Choice of rules

The parties may opt to submit their dispute to arbitration in accordance with the rules of an arbitral association. It often happens that those rules change in the time between the making of the contract and the reference of the dispute to arbitration. Are the applicable arbitral rules the original rules or the new rules? The general run of cases is that the parties are to be taken to have agreed to the arbitral rules which happen to be in force at the date of the reference to arbitration. That principle has been reaffirmed in Car & Cars Pte Ltd v Volkswagen AG [2009] SGHC 233.

Volkswagen: the facts

Car & Cars Pte (‘C&C’) was the importer into Singapore of Volkswagen cars between 1999 and 2004 under an Importer Agreement. The arrangement lasted for five years, during which time C&C made significant investment so as to build up the brand image in Singapore. However by 2004 Volkswagen wished to import directly, and variations were made to the arrangements from 1 January 2005 under which C&C was granted a dealership in respect of passenger cars. By November 2006 the parties wished to make a clean break, and entered into four written agreements. The key agreement was the Termination of Dealership Agreement, under which sums were payable to C&C and all other claims were surrendered. The agreement contained an arbitration clause in the following terms: