Bharat Aluminium Company Limited vs Glencore A.G.

T.P. Sharma, J.—I.A. No. 2, application for taking documents on record in support of the stay application, is allowed. Documents are taken on record.

Heard learned Counsel for the petitioner on admission as also on I.A. No. 1, application for interim relief.

While filing the instant writ petition under Article 227 of the Constitution of India the petitioner has prayed for the following reliefs:

a) Pass an appropriate writ, order or direction quashing the Order dated 6-7-2010 passed in Civil Suit No. 6A of 2010; and /or

b) Pass an appropriate writ order or direction restraining the respondents from commencing and/or pursuing any proceedings anywhere (except in India) including from commencing and/or pursuing any proceedings in the High Court of Justice, Queens Bench Division, Commercial Court, Royal Court of Justice, or any other court in England which would have the effect of preventing the petitioner from commencing and or pursuing any proceedings in India to set aside the award dated 17-6-2010 or any other award which may be passed by the Hon''ble Arbitral Tribunal mentioned hereinabove; till the disposal of the application under Order 39 Rule 1 and 2 of C.P.C. and/or

c) Pass an appropriate writ order or direction restraining the respondents (during the pendency of the present writ petition) from taking any steps to commence any proceedings anywhere (except in India) including from taking any steps to commence any proceedings in the High Court of Justice, Queens Bench Division, Commercial Court, Royal Court of Justice, or any other court in England which would have the effect of preventing the petitioner from commencing and or pursuing the proceedings in the present writ petition; and /or

d) pass any other or further order(s) as this Hon''ble Court may deem fit and proper in the interest of justice.

Mr. M.L. Verma, learned Senior Advocate appearing on behalf of the petitioner, vehemently argued that award between the parties has been passed by the Sole Arbitrator appointed in terms of the agreement. The petitioner has challenged the award u/s 34 of the Arbitration and Conciliation Act, 1996 (for short ''the Act'') on the ground of misconduct, before the District Judge, Korba, being a foreign award and the petitioner is entitled to challenge the same in India. After filing of the petition u/s 34 of the Act, the District Judge, Korba has admitted the application and directed the respondent for its appearance and filing of response. The petitioner has again filed another suit bearing Civil Suit No. 6A/2010 for anti- suit injunction against the respondent for restraining the respondent from commencing any proceedings in English Courts which may restrain/prevent the petitioner from commencing any proceedings in India to set aside the final award dated 17-6-2010. In the said civil suit the petitioner has filed application under Order 39 Rules 1 and 2 of the Code of Civil Procedure, 1908 (for short ''the Code'') and also under Order 39 Rule 3 of the Code for ex parte injunction on the ground that if the notice of Section 34 of the Act is served upon the respondent, the respondent would file petition for restraining/preventing the petitioner from commencing any proceeding in India to set aside the final award dated 17-6- 2010 at England. Therefore, the respondent be restrained from filing such suit/anti-suit against the plaintiff/petitioner. But learned District Judge has dismissed the application filed under Order 39 Rule 3 of the Code on the ground that alternative remedy under Sections 8 and 9 of the Act is available to the petitioner and there is no other ground for restraining the respondent without providing opportunity of hearing to the respondent. Mr. M.L. Verma, learned Senior Advocate, further argued that foreign award can be challenged u/s 34 of the Act in the Indian Courts. During arbitration proceeding at England, senior officer of the respondent has threatened the petitioner that in case the award is passed in favour of the respondent, the respondent will file such proceeding before the Court of England, even after passing of the award the respondent has served notice to the petitioner for payment of award and also threatened that in case the respondent does not receive payment, they will enforce the award by alternative means without further notice. Mr. M.L. Verma, learned Senior Advocate, also argued that Sections 8 and 9 of the Act would not be applicable in the present case. Even otherwise, Section 9 of the Act has limited scope only relating to preservation of property and is applicable to domestic awards, but the same is not applicable to foreign awards like in the present case.

