• LexADR

POSITION OF ANTI- ARBITRATION INJUNCTION LAW IN INDIA

Niyati Bhogayta, 5th year, ILS Law College, Pune


Meaning:


An anti- arbitration injunction seeks to prevent the initiation or continuation of arbitration proceedings. The legal existence of such injunctions is disputable. The scope of a Court’s authority under The Arbitration and Conciliation Act, 1996 to grant an anti-arbitration injunction remains vague. The Act does not contain any specific provision in relation to anti-arbitration injunctions. However, Section 45 of the Arbitration and Conciliation Act, 1996 provides certain powers to the court to interfere with proceeding in foreign arbitrations if the arbitration agreement between the parties is null and void or inoperative or incapable of being performed.


Courts views governing anti-arbitration injunction suits:


The earliest decision in this regard as to whether an anti-arbitration suit is maintainable is that of Kvaerner Cementation India Limited v. Bajranglal Agarwal, wherein a three judge bench of SC held that arbitral tribunal has the power to decide questions of its own jurisdiction on a bear reading of Section 16 of the Act.



On the other hand, there are body of case laws which have affirmed the civil courts jurisdiction in granting anti-arbitration injunctions under certain circumstances. In SBP & Co. v. Patel Engineering, 2005 the SC conclusively rejected the argument that arbitral tribunal solely has competence to the exclusion of civil courts, to determine its own jurisdiction.


Subsequently, the Apex Court in 2014 in World Sport Group Ltd. v. MSM Satellite Pvt Ltd., held that a civil court has inherent jurisdiction under Section 9 of the Code of Civil Procedure, 1908, to try all suits of civil nature unless expressly or impliedly barred by the law, and in the absence of any such bar on the maintainability of anti-arbitration suit, suits seeking injunctions in restraint of arbitration are indeed maintainable.


Later, in McDonald’s India Pvt Ltd. v. Vikram Bakshi, Delhi High Court relying on the decision of World Sport Group, held that civil courts do have jurisdiction to grant anti-arbitration injunctions. However, it refused to grant the same on the basis of the facts and persistently held that there is a distinction between the principles that govern the grant of anti-suit injunctions and anti-arbitration injunctions. For the reason that Arbitration Act is a code in itself and empowers the arbitral tribunal to rule on its own jurisdiction.


Most recently, the Calcutta High Court in Balasore Alloys Limited v. Medima LLC refused to follow the recent judgement of Delhi High Court of Bina Modi[1] wherein Kvaerner Cementation was followed. The case had titled the balance entirely in favour of arbitral tribunal’s autonomy. Raising doubts on its precedential value, the Calcutta HC held that the Delhi HC had failed to recognize the ruling of seven judge bench in SBP & Co.

Rendering a detailed judgement, the High Court has summarized the circumstances as enumerated in Modi Entertainment[2] and the scope and limitations within which that power to grant anti-arbitration injunctions may be exercised.


From the above judgements, the position remains that, courts while granting injunctions must use its power sparingly and in controlled manner.


Ramifications of Anti-arbitration Injunctions:


1. Principle of “kompetenz-kompetenz”

“Competence-competence” principle is the most important concept whereby the tribunal have the jurisdiction to rule as to the extent of its competence on an issue before it. It provides full autonomy to the tribunal with the least interference of the courts in the arbitral proceedings. Anti-arbitration injunctions strip the tribunal of this power.


2. Increases court interference:

It increases unnecessarily the level of court interference in the arbitral process which is against the policy of The Arbitration and Conciliation Act, 1996. That interference should be kept to a minimum.


3. Party Autonomy

The forum of arbitration, is consciously chosen by the parties and cannot be considered an inconvenient forum per se. Also, the basis of this principle is that where parties have knowingly entered into and executed arbitration agreements, they should not be allowed to retract from their contractual commitments regarding jurisdiction and dispute resolution.


4. Absence of legal existence

The legal actuality of such injunctions is a matter of dispute. The provenance of a court's jurisdiction to issue an anti-arbitration injunction under the Arbitration and Conciliation Act 1996 is unclear. The jurisprudence related to anti-arbitration injunction is very limited in India.


Comments:


There is no final settlement as to the question of power of courts to grant such injunctions. Since, there exist divergent opinions, it is imperative for the Supreme Court to settle this enigma and define the power of courts. Also, since the principles of autonomy of arbitral tribunal have been developed in many jurisdictions the courts are seen to exercise restrain in granting anti-arbitration injunctions. However, this principle must not deprive a remedy of injunction in cases where no consent to submit to arbitration exists in the first place.





[1] 2020 (2) ArbLR 446 (Delhi) [2] AIR 2003 SC 1177

87 views0 comments

Recent Posts

See All

©2020 by LexADR.