Indian Courts can grant Anti-Arbitration Injunctions against foreign-seated arbitration: Calcutta HC

The Calcutta High Court on Wednesday ruled that Indian courts have the power to grant anti-arbitration injunctions against foreign seated arbitrations (Balasore Alloys Limited v. Medima LLC)..The order passed by Justice Shekhar B Saraf states,.“… courts in India do have the power to grant anti-arbitration injunctions. However, this power is to be used sparingly and with abundant caution, a caveat once previously stated in Devi Resources Ltd. (supra) by the learned Division Bench of this court. It is only under the circumstances enumerated in and exhaustively discussed in paragraph 24 of Modi Entertainment Network (supra) … which would merit the grant of an anti-arbitration injunction and therefore, its rare and controlled usage.”.To arrive at this conclusion, the Court, inter alia, found that the contrary ruling by the Delhi High Court in Bina Modi & Ors v. Lalit Modi & Ors did not have precedential value as it had not considered the Supreme Court's ruling in SBP & Co. v. Patel Engineering. In this regard, the Calcutta High Court's order states:."... the learned judge was not made aware of the Supreme Court’s Constitution Bench ruling in SBP & Co. (supra) which I have already held, has implicitly overruled Kvaerner Cementation (supra) as far as an arbitral tribunal, alongside civil courts, being competent to rule on issues of jurisdiction as well as examining the existence and validity of an arbitration agreement, are concerned.".Justice Saraf proceeded to opine that while Indian Courts can grant anti-arbitration injunctions, this power should be used sparingly and in line with principles already laid down by the Supreme Court in Modi Entertainment Network v. WSG Cricket. .These principles include the following:The defendant, against whom the injunction is sought, is amenable to the personal jurisdiction of the court.If the injunction is declined, the ends of justice will be defeated.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..In the Modi Entertainment Network case, the Supreme Court had also laid down the following additional guidelines:In a case there is more than one forum, the court in the exercise of its discretion to grant anti-suit injunction will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties. Anti-suit injunction may be granted against proceedings which are oppressive or vexatious or in a forum non-conveniens. Where the jurisdiction of a court is invoked on the basis of jurisdiction clause in a contract, clauses concerning exclusive or non-exclusive jurisdiction of the court of the choice of parties are not determinative but are relevant factors.When a question arises as to the nature of the jurisdiction agreed to between the parties the court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case.A court of natural jurisdiction will not normally grant 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 in exceptional case for good and sufficient reasons, with a view to prevent injustice.Such exceptional cases include where the injunction is to permit a contracting party to be relieved of the burden of the contract; or where 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 of choice, because the essence of the jurisdiction of the court does not exist or because of a vis major or force majeure and the like.Where 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. 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.A party to the contract containing 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 of the 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 forum non-conveniens. 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..The case before the High Court concerned agreements between India-based Balasore Alloys Limited and US-based Medima LLC..Agreements between the two parties spoke of referring potential disputes to arbitration. .However, when a dispute arose, there was a difference of opinion as to whether the seat of arbitration would be in India or before the International Chamber of Commerce (ICC) in the United Kingdom (the ICC being a neutral foreign arbitration forum)..The dispute was a matter of which agreement clause would apply, i.e.A clause in a 2018 “Agency Agreement” introduced to cover past and present transactions between the parties which stated ICC to have jurisdiction, ORThe terms and conditions in purchase orders which provided for the application of Indian arbitration law and for the venue of arbitration to be in Kolkata, India..Balasore had moved the Calcutta High Court seeking to restrain arbitration proceedings initiated by Medima in the ICC, UK..Having found that the Court is empowered to grant anti-arbitration injunction against foreign seated arbitration, Justice Saraf proceeded to examine whether a case had been made out by Balasore to merit the grant of such an injunction..Applying the principles laid down in the Modi Entertainment Network case, the Court found that Balasore has “failed to conclusively discharge its burden of exhibiting that the ICC in London, the alternate forum in this case, is either a forum non-conveniens or that the proceedings initiated before it by the respondent are oppressive or vexatious in nature.”.The Court held that Balasore had not shown how the arbitration clause in the 2018 agreement was inoperative or incapable of being performed..The Court added, “The mere existence of multiple proceedings and/or chance of a matter proceeding in multiple forums are not sufficient reasons to render an arbitration agreement inoperative.”.As such, the Court declined to grant the interim injunction order sought for against the ICC arbitration proceedings. .“I do not see any reason why an ad interim order for anti-arbitration injunction should be granted restraining the respondent from pursuing the arbitration before the ICC in London”, Justice Saraf said..Senior Advocate Dhruba Ghosh and Advocates Rishad Medora, Meghajit Mukherjee, Anusha Nagarajan andShivangi Thard appeared for Balasore Alloys Limited. .Senior Advocate SN Mookherjee and Advocates Shaunak Mitra, Nandini Khaitan and Shreya Singh appeared for Medima LLC..Read the Order: