Delhi High Court’s recent intervention in a Singapore-seated arbitration has reopened debate on judicial interference in foreign-seated proceedings. In Engineering Projects (India) Limited v MSA Global Limited Liability Company, the court issued an anti-arbitration injunction under the International Chamber of Commerce Arbitration Rules, 2021, after finding that the proceedings had become “vexatious and oppressive”.
The agreement provided for arbitration under ICC Rules. The governing law was that of Oman and exclusive jurisdiction was vested in the courts of New Delhi. MSA invoked the arbitration clause and nominated its arbitrator. In his disclosure under ICC Rules, the arbitrator confirmed that he had no conflicts of interest, and the tribunal was constituted with Singapore as the agreed seat.
During the proceedings, EPIL discovered that the arbitrator had previously acted in an arbitration involving MSA’s principal. EPIL challenged his independence and impartiality before the ICC court. Although the ICC accepted the non-disclosure was regrettable, it dismissed the application. EPIL appealed to the Singapore High Court.
EPIL also applied to Delhi High Court for a declaration and injunction to restrain the continuation of the ICC arbitration on the grounds that it was vexatious, unconscionable, oppressive and contrary to India’s public policy. EPIL sought interim relief to stay the arbitral proceedings.
EPIL then unsuccessfully sought to withdraw its challenge before the Singapore High Court. MSA successfully applied to the same court for an injunction restraining EPIL from pursuing the case in India.
The crucial question before Delhi High Court was the extent of its jurisdiction and power to intervene in a foreign-seated arbitration. Relying on the Code of Civil Procedure, 1908, the court ruled that it had jurisdiction over all civil matters unless explicitly prohibited. The court found support in Union of India v Dabhol Power Company and ONGC v Western Co of North America, allowing it to grant anti-arbitration injunctions if the arbitration was vexatious or oppressive.
The court held that the arbitrator’s undisclosed potential conflict of interest undermined his independence, rendering the arbitration unfair, vexatious and oppressive. It also found that MSA’s actions in opposing EPIL’s application to withdraw, enforcing a partial award rendered by the tribunal and seeking costs for cancelled hearings were made in bad faith.
The court found that EPIL had established a good prima facie case since compelling EPIL to participate before a potentially compromised tribunal would cause it serious harm and irreparable prejudice. MSA would not be prejudiced because EPIL was a public sector undertaking, eliminating any risk of asset dissipation. Lastly, the court held that forcing EPIL to submit to the jurisdiction of Singapore’s courts would infringe on party autonomy.
Delhi High Court’s order raises significant questions about the extent of judicial intervention in foreign-seated arbitrations. Anti-arbitration injunctions are meant to be exceptional remedies, invoked only in rare and compelling circumstances. The parties expressly chose Singapore as the seat, the arbitration was duly commenced under ICC Rules and EPIL’s challenge to the arbitrator was properly raised. It was pending before a competent court in Singapore.
While Dabhol Power is open to scrutiny because it involved legislation that expressly prevented arbitration, ONGC may be distinguished on facts. The decision effectively undermines party autonomy and disregards the parties’ agreed choice of seat.
The decision also raises concerns about forum shopping and the principle of comity between courts. Courts usually refrain from interfering with a tribunal’s constitution or arbitrator challenges until the final award is made. This intervention came while the matter was ongoing despite the availability of remedies at the enforcement stage. Such judicial intervention may undermine the autonomy of international arbitration.
Finally, the case shows that arbitrators must make comprehensive disclosures, reinforcing global calls for greater transparency and diligence in proceedings. The order has been appealed with the judgment reserved.
Bharucha & Partners – Sneha Jaisingh Rasika Alur
