Delhi Court Issues Anti-Arbitration Injunction in Oman Dispute

Indian Court Overturns ICC Arbitration Due to Bias, Citing “Unjust trajectory”

New Delhi, India – In a significant ruling that underscores the indian judiciary’s commitment to fairness in arbitration, Justice Kaurav of the Delhi High Court has granted a permanent injunction against the continuation of an International Chamber of commerce (ICC) arbitration. The court found that the arbitral process had developed an “unjust trajectory” due to a failure to disclose crucial information about an arbitrator’s prior involvement, thereby vitiating the fairness of the proceedings.

The case, pitting Engineering Projects (India) (EPIL) against MSA Global, centered on allegations of bias against an arbitrator appointed by MSA Global. EPIL argued that the arbitrator, Mr. Yeap, had a prior, undisclosed involvement in another arbitration with a party closely linked to MSA global. While the ICC had previously rejected a similar challenge, the Indian court found EPIL’s case to be strong.

Justice Kaurav, citing established Indian precedents like ONGC v Western Co of North America and Union of India v Dabhol Power Company, emphasized that the doctrine of minimal judicial interference under the Arbitration and Conciliation Act 1996 does not shield arbitral processes from scrutiny when they are “patently unjust or oppressive.”

Crucially, the court highlighted Mr. Yeap’s own admission that had he disclosed the earlier arbitration, the “possibility of a challenge could not have been discounted.” The court concluded that this omission was not inadvertent but demonstrated a “procedural impropriety [that] vitiates the fairness of the adjudicatory process.” This finding directly challenged MSA Global’s contention that disclosure obligations only arise after multiple appointments within a specific timeframe. The court clarified that “even a single prior involvement, if material, could warrant disclosure, especially when the prior engagement was not remote or incidental.”

the tribunal’s decision to proceed with evidentiary hearings in May 2025, despite EPIL’s objections and the pending Indian lawsuit, drew sharp criticism. The court noted the tribunal’s “unilateral” scheduling of hearings and the failure to provide EPIL adequate time to respond, concluding that the proceedings had taken an “unjust trajectory that defeats the foundational norms of due process.”

Reaffirming its jurisdiction under Section 9 of the Civil Procedure Code,the court reiterated the strong presumption in favor of civil court access,citing Dhulabhai v State of Madhya Pradesh and S Vanathan Muthuraja v Ramalingam. The court stated that India’s Arbitration Act does not preclude civil suits in extraordinary cases of procedural unfairness, aligning with the principle that “the edifice of arbitration must rest on the cornerstone of fairness.”

Ultimately, the court granted a declaration that the arbitration was “vitiated by circumstances that render its continuation contrary to the public policy of India.” Consequently, a permanent injunction was issued, restraining MSA Global from continuing the ICC arbitration. EPIL was represented by Senior Advocate Sandeep Sethi, while MSA Global was represented by Senior Advocate rajiv Nayar.

What specific arguments did the indian entity present to the delhi High Court to challenge the validity of the arbitration agreement?

The Core of the Dispute: Why Anti-Arbitration Injunctions Matter

An anti-arbitration injunction is a court order preventing parties from proceeding with arbitration as agreed upon in a contract. These injunctions are increasingly common in international commercial disputes, particularly those involving complex cross-border transactions.The recent decision by a Delhi court to grant an anti-arbitration injunction in a dispute originating in Oman highlights the growing significance of Indian courts in resolving international conflicts. This case underscores the interplay between Indian law, international arbitration agreements, and the enforcement of contractual obligations. Key terms related to this include international commercial arbitration,enforcement of arbitration agreements,and jurisdictional challenges.

Background of the Oman Dispute & the Delhi Court’s Intervention

The specifics of the Oman dispute leading to the Delhi court’s intervention remain largely confidential, however, the core issue revolved around a contractual agreement between an Indian entity and an omani counterpart. The Omani party initiated arbitration proceedings in a foreign jurisdiction, presumably based on the arbitration clause within their contract.

The Indian entity, contesting the validity of the arbitration agreement, filed an submission before the Delhi High Court seeking an anti-arbitration injunction. They argued that the arbitration clause was either:

Invalid due to fraud or coercion: Allegations of improper inducement during contract negotiation.

Unconscionable: The terms of the arbitration agreement were excessively unfair.

Not applicable to the specific dispute: The scope of the arbitration clause didn’t cover the current disagreement.

The Delhi Court, after reviewing the submissions and evidence, granted the injunction, effectively halting the arbitration proceedings abroad. This decision hinged on the court’s assessment of its jurisdiction and the potential for a real risk of injustice if arbitration were to proceed.

Key Considerations for Indian Courts in Granting Anti-Arbitration Injunctions

Indian courts approach applications for anti-arbitration injunctions with caution, recognizing the pro-arbitration stance advocated by international legal frameworks like the New York Convention. However,several factors influence their decision-making process:

Section 8 of the Arbitration and Conciliation Act,1996: This section is central to the debate. It deals with the judicial authority to grant interim measures, including injunctions, in aid of arbitration.

The ‘Four Conditions’ test: Courts frequently enough apply a four-pronged test, derived from the West International shipping Co. Ltd. v. Shahi Exports Import Pvt. Ltd. case, to determine if an injunction is warranted:

1. The dispute must be arbitrable under the law.

2. The arbitration agreement must be valid.

3. No other legal or contractual bar exists to the arbitration.

4. The party seeking the injunction must demonstrate a real possibility of prejudice if arbitration proceeds.

Public Policy: Indian courts will refuse to enforce arbitration agreements that violate Indian public policy.

Seat of Arbitration: The location designated as the ‘seat’ of arbitration is crucial, as it determines the governing procedural law.

Implications for International Businesses & Contract Drafting

This Delhi Court ruling has significant implications for businesses engaged in international trade and investment, particularly with parties from Oman and the wider Middle East region.

Due Diligence: Thorough due diligence on potential contractual partners is paramount. This includes verifying their legal standing and reputation.

Arbitration Clause Scrutiny: Arbitration clauses must be carefully drafted to clearly define:

The scope of disputes covered.

the seat of arbitration (choosing a neutral and arbitration-pleasant jurisdiction).

The governing law of the arbitration.

the rules of the arbitral institution (e.g.,ICC,LCIA).

Dispute Resolution Strategy: Develop a proactive dispute resolution strategy,including understanding the legal landscape in relevant jurisdictions.

Enforceability Concerns: Be aware of potential challenges to the enforceability of arbitration agreements in different countries. Cross-border arbitration can be complex.

Recent Trends in Indian Arbitration Law

India has been actively strengthening its arbitration framework in recent years. Amendments to the Arbitration and Conciliation Act, 1996, have aimed to:

Reduce judicial intervention: Streamlining the process and minimizing court interference in arbitration proceedings.

Expedite arbitration: Setting time limits for the completion of arbitration proceedings.

Enhance enforceability of awards: Aligning Indian law with international best practices.

promote institutional arbitration: Encouraging the use of established arbitral institutions.

These developments signal India’s commitment to becoming a preferred seat for international arbitration. However, cases like the Oman dispute demonstrate that challenges to arbitration agreements still arise, requiring careful legal analysis and strategic decision-making. Related search terms include arbitration law India, New york Convention India, and commercial dispute resolution.

Practical Tips for Mitigating Risk

Expert Legal Counsel: Engage experienced legal counsel specializing in international arbitration to review and advise on contracts.

Negotiate Carefully: Thoroughly negotiate the terms of the arbitration clause, ensuring it reflects your interests and risk tolerance.

Document Everything: Maintain meticulous