Delhi High Court: Anti-Arbitration Injunction Suit Maintainable When Arbitration Proceedings Are Prima Facie Vexatious & Oppressive
The Delhi High Court said that where the arbitral proceedings are shown to have been vexatious and oppressive in a manner calculated to harass the opposite party, the Civil Courts are not only empowered but also under a solemn duty to intervene.
Justice Purushaindra Kumar Kaurav, Delhi High Court
The Delhi High Court observed that the suit for grant of anti-arbitration injunction is maintainable when the arbitration proceedings are prima facie vexatious and oppressive.
The Court observed thus in a Suit seeking a declaration and injunction against the continuation of arbitration proceedings before the International Chamber of Commerce (ICC) on the ground that the proceedings before the ICC are vexatious, unconscionable, oppressive, and violative of the public policy of India.
A Single Bench of Justice Purushaindra Kumar Kaurav enunciated, “In view of the aforesaid and in the peculiar facts and circumstances of the case, it is crystal clear that the suit for grant of an anti-arbitration injunction is maintainable before this Court as the arbitration proceedings are prima facie vexatious and oppressive in nature.”
The Bench said that where the arbitral proceedings are shown to have been vexatious and oppressive in a manner calculated to harass the opposite party, the Civil Courts are not only empowered but also under a solemn duty to intervene.
Senior Advocate Sandeep Sethi appeared for the Plaintiff while Senior Advocate Rajiv Nayar appeared for the Defendant.
Facts of the Case
The Plaintiff was a public sector enterprise under the Ministry of Heavy Industries and Public Enterprises (Department of Heavy Industry), Government of India and the Defendant was a military and security systems integrator company based out of Oman. In 2015, the Ministry of Defence, Oman entered into an agreement with the Plaintiff and appointed it as the main contractor for a supply and build project which involved inter-alia the design, supply, installation, integration, and commissioning of the border security system at the Oman-Yemen border. Thereafter, the Plaintiff entered into a sub-contract agreement for design, supply, installation, integration, and commission of the border security system in relation to one Engineer-3 Project, specifically covering Sections 3 and 4 on the Oman-Yemen border.
The said agreement included an arbitration clause i.e., Article 19, which stipulates that the Courts at New Delhi, India, shall have exclusive jurisdiction in respect of disputes arising out of or in connection with the contract. However, it further provided that any reference to arbitration shall be governed by, and conducted in accordance with, the Rules of Arbitration of the ICC, 2021. A dispute arose between the parties concerning delays in the performance of contractual obligations under the sub-contract agreement. Pursuantly, the Defendant invoked arbitration clause and commenced proceedings under the aegis of ICC, thereby nominating a co-arbitrator. Subsequently, an Arbitral Tribunal was constituted, which rendered the first partial award on an application for interim measures filed by the Defendant.
The said award was assailed by the Plaintiff before Singapore High Court. In the meantime, the Plaintiff while alleging lack of disclosure and thereby raising doubts over the independence, neutrality, and impartiality of one co-arbitrator, filed a challenge application before the ICC Court. The ICC Court held the challenge to be admissible but rejected it on merits. Meanwhile, the Defendant filed an Enforcement Petition before the High Court, seeking recognition and enforcement of the first partial award. Parallelly, the Plaintiff also filed an application before the Singapore High Court, seeking determination on the validity of the co-arbitrator’s participation in the arbitral proceedings. In April 2025, the Defendant filed an application before the Tribunal seeking reimbursement of wasted costs incurred due to the cancellation of the evidentiary hearing scheduled for January 2025. In this backdrop, the Plaintiff approached the Delhi High Court.
Reasoning
The High Court in view of the above facts, noted, “The judicial authority of the Civil Courts under Section 9 of the CPC and its inherent powers under Section 151 CPC remain preserved to safeguard against the misuse of the arbitral process, unless expressly barred by the statute which is not the case herein. … It would be wholly unjust to compel a party to submit to arbitration when the process itself is a vehicle of abuse, serving no legitimate adjudicatory purpose.”
