Dear all,
A Division Bench of the Calcutta High Court on July 27, 2020, in the matter of Visa Resources Pte. Ltd. (“Appellant/Defendant”) v. Super Smelters & Anr.(“Respondent/Plaintiff”), set aside an order of anti-arbitration injunction passed by the Learned Single Judge for stay of arbitration proceedings pending before Singapore International Arbitration Council (‘SIAC’).
Brief facts of the case:
The Appellant/Defendant challenged an order of the Single Judge, by which an anti-arbitration injunction in a suit was granted for stay of arbitration proceedings pending before SIAC. The Single Judge allowed such stay of proceedings because the Respondent/Plaintiff had challenged the very existence of the parent contract (‘matrix contract’) entered into between the parties. The arbitration clause was a part of the matrix agreement. The Single Judge was of the view that, under such circumstances, it would be financially taxing on the Respondent/Plaintiff’s part to approach SIAC. Hence, allowed such anti-arbitration injunction in the suit proceeding. The decision was challenged in an appeal before the Division Bench.
Arguments on behalf of the Appellant/Defendant:
The Appellant/Defendant submitted that the emails exchanged between the parties after the date of execution of the matrix contract would not have any bearing on the arbitration agreement. The arbitration agreement incorporated in the matrix contract was a separate and severable contract in itself. The emails that were exchanged after the date of execution of the matrix contract was on account of negotiating incidental terms in the contract, which did not impact the arbitration clause. The Appellant/Defendant also argued that the language of the arbitration clause in the matrix contract was widely worded which encompassed within its purview “Any dispute arising between the parties in connection with this Contract including any question regarding its existence, validity or termination, shall be referred to and finally resolved by Arbitration…” . Therefore, the validity of the matrix contract was also an arbitrable question.
Arguments on behalf of the Respondent/Plaintiff:
The Respondent/Plaintiff placed before the Bench communications after the date of execution of the matrix contract and contended that on reading of such emails it would demonstrate that there was no concluded contract entered into by and between the parties. Therefore, as the existence of the matrix contract was under challenge, the reference to arbitration was not permissible in law.
Decision of the Division Bench:
The Division Bench before coming to the conclusion that the order of injunction could not be sustained in law relied on various other judicial precedents as follows:
Upon considering material documents on record and judicial precedents, the Division Bench was of the view that insofar as the order under challenge (‘Impugned Order’) was concerned, the Single Judge failed to record his prima facie satisfaction with regard to the non-existence of the matrix contract. Further, the Impugned Order also did no mention anything with respect to the arbitration agreement being non-workable. The Division Bench observed that challenge to the institution of an international arbitration under Part II of the A&C, Act could only be sustained on limited grounds. On reading Section 45 of the A&C Act, it is clear that a judicial authority can only interdict when there is a prima facie finding to the effect that the arbitration agreement is “null, void, inoperative or incapable of being performed”. In view thereof, the Appellate Court set aside the Impugned Order passed by the Learned Single Judge.
Please find a copy of the order here.
This update has been contributed by Pooja Chakrabarti (Partner) and Debjyoti Saha (Associate).
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