Arbitration agreement survives disputed contract; Indian seat and anti-suit relief upheld against parallel English proceedings.

An arbitration agreement was treated as severable from the disputed substantive contract and continued to bind the parties, so the dispute was referred to arbitration despite disagreement over whether the draft IPLA was concluded. The tribunal clause was held workable because the missing mechanism for appointing the third arbitrator was a curable machinery defect, not a fatal vagueness. Although London was described as the venue, Indian substantive law and curial law pointed to India as the juridical seat, so English supervisory jurisdiction was not accepted. On that basis, the anti-suit injunction was restored to restrain the English proceedings.

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Issues: (i) Whether the draft IPLA was a concluded contract and, if not, whether the arbitration agreement nonetheless survived; (ii) Whether the arbitration clause was vague or unworkable because of the mechanism for constitution of the tribunal; (iii) Whether the seat of arbitration was in London or in India and whether the English Courts had concurrent supervisory jurisdiction; (iv) Whether the appellants were entitled to an anti-suit injunction restraining proceedings in England.

Issue (i): Whether the draft IPLA was a concluded contract and, if not, whether the arbitration agreement nonetheless survived.

Analysis: The existence of a dispute about the substantive contract did not, by itself, destroy the arbitration agreement. The parties had a long-standing commercial relationship and had repeatedly agreed to arbitrate disputes in earlier agreements and in the Heads of Agreement. The arbitration clause was treated as independent of the underlying contract, and the challenge that the IPLA was not finally concluded did not fall within the limited grounds on which reference to arbitration could be refused. The issue whether the substantive contract was concluded could be decided by the tribunal.

Conclusion: The arbitration agreement was held to survive, and the parties were required to proceed to arbitration; the objection based on non-conclusion of the IPLA failed.

Issue (ii): Whether the arbitration clause was vague or unworkable because of the mechanism for constitution of the tribunal.

Analysis: The clause evinced a clear intention to arbitrate and contemplated a three-member tribunal. The omission as to how the third arbitrator was to be appointed was treated as a machinery defect capable of being supplied by interpretation without rewriting the bargain. The Court preferred a pragmatic construction that preserved the parties' bargain and avoided frustration of the reference.

Conclusion: The clause was held to be workable, and the alleged defect in the appointment mechanism did not invalidate the arbitration agreement.

Issue (iii): Whether the seat of arbitration was in London or in India and whether the English Courts had concurrent supervisory jurisdiction.

Analysis: Although London was described as the venue, the governing law of the contract, the arbitration agreement and the arbitral procedure was Indian law. On the facts, the phrase denoting venue was not treated as fixing the juridical seat. The Court held that the centre of gravity of the arbitration was India, and that the choice of an Indian curial law and Indian substantive law negatived any inference that London was the seat. Once the seat was in India, concurrent supervisory jurisdiction in England would create conflicting proceedings and was inconsistent with settled arbitration principles.

Conclusion: The seat of arbitration was held to be in India, and the finding of concurrent jurisdiction in the English Courts was set aside.

Issue (iv): Whether the appellants were entitled to an anti-suit injunction restraining proceedings in England.

Analysis: Since the seat was in India and the Indian Courts were the natural forum for supervisory relief, the continuance of parallel proceedings in England was considered oppressive and contrary to comity and orderly arbitration. The factors relied upon by the respondents did not justify continuation of the English proceedings in the face of the Indian seat and the Indian curial regime.

Conclusion: The anti-suit injunction was restored and the respondents were restrained from pursuing the identified English proceedings.

Final Conclusion: The dispute was referred to arbitration, the arbitral tribunal was directed to be constituted, the Indian courts were held to have exclusive supervisory jurisdiction, and the restraints against the English proceedings were revived.

Ratio Decidendi: An arbitration agreement is severable from the underlying contract and may survive even if the substantive contract is disputed; where the parties choose Indian substantive and curial law, a reference to a foreign venue does not by itself establish the foreign place as the juridical seat, especially where doing so would defeat the parties' arbitral bargain and create parallel supervisory jurisdictions.

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