ANTI-ARBITRATION INJUNCTION

OBJECTIVE:

In this blog, the author explains the concept of anti-arbitration injunction, its importance, and legal provisions relating to it. This blog also analyzes the power of the courts on the given matter and raises the question- Why the courts have given different decisions in the allied cases. The blog ends with suggestions to the Supreme Court of India for the formation of anti-arbitration injunction laws.

INTRODUCTION:

An Anti-arbitration injunction is a legal or judicial order to restrain a part from further proceeding with the dispute under arbitration. The injunction is being accorded by the courts. The main motive of the court is to stop the outside arbitration and restrain any other body from working as an adjudicative body.

LEGAL PROVISIONS:

Arbitration came upon with the motive of helping the judiciary through sharing the arbitral agreement in cases. Parties can choose whether they want courtroom proceedings or go through arbitration proceedings, which they are free to decide. Even after the arbitration award is passed, if either of the party is not satisfied within, then they can appeal in court. The legal existence of such injunction is a matter of dispute due to the lack of legal recognition under the Arbitration and Conciliation Act, 1996 (ACA). Despite this immense discourse, the power of the court to issue an anti-arbitration injunction is equivocacy.

“Granting an anti-arbitration injunction is often argued to be contradictory to the cardinal concept of mediation i.e., the rule of kompetenz-kompetenz embodied in section 16 of the above-mentioned Act.”[i]Arbitral tribunal empowered by this act to work independently without any interference of the courts. They enjoy their jurisdiction and proceed in with the clause of the arbitrary agreement. Judicial authority intervention is forbidden under section 5, in any concern ruled by the mediator.

However, sec.9 and sec. 45 of the concerned act, grants anti-arbitration injunction. Section 9 talks about the interim remedies which go to parties i.e., the court can provide interim remedies to parties before or between the adjudication advancing. Same as, section 45grant interfering powers to the judicature for the advancing in foreign arbitrations if the adjudication agreement between the parties becomes inoperative or incapable of performance.

COURT`S JURISDICTION IN ANTI-ARBITRATION INJUNCTION

“ In India, the issue concerning the grant of anti-arbitration injunction has seen divergent decision from the Hon`ble Supreme Court.”[ii] Different high courts haves different opinions, so they can`t be used as a precedent. Diversion in judgment shows the deviation in thoughts.

Like, in the case of Kvanver cementation India limited v. BajranglalAgawrawal[iii](Kvanver Cementations), the case has a different judgment from the World sports group (Mauritius) Ltd. V. MSM satellite(Singapore) Pte. Ltd.[iv]case. But both the discretion was decided by the Apex Court.

In Kvanver cementation India limited v. Bajaranglal Agarawal, the verdict was given by the Apex Court in 2001, but the same was reported in 2012 under the above mentioned (Act), without considering the interplay of the numerous amenities of the act, or the extent of legal intervention in arbitration. This is a brief order that neither examines or cites any precedent nor did it elaborate on the certainty of the discourse. In Kvaerner Cementation, Kvaerner had requested the permission of an anti-arbitration injunction on the basis that no arbitration agreement existed thereby uniting the parties and - the arbitration already initiated was incompetent. The Apex Court, on reading sec.16 of the law, that enshrines the principle of kompetenz-kompetenz and the scope of the law, ruled that a civil judicature was not competent to rule on any objection that arises during the existence or rationality of the adjudication agreement. Kvaerner Cementation reads kompetenz–kompetenz with negative formulation, stripping the civil judicature of its competency to govern, among other things, on the existence and the rationality of a mediation agreement.

In World sports group (Mauritius) Ltd. V. MSM satellite(Singapore) Pte. Ltd.2014, the court of the last record brought an unambiguous decision and decided that the civil courts of India had inborn authority to provide injunctions in restraint of mediation under Sec. 9 of the Code of Civil Procedure,1908. This was not in favor of the judgment of Kvaerner Cementation. Due to the discretion, it also became transparent that the problems before courts are now limited in specifying the situation in which such injunctions can be provided.

There has always been variation in the decisions of the judicature. Judgment in World Sport Group was used as precedent in 2016 in the case of, McDonald’s India Private Limited v. VikramBakshi and Ors.[v](McDonald’s), by the Divisional Bench of Delhi High Court. The court held that the civil judicature has the power to provide anti-arbitration injunction in a dire situation when it is proved that the existence of the arbitration clause is in jeopardy and that the arbitration agreement is null and void or not capable of being executed. However, facts mention that- granting of an anti-arbitration injunction was refused by the court.

Again in 2019, the Apex court took Kvaerner Cementation judgment as a precedent in national Aluminium Company Lmt. V. Subhash Infra Engineering Private Lmt. And Anr.[vi]and decided that any objection concerning the existence or validity of an arbitration agreement may be raised before the mediator. A civil suit cannot be maintained for the determination of such objection. The Supreme Court simply applied Kvaerner Cementation without analyzing that Kvaerner Cementation could no longer be considered good law in light of SBP & Co. Interestingly, the Apex Court also appointed a new arbitrator, without examining the presence of a valid adjudication agreement.

After reading the above decision, it can be inferred that, for the anti-arbitration injunction, the jurisdiction of civil courts is acknowledged by the apex court and high courts only under certain circumstances:

· If the performance become incapable or arbitrary agreement is null or void

· When the continuation of foreign arbitration proceedings become oppressive

· If proceeding causes abuse of legal process.

CONCLUSION:

Since the existence of divergent discourse, the Indian jurisprudence remains hazy on the anti-arbitration injunction. However national court seems prima facie interested in restricting and cautioning the lower court in granting anti-arbitration injunction or can be grant in certain circumstances discussed above. There is a need for the supreme court to guide the legislation to frame certain provisions regarding this or pass such a verdict which can be used as a precedent for future cases.

~Akanksha Kumari

ENDNOTE:-

[i]Yash More* And Ved Thakur*, Arbitral Process, Do Indian courts have the Power to Grant Anti-Arbitration Injunction? Do Indian Courts have the Power to Grant Anti-Arbitration Injunctions? – American Review of International Arbitration (columbia.edu)
[ii]Dhriti Mehta, Distilling the concerns of Anti-Arbitration Injunction in International Commercial Arbitration, RMLNLU Arbitration Law Blog (Aug. 15,2021, 8: 20 PM),  https://rmlnluseal.home.blog/ .
[iii] Kvaerner Cementation India Limited v. Bajranglal Agarwal, (2012) 5 SCC 214 (India)
[iv] World Sport Group (Mauritius) Ltd. v. MSM Satellite, AIR 2014 SC 968 (India).
[v] McDonald’s India Private Limited v. Vikram Bakshi and Ors, 2016 (4) ARbLR 250 (Delhi) (India).
[vi]National Aluminium Company Lmt. V. Subhash Infra Engineering Private Lmt. And Anr. , 2019 SCC Online SC 1091