A governing law clause says which country’s law will be used to interpret the contract. A jurisdiction clause says which courts (or which arbitration) will decide any dispute. They are different questions, and a Singapore company should answer both expressly in any contract with an overseas customer, supplier, distributor or investor. The usual safe choice for a Singapore business is Singapore law with either the exclusive jurisdiction of the Singapore courts or arbitration seated in Singapore. Which forum is better depends mainly on one practical question: in which country will you need to enforce a judgment or award against the other party’s assets?
This guide explains the choices in plain terms, with sample wording you can discuss with your lawyer.
Governing law and jurisdiction are not the same thing
| Clause | Question it answers | Typical wording |
|---|---|---|
| Governing law | Which legal system decides what the contract means and whether it was breached? | “This Agreement is governed by the laws of Singapore.” |
| Jurisdiction | Which court will hear a dispute? | “The parties submit to the exclusive jurisdiction of the courts of Singapore.” |
| Arbitration (alternative to jurisdiction) | Will a private tribunal decide instead of a court, under which rules and where (the “seat”)? | “Any dispute … shall be finally resolved by arbitration in Singapore under the SIAC Rules.” |
A contract can be governed by Singapore law but heard in another country’s courts, or governed by English law but arbitrated in Singapore. Mismatches are legal but add cost, because a foreign court then needs expert evidence about Singapore law.
What happens if the contract says nothing?
If there is no governing law clause, a court has to work out which law the parties implicitly chose or which system has the closest connection to the contract. If there is no jurisdiction clause, the other party may sue in its home courts, and your company may have to defend there or argue about the right forum first. These preliminary fights can take months and cost more than the underlying claim. A company that wants to sue an overseas party in Singapore without a jurisdiction clause may also need the court’s permission to serve the claim abroad; see service out of jurisdiction when suing a foreign defendant.
Exclusive or non-exclusive jurisdiction?
- Exclusive jurisdiction means disputes must go to the chosen courts. It gives certainty and makes it harder for the other side to start proceedings elsewhere.
- Non-exclusive jurisdiction means the parties accept the chosen courts but either may sue elsewhere. It suits a lender or a party that may need to chase assets in several countries, but it invites parallel proceedings.
- Asymmetric clauses (one party may sue anywhere, the other only in Singapore) are common in finance documents. They should be drafted carefully and reviewed for enforceability in the counterparty’s country.
An exclusive Singapore court clause in an international civil or commercial contract can also bring the contract within the Hague Convention on Choice of Court Agreements, which Singapore implements through the Choice of Court Agreements Act 2016. Under that framework, courts in other contracting states are generally required to respect the choice and to recognise the resulting judgment, subject to the exceptions in the Convention. Check whether the counterparty’s country is a contracting state before relying on this.
Court or arbitration?
The decisive factor is usually enforcement. A Singapore court judgment can be registered in some countries under reciprocal arrangements in the Reciprocal Enforcement of Foreign Judgments Act 1959, which since March 2023 also covers the Commonwealth countries previously dealt with under a separate Act, or recognised under the Hague framework. In other countries, the winner may need to sue again on the judgment. An arbitral award, by contrast, can be enforced in the many countries that are party to the New York Convention, which Singapore applies through the International Arbitration Act 1994. Our comparison of arbitration and litigation under the SIAC Rules 2025 covers cost, speed and confidentiality in more detail.
| Factor | Singapore courts | Arbitration seated in Singapore |
|---|---|---|
| Enforcement abroad | Depends on reciprocal arrangements or the Hague framework in the debtor’s country | Wide enforcement under the New York Convention |
| Confidentiality | Hearings and judgments are generally public | Private |
| Cost for smaller claims | Usually lower; court fees rather than arbitrator fees | Can be higher; parties pay the tribunal and institution |
| Appeals | Available | Very limited grounds to challenge an award |
| Urgent relief and summary judgment | Readily available | Available through emergency arbitrators and the courts, but with more steps |
Choosing Singapore law: practical checks
- Where are the counterparty’s assets? Choose the forum whose decision you can enforce there.
- Is the counterparty a consumer? Consumer protection laws in the customer’s home country may override a choice of foreign law or courts.
- Are there mandatory local laws? Employment, competition, data protection, land and some agency laws may apply whatever the contract says.
- Does the clause cover non-contractual claims? Draft “any dispute arising out of or in connection with this agreement, including any non-contractual dispute” so that claims for misrepresentation or in tort are caught.
- Do related contracts match? A master agreement, purchase orders and a guarantee with different clauses invite parallel cases. Align them.
- Is there a tiered clause? If negotiation or mediation must come first, set clear time limits so the step cannot be used to delay.
- Is the company’s own standard form consistent? Check that your terms and conditions and your limitation of liability clauses are drafted for the same governing law.
Sample wording to discuss with your lawyer
Court option: “This Agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it are governed by the laws of Singapore. The parties irrevocably submit to the exclusive jurisdiction of the courts of Singapore.”
Arbitration option: “Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration administered by the Singapore International Arbitration Centre in accordance with its Arbitration Rules for the time being in force. The seat of the arbitration shall be Singapore. The tribunal shall consist of one arbitrator. The language of the arbitration shall be English. This Agreement is governed by the laws of Singapore.”
These are starting points, not complete clauses for every deal. The number of arbitrators, expedited procedure, interim relief and service of process should be tailored.
Example
Example only, not a client case. A Singapore software company signs a three-year licence with a distributor in a neighbouring country. The distributor’s draft says its home law and courts apply. The distributor has no assets in Singapore, and the software company is unsure whether a Singapore judgment could be registered quickly in that country. It proposes Singapore law with SIAC arbitration seated in Singapore, because the distributor’s country is a New York Convention state. Both sides accept, and the company also aligns its standard purchase order terms so that the clauses match.
Frequently asked questions
Can we choose Singapore law if neither party is in Singapore?
Generally yes. Singapore law and Singapore courts or arbitration are often chosen as neutral options in regional contracts.
Is a governing law clause in an email exchange binding?
It can be, if the emails form the contract or incorporate terms that contain the clause. Whether terms were incorporated is a common dispute, so put the clause in a signed document where possible.
We already have a dispute and no clause. Can we agree one now?
Yes. Parties can sign a submission agreement choosing a court or arbitration after a dispute arises, if both agree.
How long do we have to sue?
Time limits depend on the governing law. Under Singapore law, most contract claims must be brought within six years; see our guide to the limitation period for business debts.
Need help with a governing law or jurisdiction clause?
If your company, or you as a director or shareholder, is negotiating a cross-border contract or facing a dispute over where a claim should be heard, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines. Where your matter needs a lawyer, we will refer you to a firm on our panel of Singapore law firms that regularly handles commercial contracts and international disputes. Raffles Corporate Services is a corporate services provider, not a law firm, and this article is general information, not legal advice.
The Raffles Corporate Services Editorial Team