Mr. M.L. Verma, learned Senior Advocate appearing on behalf of the petitioner, placed reliance in the matter of Bhatia International v. Bulk Trading S.A. and Anr. 1 in which the Apex Court has held that Section 9 of the Act applies relating to domestic award as defined in Section 2(7) of the Act. Therefore, the petitioner is having no remedy u/s 9 of the Act except to file separate suit for anti-suit injunction. Mr. M.L. Verma, learned Senior Advocate, further placed reliance in the matter of Venture Global Engineering v. Satyam Computer Services Ltd. and Anr.2 in which the Apex Court has held that parties are entitled to challenge the foreign award in India u/s 34 of the Act including on the ground of public policy which includes (a) the fundamental policy of India; or (b) the interests of India; or (c) justice or morality; or (d) in addition, if it is patently illegal.

I have perused the petition and copies of the documents.

I have no doubt in my mind that the parties are entitled to challenge foreign award within the Courts of India on the ground of public policy and in suitable cases anti-suit injunction can be granted. While dealing with the case of invoking the provisions of Section 34 of the Act, the Apex Court in the matter of Venture Global (supra) has held thus,

...In any event, to apply Section 34 to foreign international awards would not be inconsistent with Section 48 of the Act, or any other provision of Part II as a situation may arise, where, even in respect of properties situate in India and where an award would be invalid if opposed to the public policy of India, merely because the judgment-debtor resides abroad, the award can be enforced against properties in India through personal compliance of the judgment- debtor and by holding out the threat of contempt as is being sought to be done in the present case. In such an event, the judgment-debtor cannot be deprived of his right u/s 34 to invoke the public policy of India, to set aside the award. As observed earlier, the public policy of India includes - (a) the fundamental policy of India; or (b) the interests of India; or (c) justice or morality; or (d) in addition, if it is patently illegal. This extended definition of public policy can be bypassed by taking the award to a foreign country for enforcement.

While dealing with the question of grant of anti-suit injunction and principles governing grant of injunction, the Apex Court in the matter of Modi Entertainment Network and Anr. v. W.S.G. Cricket Pte. Ltd. 3 has laid down certain principles in paras 12 and 23 of its judgment which read thus,

A careful perusal of these Rules makes it clear that Clause (5) of Rule 31 deals with a case not covered by a jurisdiction agreement whereas Clause (4) of Rule 32 deals with a case involving jurisdiction agreement. Indeed, the learned authors themselves in para 12.123 state as follows:

The general principles upon which an English Court may order a party who is subject to its personal jurisdiction not to institute, or to discontinue, proceedings in a foreign court have been examined above [clause (5) of Rule 31]. But where the basis for the exercise of the court''s discretion is that the defendant has bound himself by contract not to bring the proceedings which he threatens to bring, or has brought, in the foreign court, the principles which guide the exercise of discretion of the court are distinct from those which were examined under Clause (5) of Rule 31."

Thus, it is clear that the principles governing the exercise of discretion by the court to grant anti-suit injunction against a person amenable to the jurisdiction where by contract the defendant has bound himself not to bring the proceedings which he threatens to bring or has brought in the foreign court, are different from the principles laid down in Rule 31(5) which deals with cases in general where an English Court may restrain a party over whom the court has personal jurisdiction from the institution or continuance of the proceedings in a foreign court. The test for issuance of the anti-suit injunction to a person amenable to the jurisdiction of the court in person has been varying; first it was ''equity and good conscience'' as could be seen from the decision of the House of Lords in Carron Iron Company v. Maclaren 1855 (5) HLC 416. The test later adopted was ''to avoid injustice'' [See: Castanho v. Brown and Root (U.K.) Ltd. and Anr. 1981 Appeal Cases 557]. The test adopted in the recent cases is whether the foreign proceedings are "oppressive or vexatious" SNI Aerospatiale''s case (supra). Even about this test it is commented,

