The Securities and Futures Act (Cap 289, 2006 Rev Ed) (the SFA) and the Securities and Futures (Licensing and Conduct of Business) Regulations 2002 (Cap 289, 2004 Rev Ed) (together, the Securities and Futures Laws) relate to the regulation of activities and institutions in the securities and futures industry.

Article 34(2)(b)(ii) of the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) provides that an arbitral award may be set aside on the grounds that the award is in conflict with the public policy of the state.

Section 3 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (the IAA) provides that the Model Law shall have the force of law in Singapore.

Rockeby Biomed Ltd (the plaintiff), an Australian company, was seeking to secure a listing on the Singapore Stock Exchange. Alpha Advisory Pte Ltd (the defendant) was a Singapore company that carries out the business of advising on corporate finance matters. The plaintiff and the defendant entered into a Consultancy Service Engagement agreement (the agreement). Due to the plaintiff's failure to pay certain invoices, the defendant initiated arbitration proceedings against the plaintiff for the sum of SGD 65,000. The arbitrator held in favour of the defendant, rejecting the plaintiff's claim that:

The arbitrator held that the agreement between the parties was valid and did not breach the laws of Singapore. The plaintiff then filed the current application to set aside the arbitration award, claiming that the award was in conflict with the Securities and Futures Laws, and enforcement of the award was therefore in conflict with the public policy of Singapore.

Specifically, the plaintiff's claim was based on provisions in the SFA. The general rule under the SFA is that people or entities that provide capital market services in Singapore need to be licensed under the SFA. There are, however, exemptions, provided that certain criteria are met and the business is carried out in a certain way. The plaintiff claimed that the advice provided by the defendant did not meet the necessary criteria, in particular the criterion that the advice must not be specifically given to an "accredited investor" (of which the plaintiff was found to be one) for the making of an offer of securities to the public.

The arbitrator held that the agreement specifically limited the services to be provided by the defendant and stated that if in the future there was to be an actual public offering, other professional advisers would have to be appointed by the plaintiff to advise on these matters as the defendant could not give this advice. Therefore, the agreement was not illegal.

The Singapore High Court agreed with the decision made by the arbitrator.

The High Court held that neither the IAA nor the Model Law permit appeals against arbitration awards. They only provide limited grounds (for example, public policy) on which dissatisfied parties can apply to set aside an arbitration award. The High Court considered previous decisions where the Singapore Court of Appeal had discussed the scope of the public policy exception, including PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597, where it was held that the public policy exception must be construed very narrowly. The exception should only operate in instances where the upholding of an arbitral award:

The High Court also relied on another Court of Appeal decision (AJT v AJU [2010] 4 SLR 649) concerning the extent to which illegality can be used to form the foundation to challenge an award. The Court of Appeal held that an enquiry into the illegality of the award must be two-fold. First, it needs to be established that the tribunal had decided erroneously on the issue of the illegality of an agreement. Second, it needs to be shown that the error was of such a nature that enforcement of an award would shock the conscience, be clearly injurious to the public good or contravene fundamental notions and principles of justice. The Court of Appeal held that if a tribunal concludes that a contract is valid, the award is generally enforceable. However, if a tribunal ignores "palpable and indisputable" illegality, the award would not be enforced.

The High Court held that in deciding the issue of illegality in the present case, it had the power to examine the facts of the case.

The High Court reviewed the evidence presented to the arbitrator and undertook an extensive review of the legality of the agreement in the light of the Securities and Futures Laws. The High Court held that the law did not stop firms like the defendant from giving advice to clients that would put such clients in the position in which they could subsequently consider whether to implement an actual public offering (and then to hire suitably qualified professionals to advise them on this issue). Upon an analysis of the facts, the High Court held that the advice given by the defendant was not specifically given for the making of an offer of securities to the public and therefore the agreement was not illegal. Having decided this, the court found that it was not necessary to consider the issue of whether the illegality found was against public policy and would justify the setting aside of the award

This case confirms that Singaporean courts are generally supportive of arbitration and will enforce valid arbitration awards. It is also clear that the public policy exception concerning the enforcement of arbitration awards continues to be narrowly construed in Singapore.