In the recent High Court judgment in VTB Bank (Public Joint Stock Company) v Anan Group (Singapore) Pte Ltd [2018] SGHC 250, Dentons Rodyk, acting for the plaintiff, successfully obtained a winding up order on a debtor company just six weeks after the service of a statutory demand for an underlying debt of US$ 250 million.

This case concerns interesting and novel points of law, where there is a confluence of insolvency and arbitration. It is an important decision on what the standard of proof is for a debtor company to show that there is a dispute, and therefore stave off winding up proceedings by a creditor, where the underlying contract is subject to arbitration.


The plaintiff, VTB Bank, is the second largest bank in Russia. The defendant is a Singapore-incorporated holding company which owns a significant number of shares in SGXlisted AnAn International (AAI). In November 2017, VTB Bank entered into a global master repurchase agreement (GMRA) with the defendant, which essentially provided for a loan of US$ 250 million by VTB Bank to the defendant to assist in a purchase of shares in LSElisted, EN plus. Under the GMRA, the defendant had an obligation to maintain sufficient collateral in respect of the transaction. However, in April 2018, the shares of EN plus plummeted starkly as a result of sanctions imposed by the United States against various individuals who had a controlling interest in EN plus. This triggered a default under the GMRA. The GMRA contained an arbitration clause where parties agree to refer any dispute to the Singapore International Arbitration Centre. VTB Bank issued the necessary notices under the GMRA and triggered the termination of the same; however, the defendant did not make any payment nor dispute the liability or quantum of the debt.

On 23 July 2018, the plaintiff served a statutory demand for the sum of US$ 170 million on the defendant. Three weeks lapsed without the defendant paying the sum owed, or securing or compounding the same to the reasonable satisfaction of the plaintiff. VTB Bank then commenced winding proceedings. The proceedings which followed were heavily contested by the defendant at each turn.

In summary the defendant commenced injunction proceedings to restrain VTB Bank from winding up the defendant, contested against the appointment of provisional liquidators and also the subsequent winding up proceedings.

Court’s Decision

The defendant contested the winding-up proceedings on the basis of three grounds, namely that the:

  1. Sanctions in the United States were an event of frustration;
  2. Sanctions were also a force majeure event; and
  3. The existence of the debt and its quantification was disputed and should both be resolved by arbitration pursuant to the GMRA.

The High Court accepted Dentons Rodyk’s arguments that all three grounds of dispute were unsupported by the evidence. Therefore, the main issue was the applicable standard of proof required when there was an arbitration agreement contained in the contract from which the debt arose.

The defendant relied on BDG v BDH [2016] 5 SLR 977 (BDG), a Singapore Court case, and Salford Estates (No 2) Ltd v Altomart Ltd (No 2) [2015] Ch 589 (Salford), an English Court of Appeal case, to argue that a lower standard of proof ought to apply where a dispute between two parties was governed by an arbitration clause.

The plaintiff argued that the High Court was bound by, inter aliaMetalform Asia Pte Ltd v Holland Leedon Pte Ltd [2007] 2 SLR(R) 268 (Metalform), a Court of Appeal case to rule that the test was not any different because the underlying contract was subject to arbitration.

With respect to this, the court observed that there were two distinct line of authorities submitted by the parties before it, noting particularly that the authorities relied upon by Dentons Rodyk all ‘spoke with one voice’ that the applicable standard of proof is consistent across the board, i.e. that of a genuine and substantial dispute, even where there is an arbitration agreement. On the other hand, the court observed that the defendant’s cases were all fairly recent, with the common underlying thread of according greater primacy to arbitration.

The Current Law

In his judgment, Dedar Singh Gill JC agreed with VTB Bank’s position that the High Court was bound by the Court of Appeal decision in Metalform and that even if there is a dispute between the parties which is governed by an arbitration agreement, the standard of proof remains that of a genuine and substantial dispute.

Nonetheless, Gill JC accepted that there is force in the policy reasoning in the defendant’s case and that he would have been amenable to applying the BDG approach if His Honor himself were not bound by the Court of Appeal’s decision. That said, His Honor held that the defendant would have failed to establish its case even if the lower standard of proof in BDG was applied as the defendant had not raised a bona fide dispute in relation to the three grounds that were cited (i.e. frustration, force majeure and the dispute on the alleged quantum).


This matter is highly relevant to financial institution and MNC clients in light of the prevalence of arbitration contracts in cross-border contracts.

This case shows that, even where there is an arbitration clause between the parties, if a debtor does not have any defence(s), a creditor should consider all options including proceeding by way of a statutory demand, and winding up the debtor. The present judgment also highlights the pragmatism and efficiency in the robust approach taken by the Singapore courts. It is a timely reminder that the courts, in its exercise of discretion in winding up proceedings, will always consider the entire facts and circumstances of the case. If the defence(s) raised lack merit, the court cannot and will not turn a blind eye, and allow its process to be abused by a recalcitrant debtor, simply because an arbitration clause is present in the underlying contract.

The defendant has appealed against this decision and the Court of Appeal hearing will take place in a few months’ time.