Jones the Grocer” business in exchange for 63% of the shares in JtGHH. L Capital Jones therefore became the majority shareholder of JtGHH, while Manos, through the Respondent, held the remaining 37% of JtGHH’s shares. The said shareholder agreement had an arbitration Clause.

 The respondent commenced the present minority oppression proceedings against the appellants by way of a suit, ignoring the arbitration clause. The appellants filed an application of stay in favour of arbitration. The High Court Judge refused to stay the suit in favour of the arbitration, stating that Minority oppression claim is not arbitrable, hence an appeal was filed in the Court of Appeal. Even though respondent agreed that the minority oppression issue is arbitrable in the light of the Judgment in Tomolugen  but it contended that its specific oppression claim is not arbitrable because it raises issues of public policy, specifically the importance of protecting the integrity  of the judicial process. But Court of Appeals held that the issue of “integrity of judicial process” does not arise in this case and it was not a ground raised in the High Court. Hence it reconfirmed Tomolugen as the law settled in Singapore and Oppression claims are arbitrable.