Anti-Arbitral Injunctions in Foreign-Seated Arbitrations: Delhi High Court re-examines the threshold to be applied when deciding grant of anti-arbitral injunctions

Indian law had, even before the SARR Freights Corpn. v. Argo Coral Maritime Ltd., already moved away from any broad conception of anti-arbitration injunctions as an ordinary equitable remedy.

Introduction

Anti-arbitration injunctions occupy an uneasy position in modern arbitration law jurisprudence. They exist because every legal system must retain some residual power to prevent abuse of the adjudicatory process. At the same time, they sit in obvious tension with two foundational commitments of arbitration law, namely, party autonomy and the principle of kompetenz-kompetenz (competence-competence), which holds that the Arbitral Tribunal is ordinarily competent to rule on its own jurisdiction.

Indian arbitration jurisprudence has therefore approached such relief with visible caution. The Supreme Court’s decisions in Kvaerner Cementation India Ltd. v. Bajranglal Agarwal¹, NALCO Ltd. v. Subhash Infra Engineers (P) Ltd.², and World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd.³ have broadly indicated that courts should be slow to obstruct arbitral proceedings, whether the objection is framed in terms of jurisdiction, validity of the underlying contract, or even the existence of the arbitration agreement itself.

It is against this backdrop that the Delhi High Court’s recent decision in SARR Freights Corpn. v. Argo Coral Maritime Ltd.⁴ assumes significance. The case arose from a suit seeking to restrain two parallel arbitral references before the London Maritime arbitrators Association (LMAA), together with a challenge to a partial award passed on jurisdictional issues. The plaintiffs challenged the arbitral proceedings on multiple grounds, such as the lack of contractual privity with the defendant, the absence of a valid arbitration agreement, impermissible rectification of the contractual text by the Arbitral Tribunal, and procedural oppression flowing from parallel arbitral proceedings. The case, therefore, presented the High Court with a familiar but difficult question: When, if at all, may an Indian Court halt a foreign-seated arbitration at the threshold?

The importance of the SARR case⁵ lies in the manner in which it frames the inquiry. The judgment does not treat anti-arbitration reliefs as either wholly impermissible or readily available. Instead, it conducts a detailed examination of issues related to jurisdiction, the underlying contract, arbitral consent, and oppression. The structured approach adopted in the SARR case⁶ may well prove to be the judgment’s most enduring contribution.

The Indian legal position on anti-arbitral injunctions

Indian law had, even before the SARR case⁷, already moved away from any broad conception of anti-arbitration injunctions as an ordinary equitable remedy.

In the Kvaerner case⁸, the Supreme Court treated the Tribunal’s power under Section 16 to rule on its own jurisdiction as a serious statutory command, and held that a civil court could not assume for itself the task of deciding whether an arbitration clause existed or not.⁹ The case of NALCO¹⁰ carried the same logic further. Even where the resisting party contended that no concluded contract had come into existence at all, the Supreme Court held that the objection was to be raised before the Arbitral Tribunal and not converted into a civil action to halt the reference. For foreign-seated arbitrations, the World Sport case¹¹ carried the jurisprudence by emphasising that, once the matter falls within Part II of the Arbitration and Conciliation Act, 1996 (Arbitration Act), the judicial inquiry is confined to whether the arbitration agreement is null and void, inoperative, or incapable of being performed.¹² Read together, these decisions establish the broad baseline: Objections going to contractual formation, arbitral consent, or jurisdiction do not readily justify judicial interruption of arbitral proceedings.

The difficulty, however, has never been in stating that courts should be slow to interfere. It has been in identifying the juridical standard on which interference may still take place. Across various High Courts, the judicial standard seems to be gradually crystallising. In the decisions from Calcutta, the High Court tended to approach anti-arbitration injunctions through the lens of anti-suit injunctions, asking whether the arbitral process was “oppressive, vexatious or unconscionable”.¹³

The Delhi High Court has placed a higher threshold in Vikram Bakshi v. Mc Donalds India (P) Ltd.¹⁴ (and thereafter, in the appeal before the Division Bench¹⁵) and later in Himachal Sorang Power (P) Ltd. v. NCC Infrastructure Holdings Ltd.¹⁶, and insisted that anti-arbitration injunctions cannot simply be compared to anti-suit injunctions. That distinction was rooted in the autonomy of the arbitral process and the competence-competence principle. The Delhi High Court thus treated judicial intervention as available, but only rarely, and ordinarily where the arbitration agreement was prima facie non-existent, null, void, inoperative, or incapable of performance, or where continuation of the proceedings could be shown to be genuinely oppressive in a legally meaningful sense. The SARR case¹⁷ enters this landscape. Its significance lies in the fact that it does not merely repeat the rhetoric of restraint but tries to present an organised analysis.

The case and findings in SARR

In the SARR case¹⁸, the dispute arose from a voyage charter for the shipment of military cargo for the United Nations Interim Security Force for Abyei from Mumbai to Sudan. The arrangement was recorded in a fixture recap and a booking note, both dated 4 April 2023. Although the booking note referred to the owners of “MV Pelagica or Sub”, the vessel ultimately tendered was MV Panthera J, owned by the defendant. This assumed significance because the plaintiffs later argued that the defendant was a stranger to the contract and that the substituted vessel materially differed from what had originally been contemplated. The background became more complex when hostilities in Sudan disrupted port operations, force majeure was invoked, and disputes emerged over performance, cancellation, and liability.

