Courts shall minimize interference with arbitration process: Delhi HC (DB) [Read Order]

Courts shall minimize interference with arbitration process: Delhi HC (DB) [Read Order]


Courts need to remind themselves that the trend is to minimize interference with arbitration process as that is the forum of choice, the Bench said.


A Division Bench of the Delhi High Court in MCDONALD’S INDIA PRIVATE LIMITED VS. VIKRAM BAKSHI has observed that, Courts must be extremely circumspect and, indeed, reluctant to thwart arbitration proceedings and the power to injunct arbitration proceedings must be exercised rarely and only on principles analogous to those found in sections 8 and 45 of the Arbitration and Conciliation Act, 1996.

This observation was made by a bench comprising of Justices Badar Durrez Ahmed and Sanjeev Sachdeva while setting aside a Single Bench order which had restrained the Mcdonald’s India Private Ltd from pursuing the arbitration proceedings before the Arbitral Tribunal at London. The Single Bench had invoked Doctrine of forum non conveniens and had also held that that the arbitration agreement between the parties was inoperative or incapable of performance on account of the fact that a petition is pending before Company Law Board which had also issued some interim orders.

DOCTRINE OF FORUM NON CONVENIENS INAPPLICABLE

The Bench, observing that the Doctrine is inapplicable in the instant case, said: “Clearly, the principle applies when there are competing courts, each of which has jurisdiction to deal with the subject matter of the dispute. This principle would have no application to the case at hand. First of all, there is no competing court. Here we have a court and an arbitral tribunal (which is certainly not a court). Secondly, the subject matter of dispute before this court is different from that before the arbitral tribunal. The subject matter before this court is the plea of an anti-arbitration injunction and the subject matter before the arbitral tribunal is the substantive dispute under the JVA. Thirdly, the forum of arbitration consciously chosen by the parties as an alternative forum of dispute resolution, alternative to the forum of a court, cannot be regarded as an inconvenient forum. Fourthly, the place of arbitration chosen by the parties cannot be regarded as an ’inconvenient place‘.”

MULTIPLICITY OF PROCEEDINGS DO NOT RENDER ARBITRATION AGREEMENT INOPERATIVE

Referring to World Sport Group (Mauritious) Limited v. MSM Satellite (Singapore) Pte. Ltd, the Court also observed that, the mere existence of the proceedings before the Company Law Board would not amount to rendering the arbitration agreement as being inoperative or incapable to perform. “In any event, the subject matter of the proceedings before the Company Law Board fell within the ambit of the alleged oppression and mismanagement whereas subject matter of the dispute before the arbitral tribunal related to the termination of the JVA and the rights flowing therefrom,”the Bench said.

‘TREND IS TO MINIMIZE INTERFERENCE WITH ARBITRATION PROCESS’

Setting aside the order of Single Bench, the Court observed: “Courts need to remind themselves that the trend is to minimize interference with arbitration process as that is the forum of choice. That is also policy discernible from the 1996 Act. Courts must be extremely circumspect and, indeed, reluctant to thwart arbitration proceedings. Thus, while courts in India may have the power to injunct arbitration proceedings, they must exercise that power rarely and only on principles analogous to those found in sections 8 and 45, as the case may be, of the 1996 Act".

Read the order here.