Anti-Suit & Anti-Arbitration Injunctions

INTRODUCTION

With the advent of globalization coupled with the expansion of the technological landscape, the prevalence of international commercial transactions leading to disputes and differences between parties, have become an inexorable reality of the current times. Resultantly, disputes between parties, owing to the plethora of varied laws in various nations and their applicability to such disputes, poses a challenge to both litigants and Courts, alike. There has been a remarkable surge in the number of parties to such disputes, resorting to alternative dispute resolution methods as their chosen form of dispute resolution. However, the finer intricacies of the differences in laws across nations poses a complexity far greater than imagined. The contrasting laws and interests of such litigants lead to duplicity of proceedings before various forums. If used as a tool rather a weapon, an Anti- Suit Injunction (“ASI”) and an Anti-Arbitration Injunction (“AAI”), might prove to be an effective means of meandering through the jurisdictional complexities.

Originating from England, an ASI is an order passed by a Court, restraining a party to a suit/proceeding before it from instituting or pursuing proceedings in another jurisdiction or forum. The general principles governing the grant of injunctions also govern the grant of an ASI, which is but a species of injunction. Indian Courts, being Courts of equity, have the power to issue an ASI to a party over whom it has personal jurisdiction, as Courts of equity exercise their jurisdiction in personam. Similarly, an AAI is sought by a party, requesting for judicial intervention, to prohibit another party from initiating or pursuing arbitral proceeding, when found to be digressing from the negotiated terms. It has however been held that the discretionary power of the Court (granting ASI and AAI) is to be exercised rarely and with circumspection, as it effectively interferes with the exercise of jurisdiction of another Court or the tribunal, as the case may be. Similarly, in refusing to grant an ASI, the Hon’ble Supreme Court has also reiterated and observed that an ASI should be granted sparingly and not as a matter of routine and that before passing the order granting an ASI, Courts should proceed with extreme caution.1

Anti-Suit Injunctions
The Indian Courts’ practice of grant of ASI’s, largely resemble that of the English Courts. The situation arises when one or more Courts have jurisdiction over the proceedings basis factors such as; place of residence/work of parties, where cause of action arose, or where immovable property of a party may be situated etc. While an exclusive jurisdiction clause pertains to only a singular Courts’ jurisdiction, a natural or available jurisdiction clause pertains to the prevalence of jurisdiction of more than one Court. Therefore, parties in cross-border disputes, tend to either adopt the natural or available jurisdiction by creation of exclusive or non-exclusive jurisdiction clauses or have disputes resolved by a foreign Court of choice as a neutral forum in accordance with law applicable in such forum. It is trite law, that by agreement the parties cannot confer jurisdiction, where none exists, in a Court to which the Code of Civil Procedure, 1908 applies. However, this principle is not applicable when parties to a dispute submit to the exclusive/non-exclusive jurisdiction of foreign Courts. The key principles governing the grant of ASI’s and the circumstances warranting the use of a Court’s discretionary power, have been expounded in the Hon’ble Supreme Court’s Judgment in Modi Entertainment Network & Anr. v. W.S.G Cricket Pte. Ltd.2 and the same is as under;

  1. "In exercising discretion to grant an anti-suit injunction the Court must be satisfied of the following aspects:
    1. The defendant, against whom an injunction is sought, is amenable to the personal jurisdiction of the Court;
    2. If the injunction is declined, the ends of justice will be defeated and injustice will be perpetuated; and
    3. 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.
  2. In a case where more forums than one are available, the Court in exercise of its discretion to grant an anti-suit injunction will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties and may grant anti-suit injunctions in regard to proceedings which are oppressive or vexatious or in a forum non-conveniens.
  3. Where 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 choice of the parties are not determinative but are relevant factors and when a question arises as to the nature of jurisdiction agreed to between the parties the Court has to decide the same on true interpretation of the contract on the facts and in the circumstances of each case.
  4. A Court of natural jurisdiction will not normally grant an 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, save and except in an exceptional case for good and sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relived of the burden of the contract; or since the date of the contract the circumstances or subsequent events have made it impossible for the party seeking injunction to prosecute the case in the Court because the essence of the jurisdiction of the Court does not exist or because of a vis major or force majeure and the like.
  5. When 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 as it shall be presumed that the parties have thought over their convenience and all other relevant factors before submitting to the non-exclusive jurisdiction of the Court of their choice which cannot be treated just as an alternative forum.
  6. A party to a contract containing the jurisdiction clause cannot normally be prevented from approaching the Court of choice of parties as it would amount to aiding breach of the contract; yet when one of the parties to the jurisdiction clause approached 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 a 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."3