The defendant then invoked arbitration before the LMAA, and one reference was followed by another. Four preliminary issues were framed, including whether any arbitration agreement existed, whether the relevant “Merchant” was SARR Freights Corporation or SARR Freights Limited, and whether the relevant “carrier” was the owner of MV Pelagica or MV Panthera J. These issues were decided against the plaintiffs by a majority partial award, though there was a dissent on the issue concerning the identity of the carrier. It was in these circumstances that the plaintiffs approached the Delhi High Court seeking to restrain continuation of the LMAA proceedings.

The High Court examined the matter in a structured sequence. First, it considered whether the suit was maintainable before an Indian civil court. Second, it examined whether there was, at least prima facie, a contractual relationship between the plaintiffs and the defendant. Third, it considered whether there was a prima facie agreement to arbitrate. Fourth, it considered whether continuation of the foreign arbitral process disclosed such oppression, vexation, or procedural abuse as would justify an anti-arbitration injunction.

On the point of jurisdiction, the High Court rejected the contention that the mere choice of a foreign arbitral seat automatically deprived an Indian civil court of authority to entertain the suit. Proceeding on the ordinary presumption in favour of civil court’s jurisdiction under Section 9, Civil Procedure Code, 1908 (CPC), it held that such jurisdiction can be excluded only by express statutory bar or necessary implication, and found no such bar in the present case.¹⁹

The High Court also held that the plaint could not be rejected at the threshold for want of territorial nexus. The plaintiffs had pleaded that they carried on business in Delhi, that the cargo documentation and related commercial acts had links to Delhi, that material communications were issued to and received in Delhi, and that part of the cause of action,²⁰ therefore, arose within the jurisdiction of the Delhi High Court. At the interlocutory stage, the High Court was not prepared to treat these assertions as illusory or insufficient. In doing so, it rejected any broad proposition that selection of a foreign seat automatically eliminates any remedial role for Indian civil courts. Instead, it preserved the distinction between the supervisory jurisdiction of the court at the seat and the separate question of whether an Indian civil court may entertain a suit seeking injunctive reliefs founded on abuse, lack of consent, or absence of contractual foundation.

The existence of jurisdiction was only the threshold question. A court may have authority to entertain the suit and still refuse to interfere once the substantive standards governing anti-arbitration intervention are applied. In this sense, the SARR case²¹ is careful to separate the existence of jurisdiction from the propriety of granting an injunction.

The second stage of the High Court’s analysis was whether a prima facie contractual relationship existed between the plaintiffs and the defendant. The High Court declined to accept the plaintiffs‘ case of complete non-privity merely because the booking note referred to MV Pelagica or Sub, while the performing vessel was MV Panthera J. Having regard to the parties‘ communications, the identified substitution, and the manner in which the transaction was acted upon, the High Court found no clear absence of a contractual relationship warranting interference at the threshold.

On the existence of the arbitration agreement, the plaintiffs argued that the booking note incorporated only Clauses 20 to 41, whereas the arbitration clause appeared in Clause 43. The High Court, however, did not treat the matter as one of obvious absence of consent. Looking not only at the booking note but also at the fixture recap and the surrounding commercial material, using the business efficacy test²², it held that an intention²³ to arbitrate prima facie existed.

Once the High Court reached that conclusion, the case for injunction was considerably weakened. It therefore proceeded to consider whether the arbitral process was nevertheless oppressive, vexatious, or unconscionable. Although the plaintiffs relied on the parallel LMAA references, the treatment of party identity, and the Tribunal’s contractual rectification, the High Court was not persuaded that these circumstances justified the exceptional remedy of an anti-arbitration injunction.

Conclusion and comments

The SARR case²⁴ yields a set of propositions that are likely to remain important in Indian arbitration law. These may be grouped under two heads: first, the general principles relating to jurisdiction and contractual construction; and second, the standard governing anti-arbitration injunctions.

The judgment clearly distinguishes between the supervisory jurisdiction of the courts at the seat and the jurisdiction of an Indian civil court under Section 9 CPC. The choice of a foreign seat, by itself, does not oust the jurisdiction of an Indian civil court to act under Section 9 CPC.

On contractual privity, the High Court declined to adopt a formalistic view. In the maritime context, where contracts are entered through brokers and agents and vessels may be substituted under the contract itself, the identity of the contracting party had to be gathered from the substance of the arrangement. The High Court, therefore, found prima facie privity between the plaintiffs and the defendant as owner of the substitute vessel.

On the existence of an arbitration agreement, the High Court refused to adopt a purely literal reading and instead examined the broader contractual matrix, including the parties‘ correspondence, and their conduct, to determine whether the parties’ prima facie intended to arbitrate. The reasoning is thus grounded in a commercially sensible construction that gives the arrangement business efficacy, rather than one that would render the parties‘ bargain unworkable by stripping it of any meaningful dispute resolution mechanism.

As to granting an anti-arbitration injunction, the High Court reaffirmed that it is an exceptional remedy. The threshold is stricter than in anti-suit injunction cases because party autonomy and kompetenz-kompetenz require greater judicial restraint. The burden lies squarely on the party seeking the injunction to show that the arbitral proceedings are vexatious, oppressive, or unconscionable.

The High Court further treated Section 45, Arbitration Act as the principal statutory guide. Unless the arbitration agreement is null and void, inoperative, or incapable of performance, the parties must be referred to arbitration. On the facts, none of these conditions was satisfied.

The judgment also emphasised that once the court reaches a prima facie conclusion that a valid arbitration agreement exists, Section 16, Arbitration Act prevents it from effectively conducting a mini-trial over objections to the Tribunal’s jurisdiction.

Finally, the judgment reaffirmed the importance of principles of comity and minimal judicial interference. The courts must remain slow to obstruct arbitral proceedings and may do so only rarely, on principles comparable to those reflected in Sections 8 and 45, Arbitration Act.