The Delhi High Court has refused to grant an anti-arbitration injunction sought by SARR Freights Corporation and SARR Freights Limited against arbitration proceedings pending in London before the London Maritime Arbitrators Association (LMAA), holding that the plaintiffs failed to make out the kind of exceptional case required to halt a foreign-seated arbitration.
The suit arose from a voyage charter dispute concerning theshipment of military cargo for the United Nations peacekeeping force in Sudan. SARR had sought declarations that the ongoing LMAA proceedings were invalid and had also asked the Court to restrain Argo Coral Maritime from continuing two parallel arbitration references arising out of a Booking Note dated 4 April 2023. The plaintiffs argued that Argo Coral was not a party to the Booking Note, there was no valid arbitration clause binding them, and the London proceedings were oppressive, vexatious and unconscionable.
Justice Mini Pushkarna first rejected the defendant’s objection that the Delhi High Court lacked jurisdiction. The Court held that civil courts retain jurisdiction to entertain suits of a civil nature under Section 9 of the Code of Civil Procedure and may grant anti-arbitration injunctions in exceptional circumstances
The Court held that part of the cause of action had arisen in Delhi because the plaintiffs were headquartered there, the cargo originated from New Delhi, the pre-dispatch inspection was carried out at an Army camp in Delhi, the transaction-related communications were sent and received from Delhi, and the arbitration notices were also received by the plaintiffs in Delhi. The Court also noted that any eventual enforcement of an arbitral award would have to be pursued in Delhi, where the plaintiffs’ assets are located. On this basis, the Court held that it had territorial jurisdiction to entertain the suit.
On the issue of whether there is a binding contract between the parties, the Court held, at least prima facie, that there was a valid contract between the plaintiffs and Argo Coral. It found that the parties were aware that MV Panthera J would be the performing vessel, that the defendant had been providing updates about that vessel’s movement, and the terms of the Booking Note contemplated that the “Carrier” would be the owner of the performing vessel. The Court therefore concluded:
“this Court is of the considered prima facie view that there existed a valid contract between the plaintiffs and the defendant. Therefore, the contention of the plaintiffs that there is no privity of contract between the defendant and the plaintiffs, and that the defendant is a complete stranger to the Booking Note, cannot be accepted.”
The Court also rejected the plaintiffs’ submission that the Booking Note did not contain any arbitration clause. Justice Pushkarna held that this was, prima facie, an inadvertent drafting error and noted that the page containing clauses 42 and 43 had in fact been signed and stamped by both sides. The Court reasoned that the Fixture Recap and the Booking Note were executed on the same date, the Recap clearly provided for English law and London arbitration, and there was no material to show that the parties had consciously chosen to abandon arbitration. The Court therefore held that:
“there exists a valid, enforceable and operative Arbitration Agreement between the parties, and the disputes between the parties ought to be resolved through the arbitration process.”
The Court emphasised that anti-arbitration injunctions are an exceptional remedy, granted only in rare circumstances where the proceedings are clearly vexatious, oppressive or unconscionable. It explained that a proceeding is vexatious when pursued without reasonable grounds to harass an adversary, while oppressive proceedings are those that impose an unjust or unconscionable burden on the opposing party.
Rejecting the plaintiffs’ argument that the defendant’s initiation of two arbitration references was abusive, the Court accepted the explanation that the second reference arose due to confusion over whether the contractual counterparty was SARR Freights Limited or SARR Freights Corporation. The Booking Note identified the “Merchant” as “SARR Freights” and carried the stamp of SARR Freights Corporation, while the first arbitration was responded to by SARR Freights Limited, which appointed an arbitrator. Once the issue became clear, the defendant continued the proceedings only against plaintiff no.1.
In these circumstances, the Court found no procedural abuse or unfairness, observing that there was nothing before this Court to show that the plaintiffs were denied a fair opportunity before the arbitral tribunal or that the arbitration was oppressive. Holding that the plaintiffs failed to establish the “exceptional circumstances” required for an anti-arbitration injunction, the Court dismissed the interim application, clarifying that its observations were prima facie and not a final determination on the merits of the dispute.
Appearances
Plaintiffs- Mr. Dayan Krishnan, Sr. Adv. with Mr. Saurabh Seth, Mr. Sumer Dev Seth, Ms. Neelampreet Kaur, Mr. Abhiroop Rathore, Mr. Kabir Dev, Mr. Sukhvir Singh and Mr. Sukrit Seth, Advocates
Defendant- Mr. Sandeep Sethi, Sr. Adv. with Mr. Amitava Majumdar, Mr. Arvind Kumar Gupta, Ms. Tripti Sharma, Mr. Dushyant Kishan Kaul, Mr. Abhiesumat Gupta, Mr. Krisna Gambhir, Ms. Shreya Sethi, Ms. Riya Kumar, Mr. Ishan Prashar, Advocates
