Courts In India Have Power To Grant Anti-Arbitration Injunction Against Foreign-Seated Arbitration, Albeit Sparingly : Calcutta HC [Read Judgment]


first_imgNews UpdatesCourts In India Have Power To Grant Anti-Arbitration Injunction Against Foreign-Seated Arbitration, Albeit Sparingly : Calcutta HC [Read Judgment] Mehal Jain14 Aug 2020 11:19 PMShare This – xThe Calcutta High Court on Wednesday ruled that while civil courts in India do have the power to grant anti-arbitration injunctions against a foreign-seated arbitration, however, this power is to be used sparingly and with abundant caution.”It is only under the circumstances enumerated in and exhaustively discussed in paragraph 24 of (the 2003 Supreme Court ruling in Modi Entertainment…Your free access to Live Law has expiredTo read the article, get a premium account.Your Subscription Supports Independent JournalismSubscription starts from ₹ 599+GST (For 6 Months)View PlansPremium account gives you:Unlimited access to Live Law Archives, Weekly/Monthly Digest, Exclusive Notifications, Comments.Reading experience of Ad Free Version, Petition Copies, Judgement/Order Copies.Subscribe NowAlready a subscriber?LoginThe Calcutta High Court on Wednesday ruled that while civil courts in India do have the power to grant anti-arbitration injunctions against a foreign-seated arbitration, however, this power is to be used sparingly and with abundant caution.”It is only under the circumstances enumerated in and exhaustively discussed in paragraph 24 of (the 2003 Supreme Court ruling in Modi Entertainment Network), which would merit the grant of an anti-arbitration injunction and therefore, its rare and controlled usage”, observed Justice B. Shekhar Saraf.In the aforesaid judgment, the apex court had held that in exercising discretion to grant an anti-suit injunction the court must be satisfied of the following aspects:a) the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the court;b) if the injunction is declined, the ends of justice will be defeated and injustice will be perpetuated; andc) the principle of comity – respect for the court in which the commencement or continuance of action/proceeding is sought to be restrained – must be borne in mind.The top court had further declared that:1) In a case where more forums than one are available, the court will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties and may grant anti-suit injunction in regard to proceedings which are oppressive or vexatious or in a forum non-conveniens.2) Where the jurisdiction of a court is invoked on the basis of jurisdiction clause in a contract, the recitals therein in regard to exclusive or non-exclusive jurisdiction of the court of the choice of parties are not determinative but are relevant factors and when a question arises as to the nature of the jurisdiction agreed to between the parties the court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case.3) A court of natural jurisdiction will not normally grant anti-suit injunction against a defendant before it where parties have agreed to submit to the exclusive jurisdiction of a court including a foreign court, a forum of their choice in regard to the commencement or continuance of proceedings in the court of choice, save in exceptional case.4) Where parties have agreed, under a non-exclusive jurisdiction clause, to approach a neutral foreign forum and be governed by the law applicable to it for the resolution of their disputes arising under the contract, ordinarily no anti-suit injunction will be granted in regard to proceedings in such a forum conveniens and favoured forum.5)A party to the contract containing jurisdiction clause cannot normally be prevented from approaching the court of choice of the parties as it would amount to aiding breach of the contract; yet when one of the parties to the jurisdiction clause approaches the court of choice in which exclusive or non-exclusive jurisdiction is created, the proceedings in that court cannot per se be treated as vexatious or oppressive nor can the court be said to be forum non-conveniens.7) The burden of establishing that the forum of choice is a forum non- conveniens or the proceedings therein are oppressive or vexatious would be on the party so contending to aver and prove the same.The Single Judge was determining the arbitration clause in which agreement between an Indian company, Balasore Alloys Limited, and a company registered in the US, Medima LLC, would apply in referring a dispute to arbitration:The general arbitration clause in an “Agency Agreement”, which was the umbrella agreement, and as per which the ICC was to have jurisdiction, orThe other purchase contracts which are in reference to individual sale and purchase contracts, and which required the Indian arbitration law to apply and for the seat of arbitration to be Kolkata, India.Balasore had sought an injunction from the High Court against arbitration proceedings commenced by Medima in the ICC, London.In denying the ad interim order for anti-arbitration injunction in the instance case, Justice Saraf laid down the following principles:1. Where a contract between the parties provides that the execution or performance of that contract shall be in terms of another contract (which contains the terms and conditions relating to performance and a provision for settlement of disputes by arbitration), then, the terms of the referred contract in regard to execution/ performance alone will apply, and not the arbitration agreement in the referred contract, unless there is a special reference to the arbitration clause also.”In light of the same, the purchase contracts would be governed by the Indian domestic arbitration clause in the purchase orders and not clause 23 of the Agency Agreement as the same is repugnant to the Arbitration clause in the Purchase orders”, said Justice Saraf.2. The Single Judge, however, added that the point above does not take away the right of the parties to raise a dispute under the Agency Agreement unless the arbitration clause therein has become inoperative or incapable of being performed;3. The burden of proof to show that the arbitration clause in the Agency Agreement has become inoperative or incapable of being performed was held to be on the party asserting the same, in this case, the plaintiff;4. The burden of proof to show that there exist forum non-conveniens or proceedings launched before a neutral foreign forum is vexatious or oppressive is also placed upon the party asserting the same, in this case, the plaintiff;5. “The mere existence of multiple proceedings and/or chance of a matter proceeding in multiple forums are not sufficient reasons to render an arbitration agreement inoperative”, reiterated the bench, relying on an authority of the Supreme Court.6. The High Court asserted that the fact that the pricing mechanism in the Agency Agreement has been incorporated into the purchase orders does not by itself make the arbitration clause in the Agency Agreement inoperative, and that the Agency Agreement being in the nature of an umbrella agreement subsists and the arbitration clause therein continues to operate on all aspects of the agreement;7. “The parties have agreed to the Agency Agreement and the purchase orders with their eyes open, and if multiple proceedings may arise due to certain ambiguities, so be it”, opined the Single Judge, declaring that that fact alone cannot make one of the proceedings, especially a neutral foreign seated arbitration applying a neutral governing and proper law, a vexatious or oppressive proceeding.8. While the Single bench was of the view that the stand taken by Balasore before the ICC agreeing to the arbitration by a sole arbitrator and retaining its right to urge the jurisdiction point before such arbitrator does not by itself bar them from filing the present suit, however, the conduct of Balasore in subjecting itself to the ICC jurisdiction and its acquiescence to a sole arbitrator was deemed to be one of the factors to be examined by the Court while granting an ad interim injunction.Click Here To Download Judgment[Read Judgment] Next Storylast_img