THE COURT OF APPEAL CONFIRMS THE JURISDICTION OF ENGLISH COURTS TO RESTRAIN A FOREIGN ARBITRATION IN AN ‘EXCEPTIONAL’ CASE

In Sabbagh v Khoury and others, [2019] EWCA Civ 1219 (available here), the English Court of Appeal partly upheld the injunction granted by the Commercial Court restraining the pursuit of arbitration proceedings seated in Lebanon.  In doing so, the Court of Appeal confirmed the power of English courts to restrain a foreign arbitration on grounds that the foreign arbitration is oppressive and vexatious and provided helpful guidance on the exceptional circumstances in which English courts may exercise this power.

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Malaysia’s Federal Court grants third party anti-arbitration injunction

It is an oft-repeated rule that only signatories to an arbitration agreement can be made party to arbitration proceedings. To this end, various jurisdictions have considered situations where an arbitration clause can be ‘extended’ to a third party, and arbitral institutions have also introduced rules to ‘join’ third parties to arbitration proceedings, subject to the consent of the parties. What steps can a third party take to safeguard its rights where parties to an arbitration do not consent to a joinder?

In Jaya Sudhir a/l Jayaram v Nautical Supreme Sdn Bhd & Ors (Federal Court Civil Appeal No. 02(i)-83-09/2018(W)), although the applicant, Jaya, was not a signatory to the shareholders’ agreement containing the arbitration clause, he nevertheless sought to enforce both contractual and beneficial rights under it. Malaysia’s Federal Court granted an anti-arbitration injunction restraining Malaysian arbitration proceedings in favour of litigation in Malaysian courts, to prevent a non-party from being left without meaningful remedy. In doing so, the Federal Court set out limited circumstances where it would allow a third party to restrain arbitration proceedings.

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English Commercial Court orders stay of Lebanon-seated arbitration in ‘exceptional’ case

In the most recent decision in the Sabbagh family feud, Sabbagh v Khoury & Ors [2018] EWHC 1330 (Comm), the English Commercial Court ordered the stay of parallel Lebanon-seated arbitration proceedings. This was despite the tribunal in that case having found that it had jurisdiction to hear it. In granting the interim injunction to restrain the pursuit of the arbitration proceedings, Mr Justice Knowles was quick to acknowledge the significance of a court that is not the supervisory court granting an injunction to prevent parties prosecuting a foreign arbitration.

 

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Recent Developments in India-related international arbitration

Herbert Smith Freehills has issued the latest edition of its Indian international arbitration e-bulletin.

In this issue, we review a number of recent arbitration-related decisions of the Indian courts, in particular a Supreme Court ruling on applicability of BALCO to an agreement varied after 6 September 2012 and a decision by the Delhi High Court issuing anti-arbitration injuction against London arbitration. We also provide an update on prospective changes to India’s investment arbitration and domestic dispute resolution landscapes.

For further information, please contact Nicholas Peacock, Head of India Arbitration Practice, Alastair Henderson, Managing Partner-SE Asia, Donny Surtani, Senior Associate, or your usual Herbert Smith Freehills contact.

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Delhi High Court issues anti-arbitration injunction against London arbitration

In a striking decision which bucks the trend of pro-arbitration decisions from the Indian judiciary in recent years, a single judge of the Delhi High Court has restrained McDonald’s from invoking an LCIA arbitration clause in its joint venture agreement with its local partner. The court’s order was issued on the basis that the arbitration agreement was inoperative or incapable of being performed, and on the basis that in an arbitration involving predominantly Indian parties and Indian law, London was a forum non conveniens and therefore the arbitration proceedings were “vexatious” and “oppressive“.

The decision may be subject to appeal, but in the meantime will raise concerns for any parties facing opposition in India to attempts to invoke offshore arbitration in Indian law agreements.

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