Singapore Case Update: Assignment of Arbitration Agreements in Claims over Bills of Exchange (Cassa di Risparmio v Rals International [2015] SGHC 264)


Case Name: Cassa di Risparmio di Parma e Piacenza SpA v Rals International Pte Ltd  [2015] SGHC 264 (available here)
Court: Singapore High Court
Coram: Vinodh Coomaraswamy Jbr></br>
Date Delivered: 16 October 2015

In this decision, the Singapore High Court clarified the general position that in an assignment of a contract, both the benefit and the obligation of an arbitration agreement are assigned along with the contractual rights under the primary contract. Importantly, the Court also provided that a claim on a bill of exchange is generally outside the scope of an arbitration agreement contained in the primary contract which has been so assigned. Leave to appeal this decision to the Singapore Court of Appeal has been granted. IAA Student Editor for Singapore Clara Khoo reports.



This case relates to whether an obligor can, under s 6 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the Act”), use its arbitration agreement with an assignor to stay an assignee’s action against him. In order to answer this question, the High Court (“the Court”) had to address a conflict between two fundamental principles embedded in the jurisprudence of international commerce – the negotiability of a promissory note and the binding power of an arbitration agreement – and decide which one superseded the other. While the Court in this case dismissed the obligor’s application to stay the action, it nevertheless granted leave for appeal to the Court of Appeal. Given that a situation where these two principles competed for primacy has never been considered by the Court of Appeal, an authoritative ruling is therefore necessary.

A. Parties

The defendant (“Rals”) is a company incorporated in Singapore. Rals bought goods from the seller (“Oltremare”), who was the payee of the promissory notes. The claimant (“Cariparma”) is a bank incorporated in Italy; it is the holder and assignee of the eight promissory notes drawn by Rals.

B.  Background

Oltremare entered into a Supply Agreement (“the Supply Agreement”) under which it agreed to manufacture and deliver to Rals equipment for Rals’ business. In return, Rals agreed to make part payment for the goods with eight promissory notes. The Supply Agreement was expressly governed by Singapore law and contained an express arbitration clause,[1] which forms the essence of this dispute.

In a separate agreement (“the Discount Contract”), Oltremare negotiated the notes to Cariparma without recourse, assigning to Cariparma the attendant contractual right to claim the debt due from Rals to Oltremare under the Supply Agreement. In exchange, Cariparma, having accepted that it was aware of the arbitration agreement contained within the Supply Agreement, agreed to discount the promissory notes.

The dispute arose when Cariparma duly presented the notes that fell due for payment but discovered that they were dishonoured.

C. The Proceedings

Cariparma commenced this action seeking to recover from Rals the value of the notes. The Assistant Registrar who heard Rals’ application in the first instance granted the stay under s 6 of the Act. The High Court granted Cariparma’s appeal and lifted the Assistant Registrar’s stay. Accordingly, this case sets out the High Court’s reasons.



The High Court deliberated on two key issues, namely

  1. whether an assignee who took an assignment of a debt under an agreement between the assignor and obligor which contained an arbitration agreement is bound to recover that debt from the obligor only through arbitration, either by reason of
    1. its status as an assignee of the buyer’s debt under s 6(1) of the Act; or
    2. it coming under the extended definition of ‘a party’ under s 6(5)(a) of the Act because it was claiming ‘through or under’ the assignor, who was a party to the arbitration agreement; and
  2. whether the assignee’s claim for the value of the promissory notes came under the scope of the arbitration agreement.



A.  Whether an assignee is also a party to the arbitration agreement between the assignor and obligor

Noting that the phrase ‘party to an arbitration agreement’ forms the central concept of s 6 of the Act, the High Court had to consider whether Cariparma was a party to the arbitration agreement between Oltremare and Rals.

