Seat v/s Courts: Delhi HC’s Intervention in Singapore-Seated Arbitration

[Swayam and Motaqueef are students at National Law University Odisha.]

The robust growth of international commercial arbitration has been anchored on two foundational tenets of party autonomy and minimum judicial interference. Indian jurisprudence, following the Arbitration and Conciliation Act 1996 (A&C Act), has largely embraced these principles, seeking to support, but not supplant, the contractual choices made by the parties. The recent judgment of the Delhi High Court in Engineering Projects (India) Limited v. MSA Global LLC (Oman) (MSA Global) marks a significant departure, stirring complex debates regarding the High Court’s power to grant anti-arbitration injunctions in respect of foreign-seated arbitral proceedings. This article critically examines the Court's reasoning, its implications for arbitral autonomy and international comity, and the broader efficacy of the anti-arbitration injunction in the transnational context.

Doctrinal Framework: Anti-Arbitration Injunctions in Indian Jurisprudence

Anti-arbitration injunctions are court orders that restrains a party to prosecute or continue arbitral proceedings. These have long been regarded as a sparsely used exceptional remedy and not a standard practice or established rule. The Indian courts have repeatedly articulated the principle that “party autonomy” and the legislative objective of minimal judicial intervention circumscribe the grant of pre-emptive injunctive relief. The Supreme Court's decisions in Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO) reaffirm the centrality of territorial jurisdiction, holding that the courts at the “seat” of arbitration are exclusively empowered to exercise supervisory jurisdiction over the arbitral process.

However, Indian courts, in specific circumstances, have asserted jurisdiction to grant anti-arbitration injunctions in cases where the continuation of arbitral proceedings is shown to be “vexatious and oppressive”. The jurisprudential threshold to determine “vexatious or oppressive” conduct has been crystallized through a series of landmark decisions that require a demonstration of exceptional hardship or manifest abuse of process.

In Oil and Natural Gas Commission v. Western Company of North America, the Supreme Court established that mere dissatisfaction with procedural rulings, or disputes already adjudicated under institutional rules, would generally not suffice for sustaining a challenge or securing an anti-arbitration injunction. The Court emphasized that the threshold for intervention must be substantially high to prevent the erosion of party autonomy principles embedded in arbitration law.

The Delhi High Court in Union of India v. Dabhol Power Company further refined this standard by articulating a two-limb test for determining whether arbitral proceedings are “vexatious and oppressive”:

First, vexatious proceedings are those initiated without sufficient legal basis, with the intent to harass or burden the opponent rather than to achieve legitimate adjudicatory purposes.

Second, oppressive proceedings are those that impose unjust, harsh burdens on a party, such as compelling participation in proceedings where fundamental procedural safeguards have been compromised.

This doctrinal framework was subsequently applied in Balasore Alloys Limited v. Medima LLC, where the Calcutta High Court held that mere presence of multiple proceedings in multiple forums is not an adequate ground to make an arbitration agreement cease to operate. The Court emphasized that the party seeking an anti-arbitration injunction must conclusively discharge its burden of demonstrating that the alternative forum is either forum non conveniens or that the proceedings initiated are oppressive in nature.

Conversely, in Bina Modi v. Lalit Modi, the Delhi High Court adopted a more restrictive approach, holding that anti-arbitration injunctions were not maintainable as challenges to arbitrability must be decided by the arbitral tribunal under Section 16 of the A&C Act. This divergent approach created a jurisprudential split that remained unresolved until the MSA Global case.

Factual Matrix and Judicial Reasoning in MSA Global

The dispute in MSA Global arose out of an ICC-administered, Singapore-seated arbitration between an Indian public sector undertaking and a foreign contractor. The contract signed by the parties contained an arbitration clause providing for the jurisdiction of courts in New Delhi “in respect of the contract”, while the seat of arbitration remained Singapore. The Indian party, having participated in the selection of arbitrators, later discovered a prior, undisclosed professional connection between the co-arbitrator nominated by the opposing party and the latter's management.

A challenge was raised before the ICC Court, which, following thorough consideration, characterized the non-disclosure as “regrettable” but found it insufficient to warrant the removal of the arbitrator or to vitiate the proceedings. Parallel proceedings were also pending before the Singapore courts. Notwithstanding the ICC's and Singapore court's findings, the Delhi High Court issued an anti-arbitration injunction, staying the proceedings before the arbitral tribunal.

Party Autonomy, Disclosure, and the Threshold of “Oppression”

The MSA Global judgment is noteworthy for potentially lowering the threshold at which “oppressive and vexatious” conduct might be inferred. Traditionally, as established in KK Velusamy v. N Palanisamy and consistently applied in subsequent decisions, courts have required a showing of egregious conduct, such as outright fraud, bad faith, or manifest injustice to enjoin arbitral proceedings.

