Introduction
Arbitration is built on two foundational principles: party autonomy and the doctrine of Kompetenz-Kompetenz. While Party autonomy empowers the disputing parties to decide how, where and under what rules their disputes will be resolved; the doctrine of kompetenz-kompetenz empowers the tribunals to determine their own jurisdiction. However, when arbitration is between entities of different countries, it often faces conflicting legal frameworks regarding the arbitrability of the disputes. The friction disrupts the arbitration process and the parties’ intention to arbitrate.
A common scenario is when one party initiates proceedings in the national court of the home country, seeking anti-arbitration injunction. In response the other party may seek an anti-suit injunction, creating a legal tug of war between the jurisdictions. The recent case of Anupam Mittal vs Westbridge II Investment Holdings shows such jurisdictional complexities.
The crux of the issue, in this case, was the arbitrability of oppression and mismanagement disputes (“O&M disputes”). While Singapore law allows arbitration in oppression and mismanagement disputes. In India, the National Company Law Tribunal has the exclusive jurisdiction and O&M disputes are not arbitrable in India. This created a tug-of-war between the two jurisdictions.
Scope and Limitations of Anti-Arbitration Injunction
Under Indian law, Sections 8 and 45 of the Arbitration and Conciliation Act (1996) empower courts to determine whether an arbitration agreement is null and void, inoperative, or incapable of being performed before referring disputes to arbitration. Courts may issue anti-arbitration injunctions if they find prima facie evidence against an agreement’s validity or if the disputes are not arbitrable.
However, anti-arbitration injunctions are often criticized for disrupting agreed-upon arbitral mechanisms. because they undermine the principle of party autonomy, which is central to arbitration. They can also disrupt the efficient and flexible nature of arbitration, potentially leading to parallel proceedings and increased costs. Furthermore, critics argue that they can be misused by parties seeking to evade or delay arbitration.
Another key criticism is that anti-arbitration injunctions attack the very core of the competence-competence principle which empowers arbitral tribunals to determine their own jurisdiction. By allowing courts to intervene before the tribunal has had a chance to rule on its authority, such injunctions strip arbitrators of this fundamental power and unnecessarily increase the judicial interference in the arbitral process.
The Anupam Mittal Case: A Jurisdictional Tug-of-War
The Anupam Mittal case exemplifies conflicting approaches by Indian and Singaporean courts regarding arbitrability in shareholder disputes.
Facts of the Case
Anupam Mittal and Westbridge Investment Holding entered into a Shareholders Agreements, governed by Indian law. The arbitration clause provided arbitration under the rules of International Chamber of Commerce with Singapore as the seat of arbitration. Further, the arbitration clause also provided that enforcement of the award would be as per the Arbitration & Conciliation Act, of 1996.
Before the commencement of the arbitration under the rules of the International Chamber of Commerce, Anupam Mittal accused Westbridge of oppression and mismanagement and initiated legal proceedings before the National Company Law Tribunal, Mumbai.
Since the arbitration clause designated Singapore as the seat of arbitration, Westbridge went to the Singapore High Court seeking Anti-Suit Injunction against the NCLT proceedings in India. The Singapore High Court issued an anti-suit injunction, requiring Anupam Mittal to withdraw the case from the NCLT. Mittal challenged this order by appealing to the Singapore Court of Appeal. The Appellate Court also upheld the anti-suit injunction.
In response, Anupam Mittal sought a permanent injunction from the Bombay High Court to prevent the enforcement of the Singapore court’s anti-enforcement injunction. The Bombay High Court granted this request reasoning that disputes involving oppression and mismanagement cannot be resolved through arbitration under Indian law [¶78]. The NCLT also issued an order to stay the arbitration process.
This case shows how the same contract in different countries can be interpreted in conflicting ways. The situation also highlights the challenges that arise when courts in separate jurisdictions come to opposing decisions, raising questions about how the principle of comity i.e., mutual respect between legal systems—is applied when such a situation occurs.
Singapore’s and India’s divergent views
The Singapore courts, while addressing the issue of arbitrability at the pre-award stage, made a critical distinction between two aspects: the law of the arbitration seat and the law governing enforcement of an award. They observed that while the law of the seat determines whether a subject matter is arbitrable, the enforceability of any resulting award depends on the laws of the jurisdiction where enforcement is sought. In this case, disputes related to oppression and mismanagement (O&M) are considered non-arbitrable under Indian law, which would govern enforcement. However, the Singapore courts decided that arbitrability should be assessed under Singapore law at this stage. Consequently, the Singapore High Court granted Westbridge’s request for an anti-suit injunction to prevent Anupam Mittal from pursuing O&M proceedings in India.
The Singapore Court of Appeal upheld this decision and observed that it is premature to assume arbitration would be futile simply because enforcement in India may be uncertain.