The High Court held that an arbitration agreement, as defined by s 2A of the Act, was to refer only to contractual agreements, and therefore would exist only if parties to it have a contractual right – and a corresponding contractual obligation – as against each other to arbitrate disputes falling within its scope. In adopting this interpretation, the Court considered the importance of upholding the principle of arbitration as a consensual procedure. Given that Cariparma’s relationship to the Supply Agreement was merely that of an assignee, and an assignee does not become a party to a bilateral contract simply by assuming some or all of the rights of its assignor against an obligor under that bilateral contract,[2] Cariparma was not a party to the arbitration agreement.

B.  Whether an assignee can be considered an extended party to the arbitration agreement by claiming ‘through or under’ the assignor

In deciding whether Cariparma could be considered an extended party to the agreement under s 6(5)(a) by ‘claiming through or under’ Oltremare, the Court referred to one Australian and three English cases which considered the scope of this phrase.

Although these cases did not provide any definitive answer, the Court found that they supported the consensual nature of an arbitration procedure. Therefore, the phrase ‘claiming through or under’ did no more than mirror the operation of the general law of obligations.

Following this, the Court had to address two further sub-questions in order to determine whether the phrase would apply to Cariparma under the general law. Firstly, they had to decide which law governed and subsequently, whether that law considered Cariparma to be bound by the arbitration agreement contained in the Supply Agreement.

Which law should apply to this case?

There was no disagreement between the parties that Singapore law governed the issue. After a process of elimination, the Court arrived at the same conclusion either because Singapore law was the law of the Supply Agreement, or because it was the proper law of the arbitration agreement. The Court expressed, in obiter, its inclination towards the law that governed the parties’ separable arbitration agreement if a choice had to be made between the two.

Is an assignee of a right against an obligor bound by the arbitration agreement between the assignor and obligor under Singapore law?

The High Court noted that it is well-established in English law that arbitration agreements as a class are capable of assignment and that the assignee takes the benefit of the arbitration agreement when assigned. However, the Court also invoked the conditional benefit doctrine to find that the assignee was under an actionable obligation to arbitrate, notwithstanding the equally well-entrenched principle that contractual burdens cannot be transferred by assignment but only by novation. It asserted that a contractual right, which is subjected to an arbitration agreement, has annexed to it ab initio both the right and obligation to arbitrate. As such, Cariparma was bound by the obligation to arbitrate regardless of whether it consented to the arbitration agreement independently.

In reconciling this theory of imputed consent to the assignee with the principle that arbitration is a consensual dispute resolution procedure, the Court held that the latter principle is true only in the contractual, rather than subjective, sense. Therefore, it is justified that a party can find itself contractually bound to arbitrate even if it had no subjective intention to do so, since its intent could be objectively ascertained from its agreement with its counterparty, construed in light of the surrounding circumstances. This is further augmented by the fact that every assignee would have the opportunity to review the substantive agreement between the assignor and the obligor before he took assignment.

Answering this question in the positive, the High Court therefore inevitably found Cariparma to be a party claiming ‘through or under’ Oltremare under s 6(5)(a), although it was not a party to the arbitration agreement.

C.  Whether a claim over the bills of exchange is within the arbitration agreement

Having satisfied that the litigants are parties to an effective arbitration agreement, a stay under s 6 of the Act would be mandatory if the subject-matter of this action fell within its scope. It suffices merely that it is arguable that this second criterion is satisfied.

In this regard, Cariparma deliberately confined the subject-matter of its action to its rights as the holder in due course of the promissory notes, making no reference to its position as Oltremare’s assignee. This presented the High Court with two competing commercial purposes:

  1. the commercial purpose for which the parties stipulate a bill of exchange as their chosen payment mechanism; and
  2. the commercial purpose for which the parties stipulate arbitration as their chosen mode of dispute resolution,

and therefore two principles competing for primacy:

  1. the principle of cash equivalence, which treats a bill of exchange as a payment mechanism forming a separate contract from the underlying and original contract; and
  2. the principle that arbitration is a consensual dispute resolution procedure.

