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4 December 2024
In the recent case of TrueCoin LLC v Techteryx, Ltd [2024] SGHC 296, the Singapore High Court (SGHC) granted a stablecoin developer an anti-suit injunction (ASI) to restrain Hong Kong court proceedings in favour of Singapore-seated arbitration. This is the first case of an ASI being granted by the Singapore courts in a cryptocurrency dispute. It underlines the court’s application of established principles to enforce arbitration agreements including in the nascent area of cryptocurrency disputes.
Background
The case involved a Delaware company, TrueCoin, which was in the business of developing digital currency products including “stablecoins”. Under two Delaware law agreements, TrueCoin granted a BVI company, Techteryx, certain exclusive rights in respect of its TrueUSD stablecoin (TUSD). Both agreements provided for Singapore-seated arbitration under the rules of the Singapore International Arbitration Centre (SIAC). The parties subsequently issued a joint instruction notice (the Notice) to an escrow agent to release and transfer the digital assets to Techteryx’s agent. The Notice was governed by Hong Kong law and provided for the non-exclusive jurisdiction of the Hong Kong courts.
Techteryx allegedly failed to meet certain payment obligations and TrueCoin commenced two SIAC arbitrations (which were later consolidated). Techteryx in turn commenced Hong Kong court proceedings first against the escrow agent and two other parties under separate contracts connected with the TrueCoin deal, but subsequently adding TrueCoin as a defendant for alleged breach of the stablecoin agreements and for misrepresentation. Techteryx argued that the arbitration clause had been superseded by the Hong Kong jurisdiction clause in the Notice.
In response, TrueCoin applied to the Singapore High Court for an ASI to restrain the Hong Kong proceedings.
The key issues the Court considered were whether it should decline to even entertain the application on grounds of comity; whether there was a prima facie breach of the arbitration agreements; and whether there were strong reasons not to grant an ASI. The Singapore court ultimately granted the ASI. We summarize the court’s key findings.
Considerations of comity
Techteryx argued that the Singapore court should not even entertain the ASI application because TrueCoin had in parallel applied to the Hong Kong courts to stay the Hong Kong action. Techteryx argued the Singapore court should simply wait for the Hong Kong court to decide that application, in the interests of international comity.
The Singapore court rejected this argument, and stated that enforcing this position would “completely undermine ASI applications”, referencing the general principles cited in the case of Hilton International Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd [2018] SGHC 56. On the contrary, it would promote comity for the Singapore court to deal with the ASI application before proceedings between TrueCoin and Techteryx were further advanced, as this would save the time, effort and expense that the parties and the Hong Kong court or tribunal might otherwise spend.
The Court also rejected Techteryx’s argument the Singapore court’s supervisory jurisdiction (arising from the arbitration agreements providing for arbitration in Singapore) was subordinate to the Hong Kong court’s jurisdiction over the parties in the Hong Kong action, as it was “unsupported by authority and unsound”.
Interaction with foreign law
Foreign law was relevant to the case because the stablecoin agreements were governed by Delaware law; and because the Notice was governed by Hong Kong law.
The Singapore court observed that the fact that foreign law was involved in this case (with no evidence or arguments as to any difference with Singapore law) was no reason for the Singapore court to defer to the foreign court. In this case, Techteryx did not provide any substantive evidence or foreign law opinion regarding Hong Kong or Delaware law and how it might differ from Singapore law.
Forum fragmentation
Techteryx argued that there were strong reasons not to grant an ASI, or there would be serious forum fragmentation and risk of conflicting decisions from the Hong Kong courts (in the proceedings concerning the other parties) and the SIAC arbitration. The Singapore court rejected this argument. Its key considerations were that Techteryx’s Hong Kong claims against TrueCoin were prima facie subject to the arbitration agreement and would in all likelihood be stayed in due course; Techteryx could also not avoid its arbitration agreement with TrueCoin simply by alleging in the Hong Kong proceedings against the other defendants that they had conspired with TrueCoin.
More fundamentally, forum fragmentation would not necessarily constitute strong grounds to refuse an ASI – it depends on the circumstances. In this case, Techteryx should have foreseen the risk of multiplicity of proceedings if it wished to bring claims against other parties (such as the escrow agent) who were not party to the arbitration agreement, and whose separate agreements contained different dispute resolution clauses. It could not now rely on forum fragmentation to avert its obligation to arbitrate.
Comments and conclusions
The decision in TrueCoin follows two recent Singapore cases where ASIs were granted to restrain foreign court proceedings brought in breach of arbitration agreements (Asiana Airlines, Inc v Gate Gourmet Korea Co, Ltd and others [2024] SGCA(I) 8, and COSCO Shipping Specialized Carriers Co, Ltd v PT OKI Pulp & Paper Mills and others and another matter [2024] SGCA 50. In these earlier cases, ASIs were granted to restrain the foreign proceedings against parties to the arbitration agreements, but in Asiana the ASI initially granted against two non-parties (directors of the corporate party) was set aside on appeal. Where non-parties to an arbitration agreement are concerned, an ASI will only be granted in very limited circumstances, viz, if the agreement was intended to also cover the non-party; or it is shown that the real purpose for suing the non-party was to bypass the arbitration agreement in a manner that was vexatious or oppressive.
The decision also rounds up a bumper year for crypto-related cases coming before the Singapore courts. Other significant cases this year include Cheong Jun Yoong v Three Arrows Capital Ltd and others [2024] SGHC 21 (concerning where cryptocurrency assets are deemed to be located for the purpose of determining whether a dispute concerning them should be heard in Singapore – see our update here); and Fantom Foundation Ltd v Multichain Foundation Ltd and another [2024] SGHC 173 which concerned assessment of damages involving cryptocurrencies. TrueCoin is the first Singapore case concerning the grant of an ASI, and is likely not to be the last given the proliferation of disputes in the digital asset space. The involvement of multiple, incidental parties such as escrow agents with whom there are asymmetrical dispute resolution clauses, is also likely to be a recurrent feature in such disputes.
Clara Tung would like to thank Amber Heron for her assistance in the preparation of this article.