On the other hand, Bombay High Court adopted a different approach. The Bombay High Court referred to Vijay Karia v. Prysmian Cavi E Sistemi SRL which holds that disputes deemed non-arbitrable under Indian law cannot result in enforceable awards under Section 48 of India’s Arbitration & Conciliation Act, 1996.
Balancing international comity with access to justice, the Bombay High Court emphasized that foreign court orders like anti-suit injunctions should not deprive litigants of their legal remedies when such remedies are important under local laws of the country. It said that the principles of comity cannot override a party’s fundamental right to seek justice, particularly when foreign orders interfere with proceedings addressing non-arbitrable matters under Indian law [¶56].
This case shows two different approaches between jurisdictions. The Singapore courts prioritized the law of the seat of arbitration and applied Singapore law to determine arbitrability at the pre-award stage. They viewed this as consistent with parties’ contractual intent and arbitration-friendly policies. Conversely, Indian courts focused on Indian law as both the governing law of the contract, arbitration agreement and as the basis for enforcement. This led them to prioritize non-arbitrability under local laws over foreign court orders. These differing perspectives highlight how legal systems interpret arbitration agreements and conflicts differently based on their own laws and principles.
Analysis
The recent decisions of the Bombay High Court and the National Company Law Tribunal (NCLT) illustrate a marked divergence between the Indian and Singaporean judicial approaches to the arbitrability of shareholder oppression and mismanagement disputes. While Singaporean courts have concentrated on the arbitrability of such disputes in accordance with the seat of arbitration and the terms of the relevant agreement, Indian courts have generally maintained that these matters are non-arbitrable under Indian law.
The Bombay High Court held that the disputes related to oppression and mismanagement is non-arbitrable in India and the exclusive jurisdiction lies with NCLT to deal with such matters. Since Indian law does not allow arbitration of oppression and mismanagement disputes, any foreign award on such matter would be unenforceable in India violating public policy. Applying the standard test for granting injunctions, the court found that Mittal had a strong prima facie case, would suffer irreparable harm if denied access to the NCLT, and the balance of convenience favoured granting the anti-enforcement injunction. But the said judgment of Bombay High Court seems to be flawed for the two reasons primarily: Firstly, The arbitration’s designated “seat” was Singapore, meaning the Singapore courts- not Indian courts have the jurisdiction to decide upon the arbitrability of dispute. Secondly, the court’s decision to focus on the idea that the arbitration would be pointless, since any final award might not be enforceable in India, overlooks the fact that the parties themselves chose to resolve their disputes through arbitration in Singapore.
A central issue arising from this divergence is whether the Singapore Court of Appeal (SGCA) was justified in referring the disputes in question to arbitration solely on the basis that Singapore law permits arbitration of oppression and mismanagement claims. The SGCA’s reasoning in this respect was grounded in the precedent established in Tomolugen Holdings Ltd v Silica Investors Ltd, where it was held that such disputes are arbitrable under Singapore law. However, this decision was predicated on the interpretation of the Singapore Companies Act, which may not be applicable to companies incorporated outside Singapore. This raises the question of whether similar reasoning should extend to entities governed by foreign laws, including Indian law.
Additionally, there is a broader concern regarding the enforceability of foreign arbitral awards in India when the underlying subject matter is non-arbitrable under Indian law. Specifically, if an arbitral award addresses issues of oppression and mismanagement-matters deemed non-arbitrable in India-there is uncertainty as to whether such an award would be enforceable in India, particularly on public policy grounds.
The NCLT’s decision to stay the Singapore arbitration proceedings further complicates the issue, raising questions about the tribunal’s jurisdiction to restrain a foreign-seated arbitration. Notably, the Macquarie case established that only courts at the seat of arbitration possess the authority to grant such orders, yet the NCLT did not articulate any rationale for departing from this established principle. Moreover, the NCLT’s justification for granting the injunction appears unconvincing, especially given that both parties acknowledged the existence of a valid arbitration clause and agreed to refer the disputes to arbitration. The tribunal’s assertion that any award rendered in Singapore would not be enforceable in India further undermines the necessity of the injunction, as it is unclear how refraining from granting the injunction would result in substantive prejudice.
Conclusion
It is worth noting that India is one of the few countries that does not allow arbitration of oppression and mismanagement disputes. In most other countries, these disputes are mainly seen affecting the commercial interest of private parties, whereas in India it is the violation of public policy. Certainly, it is time to reconsider the position on this issue. Until that happens, however, the difference between Indian and Singaporean law on what can be arbitrated will continue to create uncertainties for the Businesses. However, this uncertainty can be reduced by the parties, if they embed very clear terms in the contract about which law will govern their arbitration agreements.
Author(s)
Udit Agrawal
Student at MNLU, Aurangabad