Foreign arbitration clause enforced where alleged defects did not vitiate the agreement or justify interim injunction relief.

Section 45 of the Arbitration and Conciliation Act, 1996 requires reference to foreign arbitration unless the arbitration agreement is shown to be null, void, inoperative or incapable of being performed. Alleged defects in the rig did not strike at the root of the charter party or the arbitration clause, especially where the contract had been performed for a substantial period and latent defects were addressed by the contractual repair mechanism. Continued use of the rig indicated acquiescence rather than repudiation, so the agreement remained valid and operative. Interim injunction was also denied because no prima facie case, balance of convenience, or irreparable injury was shown to justify restraining the arbitration.

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Issues: (i) Whether the arbitration agreement contained in the charter agreement was null and void, inoperative or incapable of being performed so as to bar reference to arbitration under Section 45 of the Arbitration and Conciliation Act, 1996. (ii) Whether the plaintiff was entitled to interim injunction restraining the defendant from taking steps pursuant to the arbitration clause and whether the ex parte injunction deserved to be continued.

Issue (i): Whether the arbitration agreement contained in the charter agreement was null and void, inoperative or incapable of being performed so as to bar reference to arbitration under Section 45 of the Arbitration and Conciliation Act, 1996.

Analysis: Section 45 confers power on the Court to refer parties to foreign arbitration unless the agreement is found to be null and void, inoperative or incapable of being performed. The alleged defects in the rig did not establish fraud going to the root of the charter agreement or the arbitration clause. The contract had been acted upon for a substantial period, the plaintiff continued to use the rig, and the contractual clause itself dealt with latent defects by placing repair liability on the owner while suspending hire charges during repairs. The record showed acquiescence rather than repudiation, and no material was shown to demonstrate that the arbitration clause itself was vitiated.

Conclusion: The arbitration agreement was held to be valid, operative and capable of being performed, and the parties were rightly referred to arbitration.

Issue (ii): Whether the plaintiff was entitled to interim injunction restraining the defendant from taking steps pursuant to the arbitration clause and whether the ex parte injunction deserved to be continued.

Analysis: The plaintiff failed to establish a prima facie case for injunctive relief. The balance of convenience was not in its favour because it had already enjoyed the contractual benefit of the rig and the disputes were covered by the arbitration clause. No irreparable injury was shown if the plaintiff participated in the London arbitration. The suit and injunction application were treated as an attempt to stall contractual arbitration rather than a basis for equitable relief.

Conclusion: Interim injunction was refused and the earlier ex parte injunction was vacated.

Final Conclusion: The suit could not be maintained to obstruct the agreed foreign arbitration, and the connected interlocutory reliefs failed once the arbitration clause was found enforceable and operative.

Ratio Decidendi: In a proceeding under Section 45 of the Arbitration and Conciliation Act, 1996, a foreign arbitration clause will be referred to arbitration unless the court is satisfied that the agreement itself is vitiated; alleged contractual defects that do not strike at the root of the arbitration agreement and are consistent with continued performance do not render the clause null, void, inoperative or incapable of being performed.

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