In most decisions, the courts have considered whether the foreign proceedings were vexatious or oppressive. Historically, since the 19th century, these terms were used in the exercise of the court''s jurisdiction whether or not to grant anti-suit injunctions. But, in the context of stay of proceedings on ground of another forum being the more appropriate forum, these terms were effectively abolished by the House of Lords in Macshannon v. Rockware Glass Ltd. (1978) 1 All ER 625. This was because of the moral connotations attached to these words and the difficulty for the defendant to prove that there was something wrong in the character of the plaintiff. Although Lord Goff explained, in SNI Aerospatiale v. Lee Kui Jak and Anr. (1987) 3 All ER 510, that these words could have different meaning in different contexts, he was inclined, in Airbus Industries GIE v. Patel and Ors. (1998) 2 All ER 257, to agree, albeit obiter, with Judge Sopinka in Amchem Products Inc v. Workers Compensation Board (1993) 102 DLR (4th) 96, who preferred to use, simply, ''ends of justice''. However, Lord Goff did not expressly abandon these words.*

These expressions are not clearly defined but in C.S.R. Ltd. v. Cigna Insurance Australia Ltd. 1997 (189) C.L.R. 345, the High Court of Australia used them in the sense "only if there is nothing which can be gained by them over and above what may be gained in local proceedings". The Supreme Court of Canada adopted the test of the requirement of "the ends of justice". The essence or the ultimate objective is to enquire how best the interests of justice will be served; whether grant of anti-suit injunction is necessary in the interests of justice. However, in a case where a jurisdiction agreement exists it is not necessary, in all cases, to show that foreign proceedings are vexatious, oppressive or that the local court is a natural forum for the claim and there is no obligation upon the claimant to seek relief from foreign court first. The case on hand is a little different from the category which is subject of formulation in Rule 32(4). Here the appellants who are parties to the contract containing a non-exclusive jurisdiction clause of English Court and resolution of disputes in accordance with the principles of English law, are seeking anti-suit injunction against the respondent to restrain it from proceeding with the action brought by it in English Court.

From the above discussion the following principles emerge:

(1) In exercising discretion to grant an anti-suit injunction the Court must be satisfied of the following aspects:

(a) the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the court;

(b) if the injunction is declined the ends of justice will be defeated and injustice will be perpetuated; and

(c) the principle of comity - respect for the court in which the commencement or continuance of action/proceeding is sought to be restrained - must be borne in mind;

(2) in a case where more forums than one are available, the Court in exercise of its discretion to grant anti-suit injunction will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties and may grant anti-suit injunction in regard to proceedings which are oppressive or vexatious or in a forum non-conveniens;

(3) Where jurisdiction of a court is invoked on the basis of jurisdiction clause in a contract, the recitals therein in regard to exclusive or non-exclusive jurisdiction of the court of choice of the parties are not determinative but are relevant factors and when a question arises as to the nature of jurisdiction agreed to between the parties the court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case;

(4) a court of natural jurisdiction will not normally grant anti-suit injunction against a defendant before it where parties have agreed to submit to the exclusive jurisdiction of a court including a foreign court, a forum of their choice in regard to the commencement or continuance of proceedings in the court of choice, save in an exceptional case for good and sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relieved of the burden of the contract; or since the date of the contract the circumstances or subsequent events have made it impossible for the party seeking injunction to prosecute the case in the court of choice because the essence of the jurisdiction of the court does not exist or because of a vis major or force majeure and the like;

(5) where parties have agreed, under a non-exclusive jurisdiction clause, to approach a neutral foreign forum and be governed by the law applicable to it for the resolution of their disputes arising under the contract, ordinarily no anti-suit injunction will be granted in regard to proceedings in such a forum conveniens and favoured forum as it shall be presumed that the parties have thought over their convenience and all other relevant factors before submitting to non-exclusive jurisdiction of the court of their choice which cannot be treated just an alternative forum;

(6) a party to the contract containing jurisdiction clause cannot normally be prevented from approaching the court of choice of the parties as it would amount to aiding breach of the contract; yet when one of the parties to the jurisdiction clause approaches the court of choice in which exclusive or non-exclusive jurisdiction is created, the proceedings in that court cannot per se be treated as vexatious or oppressive nor can the court be said to be forum non-conveniens; and

(7) the burden of establishing that the forum of choice is a forum non-conveniens or the proceedings therein are oppressive or vexatious would be on the party so contending to aver and prove the same.

