This article is written by Ojasvi Sharma, pursuing a Certificate Course in Arbitration: Strategy, Procedure and Drafting from LawSikho.com.
Table of Contents
Introduction
An anti-arbitration injunction is an injunction ordered by the court which seeks to prevent the initiation or continuation of the arbitration proceedings. So, anti-arbitration injunctions are basically a remedy available to an aggrieved party to arbitration agreement to have a stay on the arbitration proceedings.
Anti-arbitration injunctions can be sought by a party in two instances:
i) when the arbitration proceeding has not begun and there is an anticipation that such proceedings may begin; and
ii) when the proceeding has begun but the party is aggrieved by such a proceeding. In these two instances the aggrieved party can approach the court and pray before it to stay such a proceeding. These are called anti-arbitration injunctions.
I am writing this article because the subject of anti-arbitration injunction evolves with every judgement passed by the courts and the jurisprudence is still not fully developed. So, it becomes important to understand the nuances of the subject with the help of decided cases.
To recapitulate, in the previous article I had talked about the grant of anti-arbitration injunctions by Indian courts in foreign seated arbitrations and relating case laws.
In the following article I shall discuss the jurisprudence, related to grant of anti-arbitration injunctions in domestic arbitration by the Indian courts. With the help of Landmark judgements of the Supreme Court.
Anti-arbitration Injunctions in Domestic Arbitration: Important Provisions
It becomes pertinent to look upon the legislative intent on the anti-arbitration injunction. The legislature is not vocal about whether such injunctions are valid or invalid. The arbitration conciliation act with all its amendments up to Date is silent about whether such injunctions are maintainable or not. There is no exhaustive explanation regarding the law in respect of anti-arbitration injunctions. But, it is only implicitly provided in sections 16, 5 and 8 of the arbitration conciliation (amendment) act, 2019.(“Act”)
Section 16 clearly mentions that the arbitral tribunal is competent to decide upon its own “competence” (The kompetez-kompetenz principle) and the arbitral tribunal is even competent to decide upon its jurisdiction and to look into the validity and existence of the arbitration agreement.
Section 5 of the Arbitration and Conciliation (Amendment) Act, 2019 talks about the “Extent judicial intervention” it states that there shall be absolutely no judicial intervention in the arbitration matters unless there is a provision contrary to this or decided by the parties unilaterally.
Section 8 of the act clearly makes it mandatory for the court to refer the parties to arbitration once an application for the same has been made before it by one of the parties. The court shall only be empowered to scrutinize the agreement to the extent of checking whether prima facie there is a valid and existing arbitration agreement between the parties or not. If yes, then it is strictly bound to refer the parties to arbitration.
Thus, it becomes very much clear by these sections namely 16, 5 and 8 that the arbitral tribunal can rule upon its own Jurisdiction, competence and validity or existence of the arbitration agreement and judicial intervention is strictly discouraged as far as part I of the act governing domestic arbitrations is concerned.
Grant of Anti-arbitration Injunctions in Domestic Arbitrations: Supreme Courts Point of View
The law regarding the anti-arbitration injunctions is evolving and has been in discussions in various judicial pronouncements of the Supreme Court and many other prominent courts in India.
To, understand the concept of anti-arbitration injunctions in India and the grant thereof with respect to domestic arbitration.We shall look into the following landmark judgements:
Judicial intent
As stated above, the judicial standpoint on the grant of anti-arbitration injunctions is conflicting and still evolving. There are various Judgements regarding the judicial standpoint on anti-arbiration injunctions in domestic arbitration. They have been illustrated below:
- In Kvaerner Cementation India Ltd. v. Bajranglal Agarwal, [(2012)MANU/SC/1965/2001], (“Kvaerner cementation”) the decision of the case came on 21st march 2001, but was not reported until 2012, the petitioner was a party to the arbitral proceedings he moved to the Hon’ble Supreme Court to seek relief against the order passed by the Bombay high court. The objection raised by the petitioner was regarding the “validity and existence” of the arbitration agreement and prayed the court to declare that there was no arbitration clause and such arbitration was without the jurisdiction.
The three-judge bench of the hon’ble Supreme Court upheld the order passed by the Bombay high court and stated that on a bare reading of the section 16 and 5 of the arbitration and conciliation (amendment) act, 2019. The Supreme Court relied on the competence-competence principle (Kompetenz-Kompetenz) and held that it is crystal clear that the civil court or the high court does not have the jurisdiction to interfere in the arbitral proceedings and the arbitrator has sole and whole jurisdiction to adjudicate upon the, objection(s), Competence, Jurisdiction, Validity and existence of the arbitral proceedings and the arbitration agreement. The only remedy a party has is to continue with the arbitration proceedings and once the award is made then the party can move before the court to set-aside such an award. Thus, the court did not grant an anti-arbitration injunction in the present case.
