This article is written by Deepu Jojo (High Court of Bombay) & Smiti Verma (Supreme Court of India and High Court of Delhi). In this article, the authors explain about anti-arbitration injunctions in India.
The Courts of India have shown great acumen by pronouncing several judgements in recent years, which has seen India raise its status as an arbitration-friendly nation. India enacted the Arbitration and Conciliation Act in the year 1996, (“said Act”), to bring it in line with the UNCITRAL Model law on Internal Commercial Arbitration, 1985 and the UNCITRAL Arbitration Rules 1976. The object of the said Act was to reform and modernize the laws on arbitral procedure in India, so as to take into account the features and needs of international commercial arbitration.
Despite adopting the said Act, however, many of the judgements pronounced subsequent to its enactment left much to be desired. In recent years, however, especially after the said Act was amended in the years 2015 and 2019, Indian courts have passed several judgements showing great acumen and foresight which has seen India raise its status as an arbitration-friendly nation.
In this backdrop, a recent decision of the Hon’ble High Court of Delhi (“Hon’ble High Court”) in the matter of Dr Bina Modi vs Lalit Modi (“Lalit Modi Case”), assumes importance. The parties to the Lalit Modi Case are Ms. Bina Modi, Mr. Lalit Modi, Ms. Charu Modi and Mr. Samir Modi who are the trustees under a trust deed (“said Trust Deed”) executed in London, the dispute resolution clause of which was the subject matter of the current dispute. The dispute resolution clause in the said Trust Deed inter alia stated
- The disputes shall be settled under the Rules of Arbitration of the International Chamber of Commerce, Singapore by one or more arbitrators appointed in accordance with the aforesaid Rules.
- The arbitration will be governed in accordance with the laws of India;
- International Chamber of Commerce will follow Indian law as the substantive law for deciding the dispute arising between the parties under/pursuant to said TrustDeed.
The disputes in the aforesaid matter commenced when Mr. Lalit Modi filed an application for emergency measures before the International Court of Arbitration (“ICA”) of the International Chambers of Commerce, Singapore (“ICC”) to restrain the opposite parties comprising Ms. Bina Modi, Ms. Charu Modi and Mr. Samir Modi (“the Petitioners”) from acting in pursuance of the said Trust Deed.
An Emergency Arbitrator was appointed by the ICC, who scheduled a preliminary call/meeting of the Emergency Arbitration proceedings. On the date of the preliminary meeting, the Emergency Arbitrator issued procedural timelines and set a date for physical hearing of the Application for Emergency measures.
Before the hearing before the Emergency Arbitrator could take place, the Petitioners filed anti-arbitration injunction suits before a Single Bench of the Hon’ble High Court of Delhi, challenging the initiation of arbitration proceedings in Singapore. The arbitral proceedings before ICC were opposed primarily on the issue of arbitrability.
Before the Hon’ble High Court, the Petitioners heavily contended that matters pertaining to trusts cannot be settled through arbitration and consequently the disputes at hand would have to be resolved by the Courts in India. Mr Lalit Modi, on the other hand, inter alia contended that the Rules of ICC Arbitration already provide that objections regarding the arbitrability of the dispute could be raised before the Arbitral Tribunal and the Petitioners’ arguments against the arbitrability of the subject matter could therefore be adjudicated by the Arbitral Tribunal.
By and under an Order dated 3rd March 2020 (“said Order”), the Hon’ble High Court dismissed the Petitioner’s application and held that the Court did not have the jurisdiction to adjudicate a plea which can be adjudicated by the Arbitral Tribunal relating to its own jurisdiction. While pronouncing the said Order, the Single Judge of the Hon’ble High Court heavily relied on the judgment of the Supreme Court of India in Kvaerner Cementation India Limited v. Bajranglal Agarwal wherein it was held that an anti-arbitration suit is not maintainable, as the Arbitral Tribunal is conferred with the power to rule on its own jurisdiction including ruling on any objection with respect to the existence or validity of the arbitration agreement.
The said Order dated 3rd March 2020 was challenged by the Petitioners by way of an appeal (“said Appeal”) before the Division Bench of the Hon’ble High Court. By and under an Order dated 5th March 2020, the Division Bench stayed the said Order dated 3rd March 2020 passed by the Single bench of the Hon’ble High Court of Delhi (“Stay Order”). The Stay Order passed by the Division Bench of the Hon’ble High Court was challenged by Mr. Lalit Modi before the Hon’ble Supreme Court of India. The Hon’ble Supreme Court, observing that the appeal against the order of the Single Bench filed by Mr. Lalit Modi was pending before the Division Bench and that it remained open for him to approach the Hon’ble High Court for an early hearing, did not entertain the SLP.
The Hon’ble High Court was scheduled to hear the case on 27th March 2020. Unfortunately, due to the prevailing COVID-19 pandemic, the entire country was placed under lockdown and the matter has not been taken by the Hon’ble High Court as of now. The Stay Order, therefore, continues to remain in operation on account of which the proceedings before the Emergency Arbitrator remain stayed. This is so, even though certain urgent matters have been decided by the Courts in India using video conferencing.
The aforesaid situation which has arisen is undoubtedly an unfortunate one as the Covid-19 pandemic has completely changed the landscape of dispute resolution in India. If the emergency arbitrator had commenced the proceedings, it is highly possible that an emergency award would have already been passed by the Emergency Arbitrator. On account of the unprecedented Covid-19 situation, the matter seems to have come to a stand-still.
Looking ahead, if an emergency award comes to be passed by the Emergency Arbitrator, the same would lead to an interesting scenario and would possibly be the scope of another article. In India, the issue of enforcement of Emergency Awards passed in foreign-seated arbitrations was discussed by the Hon’ble High Court in Raffles Design International India Private Limited v. Educomp Professional Education [2016 SCC Online Del 5521]. In the said case, the Hon’ble High Court noted that the said Act did not have an express provision for the enforcement of an emergency award passed in a foreign- seated arbitration, and the only way to implement an emergency award would be by way of a suit before an Indian Court. The Hon’ble High Court, however, further added that nothing precluded a party to such an arbitration to approach Indian courts for interim reliefs under Section 9 of the said Act. In the present case, on account of the stay Order dated 5th March 2020 passed by the Division Bench of the Hon’ble High Court, the issue of enforcement of an emergency award has not arisen yet.
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