00:00In the
00:23recent case of Techfab Vs. Medema, the Delhi High Court recently passed an ad into him
00:28ex parte anti-arbitration injunction on a prima facie view that the appointment of the
00:34arbitrator affiliated to a foreign institute is not as per the agreed arbitration procedure.
00:40So what are your views on that? What is the facts of the case that led to this decision?
00:45Thanks Amar. I think we should actually go into what the facts of this case were.
00:50So the parties had an arbitration, had an agreement between them in which they had an
00:53arbitration clause which had multiple requirements but one very interesting thing was they said that
01:00the seat of the arbitration will be India or any other country but the parties were later agreed
01:05that the seat will be India. Now when disputes arose between the parties, one of the parties
01:11initiated arbitration and they went to an appointing authority which in this case was PCA
01:16and the authority appointed an arbitrator who was affiliated with an arbitral institution based in
01:23Kuala Lumpur. Now the argument which was brought before the court in this case and on basis which
01:30an anti-arbitration injunction was sought was that they said that because this arbitrator
01:35who was appointed was affiliated to a Kuala Lumpur institution, this was going against
01:40the arbitral procedure which said that India was the seat of the arbitration. On that basis,
01:46the Delhi High Court ended up giving the anti-arbitration injunction. So basically the two
01:50assumptions that they sort of made is that first that if you have an arbitrator who is affiliated
01:56with a Kuala Lumpur institution that means he will necessarily be conducting proceedings in Malaysia
02:03and second they're saying that if and the second logical extension that they're driving at is that
02:09if they do conduct these proceedings in Malaysia then you're going against the procedure which
02:13says that the seat will be India. So there is some confusion between venue and seat
02:18and the affiliation with the Kuala Lumpur institution has something to do with seat
02:24no longer being in Davis, the fear they had. So on this basis they granted the anti-arbitration
02:30injunction. So thank you for that Hrithika. I've read through the arbitration clause. Do you think
02:35there are any problems with the arbitration clause? Yes and as you would have read it as well there
02:39are multiple problems but let's first put down what the clause says. For example, first the clause
02:45leaves it open for the parties to decide the number of arbitrators and the avoiding authority
02:51at the later time. It says the seat will be India or any other ancestral countries that the parties
02:56mutually decide. It says that governing law will be where the arbitration will be conducted. So
03:02there are multiple you know ambiguities which have been left in the clause. Now the problem
03:06which this leads to is that because it requires parties to agree on these things subsequently
03:12it's practically very difficult that the parties will end up agreeing to any of these things once
03:17the dispute has actually arisen. So I think that's the fundamental problem with this clause that it's
03:21leaving open these things. Now some things you can possibly still leave open. For example, if you are
03:28leaving open like some parts of it is still fine like you want to leave some part of procedures
03:33open is fine. But if you leave out something like the appointing authority, in the best
03:38the basic details that it becomes very difficult to then subsequently agree upon these things.
03:43So I think that is the main problem which also happened here that in fact the number of
03:47arbitrators is because something the parties couldn't agree upon. One party proposed a single
03:51arbitrator, the other party never responded. But the parties are proceeding on the basis that they
03:55have now agreed upon a sole arbitrator. So things like that are going to be difficult.
04:01And I think that is what is the main thing here that parties should keep in mind that
04:05you know there's certain basic details they should definitely agree upon in their arbitration
04:09agreement. Otherwise things like this are likely to keep arising. Okay, thank you for that Riddhika.
04:14I think I'd want to ask Arjun some questions now. Hi Arjun, thanks for being part of this discussion.
04:21So you just heard Riddhika on the arbitration clause and how it had so many problems in the
04:26context of his judgment. What are your views on this? I think the arbitration clause by itself
04:34is an impractical clause and I think if there is a dispute pertaining to the dispute resolution
04:40mechanism that poses a great problem to both parties to an agreement. Because then you will
04:46have to most probably subject yourself to the jurisdiction of a court to figure out what your
04:51actual intention to resolve disputes were. And that is definitely not a good starting point to
04:58resolve your disputes. So I think that having absolute clarity about the method and manner of
05:06your dispute resolution mechanism is an imperative requirement when you are drafting your transaction
05:14documents. We have seen in other cases as well where even a small level of ambiguity regarding
05:23the law governing the arbitration or the express or implied manner in which part one of the
05:30arbitration act is being excluded to foreign seated arbitrations. These kind of aspects are
05:38allowing parties to raise threshold arguments before an arbitrator or an appointing authority.
05:46So therefore having all bases covered at the time of drafting of transaction documents in your
05:52dispute resolution mechanism is definitely going to save you time from moving on from
05:59jurisdictional objections to actually reaching the meat of the dispute and going into the merits.
06:04So therefore the idea is always to have a robust and all-rounded dispute resolution.
06:12And let us get back to the judgment. How do you think this judgment is in the context of
06:17the previous precedents that have been there? Well, this judgment, we have to keep in mind that
06:24this judgment was passed without the presence of the respondents. So it's an ex parte order.
06:30Keeping that in mind, the fact that the court went ahead to actually stall the ongoing arbitration
06:38proceedings seems to be a situation which is not too conducive for the general arbitration landscape
06:47of the country. There are defined principles governing grant of anti-arbitration injunctions.
06:55You need to have a situation where there is evidence of forgery or that both parties or
07:00one of the parties did not give consent to arbitration or if the intention of the parties
07:06was to do some other form of dispute resolution. In these kind of situations, we have obviously
07:12seen instances in the past where courts have granted anti-arbitration injunctions.
07:17But we are also seeing some instances where courts or tribunals, for example, the NCLT
07:24Mumbai batch had granted an anti-arbitration injunction in the Anubhav Mittal Saga. So these
07:29kind of injunctions which are, one, not very happily worded, which are not going into the
07:38historic jurisprudence surrounding such grant of such injunctions, might actually stall or
07:47pose a significant roadblock in the continuation of either domestic or international arbitrations.
07:54And keeping in mind the general history of litigation in India and the fact that
08:01dilatory tactics as a litigation strategy is not uncommon, this just might be picked up as
08:08one of those ways where people try their luck at getting an injunction on an ongoing arbitration.
08:14So I think for tribunals and courts to be very circumspect and to stay their hand and not at the
08:23asking give an injunction on ongoing arbitrations should be the rule and only as a method of
08:31exception should such an injunction be granted. Thank you for that. Thank you.
08:38Thank you.
