An ‘anti-arbitration injunction’ is an injunction where a party may seek a restraining order against another party to proceed or commence with an arbitration proceeding in pursuance of the arbitration agreement between the parties. Pertinently, neither the UNICITRAL Model Law nor the Arbitration and Conciliation Act, 1996 (“the Act”) perspicuously provides any provision in granting ‘anti-arbitration injunction’.
RELEVANT STATUTORY PROVISIONS
That the object of the Act is to make provisions for an arbitral procedure to be fair, efficient and capable of meeting the needs of the specific arbitration and to minimise the supervisory role of courts in the arbitral process. Section 5 of the Act intents to reduce the judicial intervention and enumerates that no judicial authority shall intervene except where so provided in this Part.
Section 8 of the Act, being peremptory by its nature, makes it incumbent upon courts to refer parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. Whilst in cases of international arbitration, Section 45 of the Act requires the court to refer parties to arbitration unless it finds an arbitration agreement to be null and void or inoperative or incapable of being performed.
Section 9 of the Act empowers the court to grant interim remedies in support of arbitration before the commencement or during the pendency of the proceedings or at any time after making the arbitral award. The pendency of any arbitral proceedings is not a pre-condition for an exercise of power by the court. (1)
Further, the doctrine of Kompetenz-Kompetenz, which forms the bed-rock of the arbitration jurisprudence, as envisaged under Section 16 of the Act empowers the arbitral tribunal to rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement.
Section 41(h) of the Specific Relief Act 1963, bars the Courts from granting injunctions in cases where an equal and efficacious remedy can be obtained through any other proceeding.
Section 9 of the Code of Civil Procedure, 1908, on the other hand, states that the Courts shall have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance if either expressly or impliedly barred.
That the Hon’ble High Court of Calcutta, in the matter Siddhi Vinayak Industries Ltd. vs. Virgoz Oils and Fats Pte Ltd. (2), after considering that no formal agreement was executed between the parties, held that if it appears from the act and conduct of the parties nothing is left to be done except a formal shape of the agreement then such oral agreement or draft agreement (arbitration clause therein) can be enforced and further refused to grant anti-arbitration injunction.
In the case of Kvaerner Cementation India Limited V. Bajranglal Agarwal & Another (3), the Hon’ble Apex Court, held that the very object with which the said Act has been enacted the provisions contained in Section 16 confers the power to the Arbitral Tribunal to rule on its own jurisdiction, including the ruling of any objection with respect to the existence of validity of the arbitration agreement and further held that a civil court did not have jurisdiction to determine any objection with respect to the existence or validity of the arbitration agreement.
A division bench of the Hon’ble High Court of Delhi in Mcdonald’s India Private Limited v. Vikram Bakshhi and Ors. (4) held that the Courts in India may have the power to injunct arbitration proceedings, however, they must exercise that power rarely and only on principles analogous to those found in sections 8 and 45, as the case may be, of the 1996 Act whilst in the case of Union of India vs. Vodafone Group PLC United Kingdom (5), it was observed that the jurisdiction to grant an anti-arbitration injunction must be exercised with caution and granted only if the arbitral proceedings are vexatious or oppressive or inequitable or abuse of process.
In a recent judgement Balasore Alloys Ltd. vs. Medima LLC (6), the Hon’ble High Court of Calcutta held that the Courts of India has the power to grant anti-arbitration injunction even against a foreign seated arbitration. However, the Court in the said matter declined to grant any interim injunction order against the ICC arbitration proceedings.
Some of the judgments discussed with the proposition whether the Courts have the power to grant anti-arbitration injunction were:
- Devi Resources Ltd. vs. Ambo Exports Ltd. (7); held that the court would have the power to grant an injunction even if is against a foreign court or a foreign forum;
- Duro Felguera S.A. vs. Gangavaram Port Ltd. (8), it was held that even if disputes are arising out of a separate contract and not from the principal agreement, the disputes must be referred to arbitration;
- World Sport Group (Mauritius) Limited vs. MSM Satellite (Singapore) Pvt. Ltd (9) the Hon’ble Supreme Court of India has held that a civil court in India had inherent jurisdiction under Section 9 of the Code of Civil Procedure, 1908 to grant injunctions in restraint of arbitration;
- Enercon India Ltd. vs. Enercon GmBH (10), the Hon’ble Apex Court held that the Courts of India may decline referring a dispute to arbitration if the agreement was found to be null and void, inoperative or incapable of being performed;
- SBP & Co. vs. Patel Engineering (11) held that the Courts have the power to decide whether it has jurisdiction, whether there is an arbitration agreement which is valid in law and whether the dispute sought to be raised is covered by that agreement;
- M.R. Engineers and Contractors Pvt. Ltd. vs. Som Datt Builders Ltd. (12);
- Modi Entertainment Network vs. WSG Cricket (13) held that the Indian Courts has the power to issue anti-arbitration injunctions to a party over whom it has personal jurisdiction and further that the power must be used sparingly;
- Mayar (H.K) Ltd. and Ors. v Owners and Parties, Vessel M.V. Fortune Express and Ors. (14) held that a party which contends that the forum of choice is a forum non conveniens or contends that the proceeding is oppressive or vexatious has the burden of proof and must place relevant material to proof the same;
- ONGC vs. Western Company of North America (15); held that the Courts of India can grant an anti-arbitration injunction if either it is necessary to do so or if the justice requires it.
