2026 (1) TMI 504 - HC - Indian Laws

Exclusive jurisdiction clause vs arbitral 'place': seat fixed as New Delhi; venue Singapore, ICC procedure, Oman law; appeal dismissed

The dominant issue was identification of the juridical seat under the dispute-resolution clause. Applying a harmonious construction, the HC held that the ... Correctness of order while injuncting continuation of arbitration proceeding in an anti-arbitration suit - fixing of seat of arbitration - Applicability of doctrine of lex fori. Whether Article 19 of the Agreement which encapsulates the Dispute Resolution, as it presents itself, determines the “Seat” of the Arbitration, or the substantive law governing the Agreement, to be Indian law or the law of Singapore and its effect thereof? - HELD THAT:- Prima facie, this Court is of the view that the Article and its various parts would require us to harmoniously construe the Article as each sub-Article or their respective parts cannot be read disjunctively, as doing so would lead to considerable consternation. Our interpretation, as expressed hereinbefore and re-iterated hereinafter, is based on the harmonious cadence decipherable by us. The explicit stipulation that the “jurisdiction” of the Contract Agreement shall lie with the Courts at New Delhi, India, is determinative of the intent of the parties in conferring exclusive jurisdiction on the courts of New Delhi in respect of all substantive disputes arising from or in connection with the agreement. When such exclusive jurisdiction is coupled with an agreement to arbitrate disputes under an institutional regime, it ordinarily denotes the choice of the juridical seat, unless the contract clearly indicates a different intention. However, in the present case, and as discussed hereinbefore, Article 19.1 is comprised of 3 parts and the reference of the ICC Rules is only determinative of the procedural law applicable to the Arbitration. Had the parties intended that the place of arbitration would function as the juridical seat and thereby the supervisory jurisdiction, it is reasonable to expect that they would have expressly identified such a place in the agreement. The fact that the place of arbitration was left open for later decision, and ultimately fixed by the ICC Court only due to the failure of the parties to agree, strongly suggests that the parties never contemplated that the designated place, Singapore, would acquire the status of the seat. Hence, a harmonious and holistic construction of Articles 19.1, 19.2, and 19.3 leads to the following conclusions: (a) Article 19.1 confers exclusive jurisdiction on courts at New Delhi. Such a conferral typically identifies the juridical seat. (b) Article 19 also provides for the Arbitration to be conducted under the ICC Rules for Arbitration. The reference to ICC Rules designates procedural and administrative aspects of the arbitration, not the seat. (c) Article 19.2 is confined to the substantive legal framework governing the operation and performance of the contract within Oman. (d) Article 19.3 provides a mechanism for fixing the venue, not the seat. The intention of the parties, therefore, is unmistakable. The juridical supervision over the arbitration lies in the courts at New Delhi, India. The arbitration may be conducted elsewhere as a matter of convenience, but the seat remains India. Whether the non-disclosure by the learned Arbitrator, is of such significance that it would warrant the exceptional grant of an Anti-Arbitration injunction by Indian Courts? - HELD THAT:- It is trite law that the jurisdiction of the civil courts under Section 9 of the CPC is plenary, and unless specifically excluded, the civil courts have jurisdiction to try and decide all civil disputes. The primacy of the law of the seat is further underscored by the consequences that flow from non-compliance with the standards of the seat State. An award rendered in violation of the seat’s statutory standards of impartiality is liable to be set aside by the courts at the seat, thereby undermining the finality and enforceability of the award. International commercial arbitration requires a predictable and coherent supervisory structure. Such predictability would be compromised if procedural rules are allowed to dictate or modify the substantive test of impartiality - Further, the doctrinal distinction between procedural rules and the law of the seat must be respected. Procedural rules regulate the conduct of the proceedings, whereas the law of the seat prescribes the mandatory norms that safeguard the fairness of the adjudicatory framework itself. Standards of impartiality comprising both the objective perception of bias and the subjective duties of disclosure are matters that belong to the latter category. It is the law of the seat that determines the threshold for a valid challenge, the nature of disclosures required, and the legal consequences of any breach. Where any procedural rule appears inconsistent with these mandatory requirements, the procedural rule must yield; it cannot reinterpret the protections enacted by the law of the seat. This Court is of the opinion that the statutory regime of the law of the seat must govern the assessment of impartiality, and it necessarily prevails over any procedural stipulations to the contrary. Arbitrators must conform to, and courts must apply, the standard prescribed by the law of the seat when adjudicating challenges to independence or bias. This Court is of the considered view that the omission to disclose the aforesaid prior professional involvement constitutes a material non-disclosure within the contemplation of the Fifth Schedule appended of the A&C Act, and is sufficient to induce a justifiable doubt in the mind of a fair-minded and objective person. This Court is of the considered view that the juridical seat of arbitration being India confers exclusive supervisory jurisdiction upon the Indian courts, and consequently, any anti-suit injunction issued by the Singapore court acting merely as the venue jurisdiction cannot attain conclusive effect so as to operate