The Court was of the view that the evident abuse of legal machinery to harass the Plaintiff and frustrate its access to justice cannot be countenanced by a Court of law and the Courts in this country are not passive observers; they are duty-bound to intervene when a party is subjected to sustained harassment and procedural manipulation under the guise of lawful process.
“To allow the defendant to continue with such vexatious proceedings would be to permit the very erosion of judicial integrity and to allow civil process to become an instrument of oppression. This Court, therefore, cannot remain a silent spectator where one litigant has clearly been subjected to undue procedural torment by another under the pretext of arbitration, that too when the arbitration proceeding in question is itself based on the foundation of a grave and incurable error of non disclosure giving rise to legitimate doubts in the mind of the plaintiff qua the fairness, impartiality and independence of the entire arbitration proceedings”, it added.
The Court further remarked that it cannot shy away from its duty to intervene in the exercise of its civil jurisdiction as the non-intervention by the Court would not only amount to perpetuating a wrong at the hands of the Court but would also compel the Plaintiff to participate in a dead wood exercise, as no just and sustainable outcome could result from an adjudicatory exercise whose fairness itself is under question.
“So long as the plaintiff does not desist from participating in the arbitration proceedings as per the arbitration mechanism, subject to the same being in accordance with the fundamental principle of fairness, there is no question of entertaining any grievance pertaining to the arbitration mechanism. However, in cases where the plaintiff reasonably establishes that the arbitration proceedings are vexatious and oppressive, the Courts in India are not powerless to interdict such proceedings and to protect the litigant from victimisation”, it said.
The Court observed that the continuation of the arbitration proceedings at this juncture would not only cause serious and irreparable prejudice to the Plaintiff but would also be contrary to the larger interests of both the parties.
“The potential harm that would ensue from permitting the arbitral proceedings to proceed under a cloud of contested impartiality far outweighs any speculative inconvenience that may arise from their temporary suspension. If the arbitration proceedings were to continue without first addressing the plaintiff’s legitimate apprehensions regarding the neutrality of the arbitrator, the resultant Award would be susceptible to challenge, thereby rendering the entire exercise futile and causing multiplicative delays and costs. Across the world, it is an accepted jurisprudential position that failure to disclose any element of potential bias could not only lead to a challenge against the arbitrator but could also lead to the annulment of the Award”, it also noted.
The Court said that the arbitration process in this case would inevitably entail substantial expenditure of public funds and administrative resources, given that the Plaintiff is a public sector undertaking.
“It is well recognised that arbitral proceedings involve considerable financial outlay and institutional engagement. To proceed with such expenditure while a foundational objection concerning the impartiality of the Tribunal remains unresolved would not be prudent. Accordingly, the balance of convenience tilts overwhelmingly in favour of the plaintiff, whose interests are aligned with public accountability and fiscal responsibility”, it added.
Conclusion
The Court observed that the very essence of injunctive relief, namely, to prevent irreparable harm and preserve the subject matter of the suit, is clearly attracted in the facts of the case.
“In view of the aforesaid, an irreparable injury would be caused if the interim injunction is not granted at this stage. … In view of the foregoing analysis, this Court has the jurisdiction to entertain this civil suit as the arbitration proceedings are prima facie vexatious and oppressive in nature. Moreover, since all three pre-conditions i.e., prima facie case, balance of convenience and irreparable injury, tilt in favour of the plaintiff, therefore, it is a fit case to grant an interim injunction”, it concluded.
Accordingly, the High Court stayed the proceedings of the Arbitral Tribunal till the pendency of the suit and the parties are injuncted from participating in the same.
Cause Title- Engineering Projects (India) Limited v. MSA Global LLC (Oman) [Neutral Citation: 2025:DHC:6093)
Appearance:
Plaintiff: Senior Advocate Sandeep Sethi, Advocates Ajit Warrier, Angad Kochhar, Himanshu Setia, Vedant Kashyap, Sumer Dev Seth, Richa Khare, and Riya Kumar.
Defendant: Senior Advocate Rajiv Nayar, Advocates Kirat Singh Nagra, Kartik Yadav, Pranav Vyas, Sumedha Chadha, Sankalp Singh, Esh Gupta, and Pritesh Raj.