Having opined the above, and in not having granted the ASI, the Court observed that granting an ASI when the proceedings in a parallel foreign Court of choice did not result in perpetuating injustice, would be equivalent to aiding a party to commit a breach of their agreement. Further, to do so, good and sufficient reasons would have to be shown to justify departure from the contractual obligations. Therefore, in substance, a party to a contract containing the 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. When one such 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 a ‘forum non- conveniens’. It is pertinent to note that, 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. Similarly, a forum at which proceedings are initiated, if competent, cannot be considered to be a ‘forum non-conveniens’ for merely being situated in a foreign nation. This view has been espoused by the Hon’ble Calcutta High Court in Rotomac Electricals Pvt Ltd v. National Railway Equipment Company4 wherein while refusing to grant an anti-suit injunction, the Hon’ble Court observed that;

“when two parties to a contract belong to two different countries and proceedings are initiated in the country of origin of one of the parties to the contract, it cannot be said that the proceedings are initiated in a forum non conveniens, if the forum is competent otherwise. When the parties to a suit belong to different countries thousands of miles away from each other, one or the other of the parties would be inconvenienced. Proceedings in India would not be convenient to the party from the United States and proceedings in United States would not be convenient for the party from India.”

The fact that the parties had agreed to resolve their disputes under the agreement, indicated their foreseeability of a probable breach. However, the foreseeability test would not cover circumstances whereby approaching the forum of choice had been rendered impossible due to a vis major etc. Circumstances such as cost of litigation, or that of taking witnesses to the chosen foreign forum, is deemed to have been foreseen by the parties, when they agree to submit to the jurisdiction of such a foreign forum. A similar view has also been adopted in the Delhi High Court Judgment in (India TV) Independent News Service Pvt Ltd v. India Broadcast Live LLC & Ors.5 wherein the Hon’ble Delhi High Court reiterated that while deciding an application for ASI, factors such as convenience of parties, expenses involved and law governing the transaction are important while determining the appropriate forum.

Anti-Arbitration Injunctions
The practice of grant of AAI’s like its counterpart ASI, also largely resembles that of the English Courts’ system with the material distinction being the inapplicability of the principle of ‘forum non-conveniens’.6

The basis of amendments to the Arbitration and Conciliation Act, 1996 (“the Act”) have substantially been focused on limiting the extent of judicial intervention in arbitral proceedings whilst provisioning for an effective and speedy alternative dispute resolution focused on developing India as a credible commercial arbitration centre. While on the one hand the Courts’ endeavour has been to primarily provide autonomy to tribunals to adjudicate upon challenges to their jurisdiction, there will always remain a probable requirement of judicial intervention. Such a request, when made with a view to curtail the other party to the dispute, from initiation or continuing arbitral proceedings, the recourse sought is an AAI. The remedy is typically granted by the Courts against the commencement or continuation of the arbitration proceedings if the parties have agreed that they will not refer the matter to arbitration or if they have opted for litigation or alternative dispute resolution methods and may be sought at any stage of the arbitral proceedings, but before the final award is rendered. The effect of an AAI would therefore depend on, when the injunction is sought and granted, and against whom it is ordered. Alike an ASI, an order granting an AAI acts in personam against the party who is being restrained. The general circumstances under which AAI’s may be granted, include; lack of an agreement to arbitrate, arbitral proceedings that are outside the scope of an arbitration agreement, breach of an exclusive-jurisdiction clause, arbitration of an issue that is res judicata, proceedings initiated at the wrong seat, etc.