The Apex Court in the matter of Modi Entertainment (supra) has held that while granting such anti-suit injunction, the defendant against whom injunction is sought, is amenable to the personal jurisdiction of the Court; if the injunction is declined the ends of justice will be defeated and injustice will be perpetuated and in a case where more forums than one are available, the Court in exercise of its discretion to grant anti-suit injunction will examine as to which is the appropriate forum having regard to the convenience of the parties and may grant anti- suit injunction.

In the present case, as per the pleadings and notice dated 24-6-2010, some officer of the respondent has threatened the petitioner, and the respondent has directly threatened the petitioner by serving a notice that in case payment is not made, the respondent will enforce the award by alternative means without further notice. By filing application under Order 39 Rule 3 of the Code, the petitioner has prayed for the following reliefs:

a) To grant an ad interim order of stay in favour of the applicant and against the opposite party restraining the opposite party from taking any steps to commence any proceedings in the High Court of Justice, Queens Bench Division, Commercial Court, Royal Court of Justice, or any other Court in England seeking to prevent the applicant from commencing any proceedings in India to set aside the final award dated 17.06.2010 passed by the Hon''ble Arbitral Tribunal till the disposal of the main anti suit injunction application; and/or

b) To grant an ad-interim order of stay in favour of the applicant and against the opposite party restraining the opposite party from commencing any proceedings in the High Court of Justice, Queens Bench Division, Commercial Court, Royal Court of Justice, or any other court in England which would have the effect of preventing the applicant from commencing any proceedings in India to set aside the final award dated 17.06.2010 passed by the Hon''ble Arbitral Tribunal till the disposal of the main anti suit injunction application; and/or

c) To restrain the opposite party from proceeding in such English Court for any injunctive relief without putting up appearance before this Hon''ble Court in the instant proceedings; and /or

In the present case, it is evident from the documents filed on behalf of the petitioner that the petitioner has filed petition u/s 34 of the Act in which learned District Judge situate at Korba has taken cognizance and proceeding has been commenced. Therefore, reliefs No. (a) and (b) of para 10 of the instant writ petition claimed by the petitioner cannot be granted to the petitioner. As regards relief No. (c) is concerned, the petitioner wants to restrain opposite party by injunction from any type of proceedings. Grant of such relief would not be justifiable or possible by any Court.

Arbitration proceeding was conducted at abroad on the basis of arbitration Clause 12 of the agreement which reads thus,

Arbitration and Governing Law

12.1 Any dispute or difference which may arise out of or in connection with this Agreement shall be settled by arbitration to be held in London, England under the rules of the Arbitration Commission of the International Chamber of Commerce and settled in conformity with the rules of procedure of said Commission and its award shall be final and binding upon both parties. The parties shall not have recourse to legal proceedings providing the arbitration procedure has been complied with. The arbitration shall be in the English Language.

12.2 Arbitration proceedings shall not suspend the continued operation of the Agreement.

The aforesaid arbitration clause clearly reveals that the arbitration proceeding may be held at London.

Documents reveal that the parties have chosen the forum of arbitration and proceeding relating to such arbitration at England. Pleadings in the notice do not reveal that virtually the petitioner is having any threat of filing such proceeding. Even otherwise, as per Clause 12.1 of the agreement, if any proceeding is initiated at England that would not amount to forum non-conveniens. While considering the case of anti-suit injunction, the Courts are required to consider the principle of comity i.e. respect for the court in which the commencement or continuance of action/proceeding is sought to be restrained.

Therefore, I do not find any case for grant of interim protection or writ in terms of Article 227 of the Constitution of India. Consequently, I.A. No. 1 is rejected. Subsequently, the petition is liable to be dismissed and it is hereby dismissed, in limine. No order as to costs.