Singapore International Commercial Court: A framework or master agreement covers conflicts in related agreements according to a recent decision of the Singapore International Commercial Court (SICC)

In the case of Pertamina International Marketing & Distribution Pte Ltd v PHOENIX Petroleum Philippines, Inc. [2024] SGHC(I) 19 (“Pertamina v Phoenix”) the SICC declared that an arbitration clause in a framework or master agreement usually includes disputes arising under other related contracts that do not contain any dispute resolution provisions.

The parties entered a Memorandum of Understanding (MoU) which contained an arbitration agreement. According to the arbitration agreement, all disputes "arising out of or in connection with” the MoU were to be arbitrated in Singapore. The parties then entered into numerous contracts under which Pertamina was to supply petroleum products to Phoenix. However, none of these contracts contained an arbitration agreement. Pertamina commenced proceedings before the SICC, claiming outstanding purchase price payments. The defendant argued that the Framework Agreement did not apply to the individual purchase contracts and that the SICC therefore lacked jurisdiction.

In particular, the court relied on the phrase "arising out of or in connection with" in the master agreement, finding that it was broad enough to apply to the individual purchase agreements. In reaching its decision, the court also applied the Fiona Trust principle. Based on the Fiona Trust principle, "reasonable businessmen" would have intended that all disputes arising between them would be decided by the same court. Any other arrangement applies only if expressly agreed. Therefore, the court concluded that the SICC had jurisdiction over the disputes arising from the individual sale contracts.

This decision highlights the importance of clear and specific language in contracts to determine jurisdiction in the event of disputes.