Singapore High Court Confirms Court Permission Required to Commence Arbitration Against Bankruptcy Trustees

<span class="news-text_medium">Case:</span> Kardachi, Jason Aleksander (as private trustee in bankruptcy of Rajesh Bothra) and another v Deepak Mishra and others [2025] SGHC 218

<span class="news-text_medium">Court:</span> Singapore High Court

<span class="news-text_medium">Date:</span> 10 October 2025

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The Singapore High Court has clarified the circumstances in which arbitration may proceed against bankruptcy trustees. In <span class="news-text_italic-underline">Kardachi, Jason Aleksander (as private trustee in bankruptcy of Rajesh Bothra) and another v Deepak Mishra and others [2025] SGHC 218</span>, the Court held that parties must obtain leave before commencing arbitration proceedings against bankruptcy trustees, even where the dispute arises from a post-bankruptcy agreement concluded by the trustees themselves. This decision provides important guidance on the interaction between insolvency law, trustee protections and arbitration proceedings seated in Singapore.

Background

During investigations into the bankrupt’s pre-bankruptcy transactions, the trustees entered into a waiver agreement with the first defendant (“<span class="news-text_medium">DM</span>”), a former business associate of the bankrupt. DM agreed to provide information to support the trustees’ inquiries. Subsequently, the trustees commenced a clawback action concerning certain asset disposals to the defendants.

DM then initiated arbitration under the waiver agreement, contending that the trustees were contractually prohibited from using the information for “collateral purposes”, including pursuing the clawback claim. The trustees sought declarations from the Singapore High Court that DM had improperly commenced arbitration without first obtaining the Court’s permission.

High Court’s Decision

The Court agreed with the trustees and confirmed several key principles:

1. <span class="news-text_medium">Leave of court is required before commencing arbitration against bankruptcy trustees</span></br>
   The Court reaffirmed the long-standing common law rule (derived from <span class="news-text_italic-underline">Excalibur Group Pte Ltd v Goh Boon Kok [2012] 2 SLR 999</span>) that leave is required before any proceedings, litigation or arbitration, can be commenced against a liquidator. The Court held that this protection also applies to bankruptcy trustees and extends to disputes arising from post-bankruptcy agreements entered into by trustees during the course of administration.
2. <span class="news-text_medium">Permission may be retrospective, but will only be granted where there is a prima facie case</span></br>
   The Court acknowledged that retrospective permission can be granted. However, DM failed to establish any prima facie arguable case that the trustees had breached the waiver agreement. On that basis, permission was denied.
3. <span class="news-text_medium">No basis for a case management stay</span></br>
   Even if permission had been granted, the Court noted it would not have stayed the clawback action in favour of arbitration. The issues in the insolvency action did not overlap with those raised in the arbitration and allowing both to run concurrently would not serve efficiency or fairness.

Significance for Arbitration and Insolvency Practice

This judgment demonstrates that post-bankruptcy agreements remain subject to insolvency law restrictions. Parties engaging with bankruptcy trustees—even under agreements concluded after bankruptcy—must be aware that any dispute may require court approval before arbitration can begin. The decision reinforces the priority given to insolvency protections, even in Singapore’s arbitration-friendly environment.