Civil courts can grant anti-arbitration injunction against foreign-seated arbitrations: Delhi High Court

The Delhi High Court recently held that Indian civil courts can grant anti-arbitration injunctions against foreign-seated arbitrations if those proceedings are vexatious, oppressive and violate the public policy of India [Engineering Projects (India) Limited v MSA Global LLC (OMAN)]. 

Justice Purushaindra Kumar Kaurav reasoned that the judicial authority of the civil courts under Section 9 of the Civil Procedure Code (CPC) and their inherent powers under Section 151 CPC are to safeguard against the misuse of the arbitral process. 

“Where the arbitral proceedings are shown to have been vexatious and oppressive in a manner calculated to harass the opposite party, the Civil Courts are not only empowered but also under a solemn duty to intervene. It would be wholly unjust to compel a party to submit to arbitration when the process itself is a vehicle of abuse, serving no legitimate adjudicatory purpose,” the Court said. 

It observed that the civil courts are essentially the custodian of all civil rights, and to summarily relegate a party to the arbitral forum, particularly when the very institution of arbitration is being used to perpetuate unfairness, would amount to a mechanical application of statutory principles, contrary to both equity and the broader constitutional mandate of access to justice. 

“It is in these exceptional cases that the Civil Court must act as a sentinel on the qui vive (lookout) i.e., watchful guardian, ensuring that the party alleging vexation and oppression is not left remediless. The Court must, in the exercise of its judicial conscience and upon a satisfaction of procedural abuse, extend its protective jurisdiction and prevent the continuation of proceedings that are clearly unjust, thereby upholding the rule of law and preserving the sanctity of adjudication,” the Court said.

Justice Kaurav rendered these findings while dealing with a plea filed by Engineering Products India Limited (EPIL), a central government Public Sector Undertaking, seeking an injunction against the continuation of Singapore-seated arbitration proceedings before the International Chamber of Commerce (ICC). 

The arbitration proceedings were initiated by MSA Global LLC, a military and security systems integrator company based out of Oman. 

The two companies had entered into an agreement under which EPIL was appointed as the main contractor for a supply and build project which involved the design, supply, installation, integration and commissioning of the border security system at the Oman-Yemen border. 

Disputes emerged between the two firms, after which MSA invoked the arbitration clause and appointed Andre Yeap as its co-arbitrator.

EPIL nominated former Supreme Court judge Justice AK Sikri as its co-arbitrator. The tribunal was then constituted with Jonathan Acton Davis as the presiding arbitrator. 

EPIL said that while it was preparing for the evidentiary hearing, it became aware of Yeaps’ prior involvement in arbitral proceedings involving Manbhupinder Singh Atwal, the Managing Director, Chairman, and Promoter of MSA.

The Indian PSU argued that Yeap’s failure to disclose these facts violated Article 11 of the ICC Rules and raised doubts over his independence, neutrality and impartiality. It challenged Yeap’s appointment before the ICC court but the same was rejected. 

EPIL then moved the High Court of Singapore, seeking a determination on the validity of Yeap’s continued participation in the arbitral proceedings.

MSA argued that EPIL was trying to derail the arbitral proceedings, indulging in forum shopping and that the suit was not maintainable.

After considering the case, the Court said that it has the jurisdiction to deal with the dispute. 

It further said that since all three pre-conditions - prima facie case, balance of convenience and irreparable injury - tilt in EPIL’s favour, it is a fit case for grant of an interim injunction. 

“Accordingly, the proceedings of the Arbitral Tribunal shall stand stayed till the pendency of the suit and the parties are injuncted from participating in the same,” the Court ordered. 

Senior Advocate Sandeep Sethi along with advocates Ajit Warrier, Angad Kochhar, Himanshu Setia, Vedant Kashyap, Sumer Dev Seth, Richa Khare and Riya Kumar appeared for Engineering Projects India Limited. 

MSA Global was represented by Senior Advocate Rajiv Nayar and advocates Kirat Singh Nagra, Kartik Yadav, Pranav Vyas, Sumedha Chadha, Sankalp Singh, Esh Gupta and Pritesh Raj. 

[Read Judgment]