To resolve this conflict, the High Court referred to Piallo GmbH v Yafriro International Ptd Ltd [2014] 1 SLR 1028 (“Piallo”) in which these two competing commercial purposes were considered and a stay of proceedings was eventually granted. However, the Court ultimately distinguished Piallo on grounds that while Piallo was a case between the immediate parties to a bill of exchange, the present case was one between remote parties since Cariparma was neither a direct party to the promissory notes nor to the arbitration agreement (being merely Oltremare’s indorsee and assignee). The assumption in Piallo – that parties to an arbitration agreement intend to subject all disputes arising out of their relationship to the arbitration process – was therefore not applicable.

Finally, based on previous authorities and a case note on Piallo, the Court also held it most unlikely that it would be the objective intention of the payee and drawer of a bill to include claims by indorsees on the bill within the scope of their arbitration agreement. To do so would be to pose significant adverse effect on the rights of third parties and to undermine the commercial intent and purpose of the immediate parties.

In concluding the matter, the High Court held that Cariparma’s claim for the face value of the promissory notes is separate and independent from the statutory contract represented by the notes and therefore, that its claim did not fall within the scope of the arbitration agreement. Correspondingly, Cariparma’s appeal against Rals’ stay of action under s 6 of the Act was allowed and its action permitted to continue.

However, Rals has since applied for leave against the High Court’s decision and an authoritative ruling from the Court of Appeal is being awaited.



Cassa di Risparmio may be read as a pro-arbitration ruling. It reaffirmed the welcome shift away from the old perception of arbitration as an inferior subversion of the litigation process, allowing means of evasion despite a clearly expressed arbitration agreement without any contractual consequence. Despite the final decision, the High Court expressly acknowledged that arbitration today is given equal weight as any other contractual promise, and is deemed as seeking to uphold parties’ commercial intentions and expectations. The Court’s commitment to forbidding a unilateral withdrawal from an arbitration agreement under the Act is evident from the low threshold set for the court to be obliged to stay an action under s 6 of the Act – it merely suffices that the two aforementioned criteria are ‘at least arguable’. The Court also emphasised that arbitration clauses should be interpreted so widely that all matters are to be regarded as falling within their scope in the absence of good reasons suggesting otherwise, aligning itself with the position in previous case law.[3]

If approved by the Court of Appeal, this case will authoritatively affirm the validity of the proposition that an assignment of a contractual right carries with it not merely the benefit of an associated arbitration agreement but also its obligation, in Singapore. This is based on the doctrine of conditional benefit, which treats the substantive right to arbitrate as indivisible from the obligation arising from the same arbitration agreement. Nevertheless, this conditional benefit analysis is limited: it can be prevented from operating if the obligor and assignor provide for its exclusion in their substantive agreement, either expressly or impliedly.

This article may be cited as follows: Clara Khoo, “Singapore Case Update: Assignment of Arbitration Agreements in Claims over Bills of Exchange (Cassa di Risparmio v Rals International [2015] SGHC 264) International Arbitration Asia (26 January 2016) <>.

[1] Clause 9 of the Supply Agreement provided that “all disputes arising in connection with this Agreement shall be settled by a direct conciliation between the parties”, failing which will subject the dispute to the rules of Conciliation and Arbitration Rules of the International Chamber and Commerce in Singapore for final resolution.

[2] Rumput (Panama) SA and Belzatta Shipping Co SA v Islamic Republic of Iran Shipping Lines (The League) [1984] 2 Llyod’s Rep 259 at 261 per Bingham J; Schiffahrtsgesellschaft Detlev Von Appen GmbH v Voest Alpine Intertrading GmbH (The Jay Bola) [1997] 2 Llyod’s Rep 279 at 285 per Hobhouse LJ.

[3] Larsen Oil & Gas Ptd Ltd v Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) [2011] 3 SLR 414.


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