JUDICIAL EVOLUTION OF ANTI ARBITRATION INJUNCTION LAW
In an arbitration agreement there is a tendency that when a dispute arises, a party may pursue court intervention to prevent the other party from initiating or continuing arbitration proceedings. This remedy of one party to prevent the arbitration proceedings is called an anti-arbitration injunction. The position of law on the anti-arbitration injunction is not very well-defined. The language of s. 8 and s.45 of the Arbitration and Conciliation Act, 1996 are only provisions that give an implication that anti-arbitration injunction is permissible. However, no provision in law implies that the anti-arbitration injunction is illegal.
The jurisprudence in the anti-arbitration injunction is very limited in India. Kvaerner Cementation India Ltd. v. Bajranglal Agarwal and Anr., a 2001 verdict of the Supreme Court did not consider the ambit of court intervention in restraining arbitral. The apex court, in this case, ruled that the civil court did not have the power to exercise its power in intervening in an arbitral proceeding and thus it cannot injunct an arbitration.
One of the ill-famed jurisdictions in this respect is McDonald's India Pvt Ltd v Mr. Vikram Bakshi. The division bench of Delhi High Court, in this case, held that the civil courts have the jurisdiction to give anti-arbitration injunctions. The court further explained the distinction between anti-arbitration injunctions and anti-suit arbitration injunctions. It was further held that the court had jurisdiction to grant anti-arbitration injunctions in the cases where the arbitration agreement was proven to be null and void or incompetent or defective. It was also stated that though the courts may have the power to injunct an arbitration, however, the courts are directed to exercise their jurisdiction in this respect very rarely in accordance with the rule established under s.8 and s. 45 of the Arbitration and Conciliation Act, 1996.
In the recent decision of Bina Modi & Ors. v. Lalit Modi & Ors. the Delhi High Court raises questions on whether the Indian courts have jurisdiction to injunct the arbitration proceedings. In this case, Bina Modi who was one of the trustees in the family trust had initiated arbitral proceedings against the other trustees in order to settle the disputes between them due to the trust deed. The other trustees filed a civil suit against the arbitral proceedings and approached the Delhi High Court to injunct the arbitral proceedings. The Delhi High Court brought up doubts on whether it had jurisdiction to restrain the arbitral proceedings. It relied on the decision of the Supreme Court in the case of Kvaerner Cementation India Ltd. v. Bajranglal Agarwal and Anr. and ruled that a civil court does not have the jurisdiction to injunct or restrain arbitral proceedings. With respect to the recent decision of Bina Modi v. Lalit Modi’s reliance on Kvaerner Cementation India Ltd. v. Bajranglal Agarwal and Anr. there is ambiguity on whether the suits requesting anti-arbitral injunction are maintainable or not.
The reason behind injuncting an arbitral proceeding is to avoid corresponding proceedings making it cost-effective. The position of the judiciary in the courts of India is still ambiguous. There is a need for the courts of India to determine their position with respect to anti-arbitration injunctions.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.