Pertinently, this remedy poses a serious threat inasmuch as being incongruent with the ‘kompetenz- kompetenz’ principle, that preserves the sanctity of autonomy of the tribunal. The wordings of sections 8(3) and 45(4) of the Act, lend a paradoxical view as to the legality of AAI’s. However, no provision under any applicable law make AAI’s illegal as such and upon sufficient reasoning being provided, Courts have not been shy to grant them.

The High Court of Calcutta in Board of Trustees of the Port of Kolkata vs. Louis Dreyfus Armatures SAS & Ors.7 granted the AAI and laid down the circumstances under which the same can be granted, as under;

  1. "If an issue is raised whether there is any valid arbitration agreement between the parties and the Court is of the view that no agreement exists between the parties.
  2. If the arbitration agreement is null and void, inoperative or incapable of being performed.
  3. Continuation of foreign arbitration proceeding might be oppressive or vexatious or unconscionable."

The High Court of Delhi in dealing extensively with issuance of AAI’s in McDonald’s India Pvt Ltd v Mr Vikram Bakshi 8, has elucidated and further clarified the material difference between the principles that govern the grant of ASI’s and AAI’s. The defence of ‘forum non-conveniens’ that is fundamental to ASI’s, applies only when there are competing Courts and not when a dispute is before an arbitral tribunal. As in the present case, when a forum of arbitration was consciously selected by the parties as an alternative to the Court’s, the same could not be considered an inconvenient forum per se. It was further explained that Court’s should exercise their inherent power to injunct arbitration proceedings cautiously and only in rare circumstances in accordance with the principles envisaged in Sections 8 and 45 of the Act. A Similar view had also been taken in LMJ International Ltd. v. Sleepwell Industries Co. Ltd. & Anr.9 wherein the contention of ‘forum non-conveniens’ was rejected basis the fact that the contract had been entered into, with the parties’ eyes wide open. As also observed in Himachal Sorang Power Private Limited v. NCC Infrastructure Holdings Limited10 the Hon’ble Delhi High Court, while rejecting an application for an AAI, laid down the following parameters for grant of AAI’s;

  1. "The principles governing anti-suit injunction are not identical to those that govern an anti- arbitration injunction.
  2. Courts are slow in granting an anti-arbitration injunction unless it comes to the conclusion that the proceeding initiated is vexatious and/or oppressive.
  3. The Court which has supervisory jurisdiction or even personal jurisdiction over parties has the power to disallow commencement of fresh proceedings on the ground of res judicata or constructive res judicata. If persuaded to do so the Court could hold such proceeding to be vexatious and/ or oppressive. This bar could obtain in respect of an issue of law or fact or even a mixed question of law and fact.
  4. The fact that in the assessment of the Court a trial would be required would be a factor which would weigh against grant of anti- arbitration injunction.
  5. The aggrieved should be encouraged to approach either the Arbitral Tribunal or the Court which has the supervisory jurisdiction in the matter. An endeavour should be made to support and aid arbitration rather than allow parties to move away from the chosen adjudicatory process."

In the matter of Ravi Arya & Ors v. Palmview Overseas Limited & Ors,11 taking a pro-arbitration stance, the Hon’ble High Court of Bombay opined that a matter which is already before the Tribunal, cannot be entertained by the Civil Court for proceedings seeking grant of an injunction against the Tribunal during the course of arbitral proceedings. It was held that Section 16 of the Act conferred power on the Tribunal to rule on its own jurisdiction inter alia adjudication upon issues such as the existence or the validity of the arbitration agreement itself. In opining so, the Hon’ble Court sought to reduce judicial intervention and similar views then came to be adopted by the Hon’ble High Court of Delhi in Bina Modi & Ors v. Lalit Modi & Ors,12 which has generated quite a tumultuous atmosphere, in having favoured the Tribunal’s discretion in opining on their own jurisdiction. In dismissing the suit, the decision had been highly influenced that of the Hon’ble Supreme Court’s decision in Kvaerner Cementation India Ltd. v. Bajranglal Agarwal & Anr,13 which had espoused the Tribunal’s right in adjudicating upon, inter alia, issues pertaining to its jurisdiction, and by virtue of a conjoint reading of Section 5 in consonance with Section 16 of the Act, an AAI would not be maintainable. This decision had further been approved and relied upon after a long hiatus, by the Hon’ble Supreme Court in A. Ayyasamy v. A. Paramasivam & Ors.,14 and a little later in National Aluminium Company Limited v. Subhash Infra Engineers Private Limited & Anr.15