The present judgment appears to treat a mere procedural lapse, a failure to disclose a prior professional relationship as sufficient ground for judicial intervention, thereby broadening the discretion of the judiciary to intervene. This departure from established precedent raises concerns about the consistency of application and the risk of subjective judicial determinations undermining the certainty that parties seek in arbitral proceedings.

Comity of Courts and the Transnational Seat: A Doctrinal Challenge

The doctrine of comity is central to international commercial arbitration, mandating judicial respect and non-interference in the processes of foreign courts, particularly those at the seat of arbitration. The Supreme Court in BALCO articulated the territorial principle with precision, holding that Indian courts are precluded from granting interim relief or injunctive orders in respect of foreign-seated arbitrations, save for extraordinary circumstances where the “ends of justice” demand intervention.

Moreover, the authority to rule on challenges to arbitrators is typically vested in the arbitral institution or the courts at the seat. The ICC Rules' specific mandate that decisions regarding appointment, challenge, or replacement of arbitrators “shall be final” reflects a conscious allocation of authority to adjudicate. Departures from this allocation risk diluting party autonomy and certainty, the very foundations upon which international arbitration rests.

However, the critical question remains whether a national court, especially that of a non-seat jurisdiction, is best positioned to substitute its evaluation for that of the arbitral institution or seat court, particularly where the adjudicating authority has expressly ruled on the challenge, and the party has already availed remedies in those fora.

Comparative Analysis: International Approaches to Anti-Arbitration Injunctions

English jurisprudence

English courts have consistently maintained a restrictive approach to anti-arbitration injunctions. In Sabbagh v. Khoury, the Court of Appeal established that such injunctions should only be issued in exceptional circumstances where it is evident that arbitration proceedings have been wrongly brought. The court emphasized that anti-arbitration injunctions should not be issued simply because the balance of convenience supports the injunction.

The English approach, as crystallized in Compagnie Nouvelle France Navigation, SA v. Compagnie Navale Afrique du Nord, requires that: first, the order “must not cause injustice to the claimant in the arbitration” and second, the applicant for the order “must demonstrate” that the arbitration is clearly misconceived or abusive. This standard sets a considerably higher threshold than that applied in MSA Global.

United States practice

American courts have developed a nuanced framework under the doctrine of forum non conveniens, which generally precludes dismissal of arbitration enforcement proceedings where alternative forums cannot provide adequate remedies. In TMR Energy Limited v. State Property Fund of Ukraine, the D.C. Circuit established that forum non conveniens rarely applies to arbitration enforcement actions, particularly where the respondent holds or may hold property in the United States.

The US approach emphasizes that the “adequate alternative forum” requirement for dismissal is rarely satisfied in international arbitration contexts, thereby maintaining a presumption in favour of proceedings where parties have validly agreed to arbitrate.

Australian and New Zealand models

Both Australia and New Zealand have adopted frameworks that balance judicial restraint with protection against manifest abuse. The New Zealand High Court in recent cases has reaffirmed that anti-suit injunctions (including anti-arbitration injunctions) require satisfaction of three criteria: jurisdiction over the defendant, demonstration that foreign proceedings are vexatious or oppressive, and that the interests of justice require the injunction.

These jurisdictions maintain that the burden on applicants is substantial, requiring clear evidence of abuse rather than mere procedural irregularities or dissatisfaction with institutional decisions.

Synthesis of International Practice

The prevailing global norm favours non-interference unless the facts present a clear departure from due process, a risk to public policy, or irreparable harm with no remedy at the seat of arbitration. Foreign courts have consistently discouraged national courts from encroaching upon the autonomy of arbitral institutions to regulate their own proceedings and personnel.

Conclusion

The MSA Global case marks an inflection point in the Indian arbitration law. By lowering the threshold for interference with foreign-seated arbitral proceedings, the judgment highlights the role of the judiciary as guardian against real or perceived injustices in the process of arbitration. At the same time, it signals a need for caution as interventions on grounds of procedural fairness or non-disclosure must be narrowly tailored to not compromise the integrity of party autonomy, the authority of institutional rules, or the reciprocal respect among national courts. The practice of issuing anti-arbitration injunctions, must not become vehicles for forum shopping or tactical delay in the guise of preventing manifest injustice.

The need for transparency, necessary disclosures and institutional accountability is indispensable in the process of arbitration. For transnational parties, the primary assurance lies in a common framework wherein judicial intervention is reserved for cases concerning exceptional circumstances. The future of India’s engagement with international arbitration will largely depend on whether this equilibrium is restored and maintained.