“Anti-arbitration injunction against foreign seated arbitration” – Introduction
Section 5 of the Arbitration and Conciliation Act, 1996 (‘Act”) limits legal mediation during the time spent Arbitration in India, save as given under the Act. Section 16, in accordance with globally received and adhered to UNCITRAL Model Law, epitomizes the rule of Competence. Capability, as indicated by which the Arbitral Tribunal is engaged to decide and manage on its own purview. The issue which license the intercession of legal experts in Arbitration have been confined in the Act, and are held within proper limits via normal changes and corrections. Nonetheless, a clever methodology that has not been explicitly accommodated in the Act has been received by the Courts via directives called ‘anti-arbitration injunction’.
In this article, we will concentrate exhaustively whether Indian courts have the ability to concede these orders in foreign seated arbitration.
What is foreign seated arbitration?
Foreign seated arbitration is an arbitration in which the ‘seat’ of the intervention is chosen outside of India. The Act is divided into three portions, whereby Part I controls interventions that have their headquarters in India, with the exception of Section 2(2) of Part I, the pertinence of which has been extended to unfamiliar located mediation, and Sections 9, 27, and 37(1)(a) and 37(1)(b) (3).
Part II provides for the authorisation of grants given from foreign-seated arbitration, as defined by the New York Convention and the Geneva Convention, while Part III provides for arrangements with Conciliation.
What are anti-arbitration injunctions?
An injunction is a lawful cure whereby an individual is controlled, vide a request for the Court of law, from starting or proceeding with any demonstration An injunction is a legal remedy that prevents a person from commencing or continuing with any display of exclusion or commission by a request to a court of law.
An anti-arbitration injunction similarly, is an order, or more precisely, a request, that prohibits those engaged with the asserted understanding from initiating or continuing with discretion processes.
These orders can also be issued against those participating in mediation, as well as against the arbitral council, to prevent them from commencing or continuing with the processes.
There are significant parallels between anti-suit injunctions and anti-arbitration injunctions, and the terms are frequently used interchangeably. While both of these decisions are simply orders directing the commencement and continuance of separate cases and arbitrations, it should be noted that both of these orders are unique in terms of their oversight criteria.
The award of anti-arbitration injunction orders is governed by the Act, which is a comprehensive regulation for Indian arbitration and under which the gatherings individually select the arbitral court as the arbitrating authority.
This is an important distinction between anti-arbitration injunctions and anti-suit injunctions, because in the latter, the problem arises about skilled courts rather than when the subject is enthusiastically referenced to the arbitral council.
What role do Indian courts have in foreign-seated arbitration?
Despite the Act’s goal of reducing the number of times the court can intervene in the arbitration process, it actually gives the courts priority over the arbitral council by allowing them to articulate claims over the Tribunal’s choices, as well as the ability to concede certain restrictive cures under certain sections of the Act. Although the courts of the seat of arbitration have a limited jurisdiction to control the discretion proceedings in foreign seated arbitration, there are times when the Courts of India can intervene in something quite similar.
For instance, in a foreign seated arbitration, where a party to the interventions agreement has assets in India that must be recognised under the arbitral dignity, or if the attendees to the a foreign seated arbitration include a referral to mediation in a National Court.
The following sections explain the function of Indian courts in foreign-seated arbitration:
- Section 9
By the 2015 Amendment, the Supreme Court put the discussion with respect to the pertinence of this section to foreign seated arbitration very still and With the 2015 Amendment, the Supreme Court brought the debate over the applicability of this section to foreign-seated arbitration to a halt, establishing that even in global business arbitration with foreign seats, Indian Courts can be drawn closer to look for fitting between time assistance under Section 9 of the Act.
- Section 45
Section 45 provides that gatherings to a foreign-seated arbitration may resort to an Indian court for reference to arbitration.
Prior to referring to arbitration, the Court has been asked to examine the agreement on several limits accommodated under this segment.
The granting of anti-arbitration injunctions is a power that is used rarely, and you should be aware of the phases at which these orders can be sought from the Courts of law.
Anti-arbitration injunction in India
In India, there has recently been a flood of cases of Anti-Arbitration orders being sought by parties who have either exposed themselves to a novel law and seat of Arbitration or there is a case having that impact.
The grounds for seeking such a directive differ, but the hidden objective is, by all accounts, usual – to order foreign-seated arbitration proceedings.
Dissenting Opinion of the Calcutta High Court
In the recent case of Balasore Alloys Limited vs. Medima LLC (12.08.2020 – CALHC): [MANU/WB/0616/2020]. The Calcutta high court on 12th August’20 decided upon a dispute between the parties in dispute and strongly dissented with the (“Kvaerner cementation”) judgement of the Delhi High court passed preceding to this present judgement.
The plaintiff Balasore is an Indian public limited company whereas the defendant Medima LLC is a limited liability company (LLC) incorporated as per the laws of New York in the United States of America. The plaintiff supplies “Ferro alloy” to the defendant. A disagreement occurred between the parties about 37 separate purchase orders/contracts.
The plaintiff has brought this claim to prevent the defendant from continuing arbitration at the International Chamber of Commerce (“ICC”) in London, United Kingdom.
Supreme Court’s view on the case
In, Balasore alloys limited vs. Medima LLC, [MANU/SC/0691/2020] decided on On September 16, 2020, an application was brought to the Supreme Court under Section 11(6) of the Arbitration and Conciliation (Amendment) Act, 2019 by the plaintiff/applicant to appoint an arbitrator, arising from the above-mentioned judgement of the Calcutta High Court.
The petitioner stated that the arbitration procedures would be place in India under some other dispute resolution clause, and that the court would designate an arbitrator.
Despite the fact that the authority to be exercised under the abovementioned clause is restricted, it is crucial to note that the Supreme Court nevertheless considered the Calcutta High Court judgement in the “Balasore alloys” and the apex court stated that it “Found no reason to interfere” in the arbitration proceedings which had begun under the three arbitrators at “ICC” London.
Anti-arbitration injunctions in England
A gathering may wish to acquire an anti-arbitration injunction where an arbitration has been initiated by a counterparty in penetrate of a concurred A gathering may wish to obtain an anti-arbitration injunction where an arbitration has been initiated by a counterparty in violation of a mutually agreed-upon question goal measure, for example, by starting the intervention in an unacceptable seat, or where the gatherings had agreed to allude debates to the select ward of explicit public courts
This Practice Note examines the approach of the courts of (England and English are used for accommodation) on allowing off against suit relief in this unique scenario.
Arbitration is a developing legislation, particularly in terms of criteria for anti-arbitration injunctions. Courts in India have issued conflicting legal statements on whether anti-arbitration injunctions are permissible. It will be interesting to see how the standards evolve in the following years. To be sure, the future seems to be bright for arbitration in both the global and domestic circles.
I believe that anti-arbitration injunctions will be granted.
It is on the basis that an individual has the right to defend himself, and if he approaches a court for such assistance, he will not be rejected since there is a broad concept of not interfering in the arbitral dialogue.
Each matter should be resolved on its own merits, and anti-arbitration injunctions shall be permitted if necessary. However, with extreme caution and in instances when not doing so would be a disgrace to the wronged assembly.
As a result, the fundamental rules regulating anti-arbitration injunctions are continuously changing with each passing day; it is fascinating to be a witness to this growth as well as how the principles expand in the future.
Contributed by – Swadha, an Undergraduate Student at Delhi Metropolitan Education, Delhi and working as a legal content writer intern under Legal Link India