Pertinently, taking a contrary view, the Hon’ble Supreme Court, prior in time, in Chatterjee Petrochem Company & Anr. v. Haldia Petrochemicals Ltd & Ors.16 had relied on Section 45 of the Act to determine if the arbitration agreement was null and void, inoperative or incapable of being performed. Though the Court had dismissed the AAI, the approach taken had digressed from the larger bench decision in Kvaerner Cementation. Similarly, in World Sport group v. MSM Satellite Singapore Ltd. 17 the Courts had applied the principles of Section 45 of the Act to look into whether the arbitration agreement was null and void.

However, the Hon’ble Supreme Court’s decision in Kvaerner Cementation has been overruled by the case of SBP & Co. v Patel Engineering,18 in which the Supreme Court rejected the argument that an arbitral tribunal had the sole competence, to the complete exclusion of Civil Courts, to determine its own jurisdiction.

Recently, the Hon’ble High Court of Calcutta in Balasore Alloys Limited v. Medima LLC,19 held that the Courts in India have the power to grant AAI’s against foreign seated arbitrations; however, this power should be used sparingly and with caution. In rejecting the grant of an AAI, the Court observed that Balasore had not completely discharge the duty of proving that the ICC in London, in this case, the alternate venue, was indeed a ‘forum non-conveniens’ or that the proceedings brought before it by Medima were arbitrary or vexatious. Effectively, the possibility of a claim arising in several jurisdictions was not an adequate ground to make an arbitration agreement inoperative.

CONCLUSION
The catena of judgments and precedents are clarificatory on the high threshold to be met for grants of ASI’s and AAI’s. The Hon’ble Supreme Court has time and again, over the years voiced their concerns over the requisite caution towards exercise of their discretionary power that is to be used sparingly.

While conceptually similar, ASI’s and AAI’s have a fine distinction which seems to have emerged and the principles governing the grant of the respective injunctions have been elucidated in light of the same. Being unreferred to, explicitly under any law in force, ASI’s and AAI’s have cultivated dubious façade vis-à-vis their legality, over time. That being said, no law expressly bars them and the Courts have not been shy in granting them. Such injunctions pose as a double edged sword, but also a rather useful tool for the enforcement of jurisdiction. With the progression of time and the increasingly notorious misuse, the Courts of Common Law were quick to curb their accessibility, by an increase in the threshold to be met.

A tool for resolution of jurisdictional issues, aimed at reduction in multiplicity of proceedings while protecting the interest of parties to litigation, is also viewed as, a weapon to the efforts of the judiciary in promoting India as a viable hub for International Commercial Arbitrations and safeguarding the crux of the ‘kompetenz-kompetenz’ principle. Bearing in mind, the rationale behind the system of checks and balances, a certain degree of juridical discretion would be necessitated in dealing with a tool so volatile.

  1. Dinesh Singh Thakur v Sonal Thakur, (2018) AIRSC 2094
  2. (2003) 4 SCC 341
  3. Supra No.2
  4. CS No 10 of 2011.
  5. (2007) 35 PTC 177 (Del)
  6. McDonald's India Pvt Ltd v Mr Vikram Bakshi 2016 SCC OnLine Del 3949
  7. 2014 SCC OnLine Cal 17695
  8. Supra No.6
  9. 2017 SCC OnLine Cal 12762
  10. 2019 SCC Online Del 7575
  11. 2019 SCC OnLine Bom 251
  12. 2020 SCC OnLine Del 901
  13. (2012) 5 SCC 214
  14. (2016) 10 SCC 386
  15. 2019 SCC OnLine SC 1091
  16. (2014) 14 SCC 574
  17. (2014) 11SCC 639
  18. (2005) 8 SCC 618
  19. G.A. No. 871 of 2020
Dated: April 7, 2021

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