Some of the other judgments discussed with respect to the granting an anti-arbitration injunction against a foreign seated arbitration:
- Visa Rerssources PTE Ltd. vs. Super Smelters Ltd. & Anr.(16),it was held that the international arbitration proceeding under Part II of the Act shall not be interdicted by a judicial authority ‘unless it prima facie finds that the arbitration agreement is null and void, inoperative or incapable of being performed.’;
- Bina Modi vs. Lalit Modi (17), the Hon’ble High Court of Delhi whilst refusing to grant an anti-arbitration injunction held that the civil courts ought not to restrain an arbitral tribunal from exercising its statutory jurisdiction under Section 16 of the Act;
- Sasan Power Ltd. vs. North American Coal Corporation (India) Pvt. Ltd. (18) it was held that under Section 45 is confined only to the question whether the arbitration agreement is ‘null and void, inoperative or incapable of being performed’ but not the legality and validity of the substantive contract;
- Chatterjee Petrochem Company and Anr. v. Haldia Petrochemicals Limited and Ors. (19) wherein it was held that the Courts of India does not have the power to grant an anti-arbitration injunction for a foreign seated arbitration.
The Indian Courts have the power to grant an anti-arbitration injunction in both domestic and international arbitrations. However, as evident from the judicial precedents, the powers vested within the Indian Courts must be exercised sparingly and that the same must be granted only in exceptional circumstances such as when the arbitration initiated are vexatious or oppressive or inequitable or abuse of process, or when the arbitration agreement is null and void, inoperative or incapable of being performed. In a situation, where the validity of an agreement or the arbitrability of the subject matter of a dispute, is questioned and the same goes to the root of the matter, must be decided at the threshold itself, in order to prevent a futile exercise of the proceedings before an arbitrator.
Kunal Kumar is a qualified Indian lawyer and has completed his LL.M. in Dispute Resolution (specialization in International Commercial Arbitration) from Straus Institute for Dispute Resolution, Pepperdine University, California. He has been practising as an advocate and has more than five years of experience in the Courts of Delhi and focuses on Arbitration and Litigation matters. He has handled several matters relating to Civil Law and arbitrations (both domestic and international) and has appeared before the Hon’ble Supreme Court of India, Hon’ble High Court of Delhi, District Courts of Delhi and various other tribunals. Currently, he is working as a Principal Associate with the firm Lex Indis Law Offices based in New Delhi.
Sushrita Mitra is an Intern with Lex Indis Law Offices.
1. Globe Cogeneration Power Ltd. vs. Sri Hiranyakeshi Sahkari Sakkere Karkhane Niyamit, AIR 2005 Kant. 94
2. 2011 (2) CHN (CAL) 857
3. (2012) 5 SCC 214
4. 2016 (4) ARBLR 250 (DELHI)
5.(2017) 250 TAXMAN 217 (DEL)
6. G.A. no. 871 of 2020 with G.A. no. 872 of 2020, High Court of Calutta
7. APO no. 430 of 2017, GA 3072 of 2017, High Court of Calcutta
8. (2017) 9 SCC 729
9. (2014) 11 SCC 639
10. (2014) 5 SCC 1
11. (2005) 8 SCC 618
12. (2009) 7 SCC 696
13. (2003) 4 SCC 341
14. (2006) 3 SCC 100
15. (1987) 1 SCC 496
16. APO 70 of 2020, High Court of Calcutta
17. C.S. (O.S.) 84 of 2020 of the Delhi High Court
18. (2016) 10 SCC 813
19. (2014) 14 SCC 574Disclaimer: The views or opinions expressed are solely of the author.