Quinn Emanuel Explains Important International Arbitration Ruling in India

International arbitration, a key practice at Quinn Emanuel, saw a significant ruling in India last summer. In the latest issue of the Indian Journal of Arbitration Law, QE partner Parnika Chaturvedi and associate Simon Weber provide an illuminating analysis.

In their case comment (which begins here on page 124), Chaturvedi, who specializes in international commercial arbitration and common law litigation, and Weber, who focuses on complex multi-jurisdictional disputes as well as commercial and investment arbitrations, lay out the complex matter in lucid detail and suggest what may lie ahead.

Their analysis springs from an anti-arbitration injunction the Delhi High Court granted last July in Engineering Projects (India) Limited v. MSA Global LLC (Oman), restraining International Chamber of Commerce arbitration proceedings seated in Singapore. At the heart of the dispute was a contractual tension between an arbitration clause that made Singapore the seat and an exclusive jurisdiction clause empowering the New Delhi courts. 

When two companies sign a contract, they generally agree in advance on how any future disputes will be resolved. In this case, the contract said disputes would be settled through international arbitration. The arbitration was to take place under the rules of the International Chamber of Commerce, and since the contract seated it in Singapore, Singaporean courts would normally oversee the process.

But because the same contract gave the New Delhi courts exclusive jurisdiction, a knotty problem emerged.

What makes the Delhi High Court’s decision to grant Engineering Projects the injunction important is that the court stepped in and blocked an ongoing arbitration taking place in another country. Ordinarily, once parties agree to arbitrate somewhere, the courts of that country are the ones with authority over the process, and other countries’ courts are in principle expected to stay out of it.

By issuing its injunction, the Delhi High Court asserted that Indian courts still have a role to play when the process abroad has allegedly become fundamentally unfair, even if the arbitration is formally outside India’s legal territory.

There’s a twist. On appeal, a Division Bench of the Delhi High Court upheld the injunction in December – on a very different basis. It held that, properly read, the contract actually seated the arbitration in New Delhi rather than Singapore, giving Indian courts oversight without needing to claim any exceptional power to intervene abroad.

Whether either rationale will hold up, and how far it extends, is now an open question.