as res judicata before the seat court. The foreign anti-suit injunction, though enforceable within its own territorial limits, cannot be elevated to a status that undermines or circumscribes the prerogative of the Indian courts under the A&C Act. While a party may seek to rely upon such an injunction to plead the bar of res judicata, the same cannot be sustained in law, as the foreign judgment fails to satisfy the statutory threshold under Sections 11 and 13(a) of the CPC. Accordingly, the anti-suit injunction issued by the SGHC, being one rendered by a forum lacking subject-matter competence, cannot preclude or restrain the Indian seat court from exercising its rightful supervisory jurisdiction over the arbitration. Having been rendered in respect of an injunction, only constitutes as prima facie opinion, purely for the purposes of deciding the present lis, the appeal is dismissed with the observations that the Impugned Order shall not be construed as a final expression on the merits of the case, and the suit will be decided independently, uninfluenced by the observations made in the Impugned Order - Appeal dismissed. Issues: (i) Whether the arbitration agreement designated India (New Delhi) as the juridical seat despite ICC fixing Singapore as the “place” of arbitration, and whether Indian courts had jurisdiction to entertain an anti-arbitration suit/ injunction; (ii) Whether the arbitrator’s material non-disclosure warranted the exceptional grant/ continuation of an anti-arbitration injunction.Issue (i): Whether the arbitration agreement designated India (New Delhi) as the juridical seat despite ICC fixing Singapore as the “place” of arbitration, and whether Indian courts had jurisdiction to entertain an anti-arbitration suit/ injunction.Analysis: The Court harmonised the dispute resolution clause: the ICC Rules were treated as governing the arbitral procedure, while the clause conferring “jurisdiction of the Contract Agreement” on courts at New Delhi was treated as indicating the parties’ intention on supervisory jurisdiction/seat. The clause stating that the “place” of arbitration would be mutually agreed, and its later administrative fixation by the ICC as Singapore, was treated as a venue fixation for convenience and not as displacing the contractual indicia of seat. The governing-law clause referring to laws of Oman was confined to the substantive performance/operation of the contract and not treated as determining the seat or the supervisory court. On that basis, Indian law as lex arbitri applied to supervisory issues, and civil court jurisdiction was not shown to be expressly barred. The Court applied the principles of plenary civil jurisdiction under Section 9 CPC (with Dhulabhai principles), held Section 42 of the Arbitration and Conciliation Act, 1996 inapplicable to an independent civil suit, and noted the statutory extension under the proviso to Section 2(2) of the Arbitration and Conciliation Act, 1996 as further indicating that Indian court jurisdiction is not excluded in international arbitration contexts. It also held that the Singapore anti-suit injunction could not operate as res judicata or conclusively bind the Indian seat court, as the venue court lacked subject-matter supervisory competence for purposes of Sections 11 and 13 CPC.Conclusion: New Delhi, India was held (prima facie) to be the juridical seat, Indian courts had jurisdiction to entertain the anti-arbitration suit/ injunction, and the Singapore anti-suit injunction did not bar the Indian proceedings.Issue (ii): Whether the arbitrator’s material non-disclosure warranted the exceptional grant/ continuation of an anti-arbitration injunction.Analysis: Applying Indian law standards for arbitrator neutrality, the Court relied on Section 12 of the Arbitration and Conciliation Act, 1996 (as amended in 2015) and the Fifth Schedule “justifiable doubts” framework, including the continuous disclosure duty under Section 12(2). The Court treated prior involvement of the arbitrator in an arbitration connected with the defendant and its promoter/controlling individual as a circumstance capable of giving rise to justifiable doubts, and held that failure to disclose such circumstance—both at appointment and even after becoming aware of it—breached the statutory disclosure duty. The explanation for non-disclosure (that disclosure could trigger a challenge) was treated as undermining the integrity of the process. Even under ICC materials on disclosure, the Court considered that disclosure is to be assessed from the parties’ perspective and doubts should be resolved in favour of disclosure. The Court further rejected defences of res judicata, estoppel, election and forum shopping on the footing that the Indian suit was not barred by prior determinations in non-seat fora and that the suit pre-dated the Singapore anti-suit injunction application. It affirmed the finding that continuation of arbitration with the impugned tribunal composition, coupled with the defendant’s conduct, made the proceedings prima facie vexatious/oppressive, satisfying the interim injunction requirements under Order XXXIX Rules 1–2 CPC.Conclusion: The material non-disclosure and resulting justifiable doubts regarding impartiality justified the continuation of the anti-arbitration injunction at the interim stage, and no appellate interference was warranted.Final Conclusion: The appellate court upheld the interim restraint against continuing the arbitration with the impugned tribunal composition, while clarifying that the observations were prima facie and the suit would be decided independently on merits.Ratio Decidendi: Where the arbitration clause confers exclusive jurisdiction on Indian courts, later institutional fixation of a foreign “place” for hearings does not, by itself, displace India as the juridical seat; applying the law of the seat, material and continuing non-disclosure by an arbitrator that gives rise to justifiable doubts as to impartiality can warrant an exceptional anti-arbitration injunction to prevent oppressive/vexatious arbitral proceedings.