- In, A. Ayyasamy vs. A. Paramasivam and Ors. , [AIR 2016 (SC) 4675] ,the supreme court in this relied on its decision given in “Kvaerner Cementation” and states that the civil court shall not have any jurisdiction to adjudicate, if the arbitration proceedings had already begun before filing such suit before the court. Thus, once an arbitration process has begun then the arbitrator shall have the competence to deal with all the matters pertaining to the dispute and any objection or challenge regarding the dispute shall be made before the arbitrator and he shall have the sole authority to adjudicate upon it. Thereby, the court did not grant an anti-arbitration injunction.
Therefore, it is clear that courts intervention in the arbitration proceedings once it has begun is clearly and vehemently discouraged by the Supreme Court.
- In, National Aluminium Company Ltd. vs Subhash Infra Engineers Pvt. Ltd. [2019(5)ArbLR254(SC)], the Supreme Court again relied on its judgement given in the “Kvaerner Cementation” , the present suit arose before the court by a special leave petition, the dispute was regarding the jurisdiction of the arbitral tribunal. But again the arbitration proceedings had already begun prior to the institution of the suit. The supreme court by its two-judge bench strongly relied upon the Kvaerner cementation judgement and upheld the competence-competence principle and stated that the court had no jurisdiction to adjudicate upon the issues pertaining to arbitration proceedings and the arbitrator has all the right to adjudicate upon them, once the arbitration proceedings are undergoing and until the award is made.
Thus, the court did not stay the arbitration proceedings.
Judicial Standpoint on grant of anti-arbitration injunctions in domestic arbitration
Therefore, by the above-mentioned decisions of the Supreme Court, it makes it very much clear and vocal that it is of the view that the arbitrator has the sole and whole right to adjudicate upon the issues pertaining to arbitration before it. And the civil court’s do not have any jurisdiction to intervene in the arbitral proceedings once the arbitral proceedings have begun prior to institution of the suit. Thus, with respect to domestic arbitration Supreme Court vehemently discourages intervention of the civil courts in the arbitration proceedings.
Anti-arbitration Injunctions: Practice In India at Glance
Therefore, as per my observation, based on the above discussion it is clear that the Indian courts have taken a stand that the they do not have the jurisdiction and the powers to grant anti-arbitration injunction. This stand is taken even more firmly after the 2015 amendment to the act was made. The courts have emphasized on the supremacy of the arbitral tribunal and its sole competence to rule upon the issues pertaining to arbitration agreement.
However, the Supreme Court also observed that the courts shall have the power to adjudicate upon the issues pertaining to arbitration agreement only when an application is made to it under section 9 of the act. It states the power of the courts to grant interim relief to the party, before the arbitral tribunal is appointed. Once an arbitral tribunal is appointed then the parties have to go ahead with the proceedings. They can approach the court for setting-aside the arbitral award and appeal against it under section 34 and 37 of the act, respectively.
Thus, the courts in domestic arbitration can only adjudicate on matters pertaining to arbitration agreement a) when it is approached by a party, before the institution of arbitration proceedings and b) after the arbitral award has been made.
Conclusion
In my opinion, the approach taken by the courts in the recent cases has been by far the most progressive and is in the direction of a pro-arbitration regime. The jurisprudence is still developing and evolving with every judgement in this regard and it will be interesting to see how the law regarding anti-arbitration injunction develops.
The stand taken by the courts in grant of anti-arbitration injunctions in domestic arbitrations is praiseworthy as this has preserved the sanctity of the arbitral process and has ensured that the trust of people in the arbitration process is not adversely affected.
Therefore the courts shall continue the practice adopted by them and maintain the fine balance between providing relief and maintaining the sanctity of the arbitration process. This shall instill confidence of the citizens in both the systems.
References
- https://www.mondaq.com/advicecentre/content/2786/Section-8-Of-The-Arbitration-And-Conciliation-Act-1996-A-Saving-Beacon#:~:text=Section%208%20of%20the%20Arbitration%20and%20Conciliation%20Act%2C%201996%20is,parties%20to%20go%20for%20arbitration.
- https://rmlnluseal.home.blog/2020/08/09/distilling-the-concerns-of-granting-anti-arbitration-injunction-in-international-commercial-arbitration/
- http://www.conventuslaw.com/report/india-anti-arbitration-injunction/#:~:text=(i)%20%E2%80%9CIf%20an%20issue,or%20incapable%20of%20being%20performed.
- https://www.mondaq.com/india/arbitration-dispute-resolution/617480/anti-arbitration-injunction
- http://www.ciac.in/Tecnical_Session_4_dec2010.html
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
