Delhi High Court Grants Rare Anti-Enforcement Injunction: Implications for International Disputes

By Ananya Bhargava, Jindal World Regulation College, OP Jindal World College, India.

Just lately, the Delhi Excessive Courtroom within the case of Honasa Shopper Restricted v RSM Basic Buying and selling LLC granted an anti-enforcement injunction in opposition to the execution proceedings instituted within the Dubai Courtroom on the bottom that it threatened the arbitral course of in India. The Courtroom deemed the proceedings earlier than the Dubai Courtroom as an try and frustrate a potential arbitration envisaged by the contract between the events.  The injunction was granted underneath S.9 of the Indian Arbitration and Conciliation Act 1996 as an “interim measure.”  This can be a important turning level within the intersection of arbitration and cross-border litigation in India for the reason that treatment of anti-enforcement injunction is never granted by judicial authorities throughout jurisdictions.

Apparently, in 2021, the identical bench of the Delhi Excessive Courtroom granted the first-ever anti-enforcement injunction in India in Interdigital Expertise Company v. Xiaomi Company. Right here, the court docket outlined anti-enforcement injunctions as injunctions the place a court docket injuncts one of many events earlier than it from imposing in opposition to the opposite a decree or order handed by a international court docket. Thus, the treatment of anti-enforcement injunctions is triggered when a international continuing has already run its course and resulted in an unfavourable judgment. It’s a treatment restraining the enforcement of a decree that’s in an inconvenient discussion board or is in breach of the events’ contractual settlement.

By its very definition, an anti-enforcement injunction seems to be a extra aggressive and distinctive type of reduction. Thus, courts have historically been cautious in granting such injunctions, given the potential implications on worldwide comity and judicial restraint. Nonetheless, the Delhi Excessive Courtroom’s choice to grant one on this case marks an attention-grabbing departure from this reluctance. This text delves into the rationale behind Delhi Excessive Courtroom’s judgment on this case and explores its implications on cross-border litigation in India.

Temporary details:

The fulcrum of the dispute involved an Approved Distributorship Settlement (ADA) between Honasa Shopper Restricted (petitioners) and RSM Basic Buying and selling LLC (respondents). The ADA included an Arbitration clause with New Delhi because the venue of arbitration and the Arbitration and Conciliation Act, 1996 declared because the governing regulation.  The ADA additionally conferred unique jurisdiction on the courts of New Delhi for issues arising from the contract. Regardless of these provisions, the respondents filed a swimsuit within the Courtroom of First Occasion in Dubai, which dominated in opposition to the petitioners and imposed damages. The petitioners challenged this decree within the Dubai Courts of Attraction.

Whereas the attraction was pending, the petitioner approached the Delhi Excessive Courtroom underneath S.9 of the Arbitration and Conciliation Act and sought an injunction in opposition to the respondents from imposing the Dubai Courtroom’s decree. The petitioners argued that the respondent’s actions in submitting the Dubai Swimsuit was oppressive and vexatious in nature and it tried to subvert the contractual clauses agreed upon by each the events. The respondents, then again, argued that the court docket’s energy to grant interim reliefs underneath S.9 of ACA doesn’t embody the ability to grant an anti-enforcement injunction in opposition to a international court docket’s decree.

Delhi Excessive Courtroom’s Ruling:

Primarily based on the next contentions, the Courtroom held that the ability to grant “anti-enforcement” or anti-suit injunction would even be encompassed within the energy to grant interim measures. The judgment was predicated on a liberal understanding of S.9 of Arbitration and Conciliation Act, the place the court docket owing to the legally abusive nature of the international proceedings, deemed it to be “simply and handy” to go an injunction in opposition to the respondents from imposing the Dubai Courtroom’s decree in opposition to the petitioners.

The court docket arrived at this conclusion by a complete evaluation of three broad authorized ideas. First, the court docket analyzed the edge of granting anti-enforcement injunctions in different jurisdictions. Second, the court docket thought of the scope of S.9 of Arbitration and Conciliation Act, that gives for interim reliefs. Lastly, the precept of worldwide comity was mentioned intimately by the court docket. These are mentioned briefly under.

Courtroom’s evaluation of worldwide jurisprudence:

Within the absence of established precedent on anti-enforcement injunctions in India, the Delhi Excessive Courtroom analysed instances from numerous jurisdictions to form its strategy. The ideas outlined in these instances manifest the general outlook of courts throughout jurisdictions on anti-enforcement injunctions. Whereas some courts have taken a liberal strategy, different jurisdictions are cautious of the sheer magnitude of the injunction in rendering the international judgment nearly redundant.

In England, the Courtroom of Attraction in SAS Institute Inc v World Programming Ltd adopted a extra liberal view, specializing in the ideas of justice and comity moderately than imposing a excessive threshold of “exceptionality in granting such injunctions.” The court docket held that an anti-enforcement injunction has developed incrementally from the identical underlying ideas because the anti-suit injunction. Thus, the court docket didn’t distinguish between anti-suit and anti-enforcement injunctions primarily based on the diploma of exceptionality. As a substitute, it lowered the edge for the latter, putting each on the identical degree.

Conversely, the Singapore Courtroom of Appeals (SCA) in Solar Travels & Excursions Pvt Ltd v. Hilton Worldwide Handle (Maldives) Pvt Ltd., emphasised on the distinction between anti-suit and anti-enforcement injunctions and held {that a} “higher diploma of warning” must be exercised by courts whereas contemplating an anti-enforcement software.  The court docket reasoned this on the bottom that, “an AEI proscribes the enforcement of international, granting an anti-enforcement injunction is similar to nullifying the international judgment or stripping the judgment of any authorized impact when solely the international court docket can put aside or fluctuate its personal judgment.” The SCA was cognizant of the legally aggressive nature of anti-enforcement injunctions and due to this fact included the edge of “exceptionality” whereas coping with such functions.

The Delhi Excessive court docket then again, deviated from the strategy taken by SCA in Solar Travels and subscribed to a extra liberal understanding much like the English Courts. The court docket whereas endorsing its holding in Interdigital Expertise Company v. Xiaomi Company held that “the place a court docket in rendering of “justice” requires an anti-enforcement injunction to be issued, then it mustn’t maintain again its palms on some perceived notion of lack of “exceptionality” within the case.” By doing so, the court docket considerably lowered the edge for granting anti-enforcement injunctions in India and held that rarity and exceptionality needn’t essentially be a deciding issue for granting such injunctions.

On the scope of S.9 of Arbitration and Conciliation Act:

On the scope of S.9 of Arbitration and Conciliation Act, the court docket held that that the scope of S.9 is large and compendious. It acknowledged that though the part seems exhaustive in nature because it enumerates the issues wherein interim reduction will be granted, clause (e) of S.9(1)(ii) supplied the courts with the discretionary energy to grant any such interim measure that’s “simply and handy.”. The court docket whereas reiterating established ideas on interim measures held that whereas granting an injunction underneath S.9 of ACA, all of the court docket has to see is whether or not  the applicant for interim measure has a superb prima facie case, whether or not the steadiness of comfort is in favour of  interim reduction as prayed for being granted and whether or not the applicant  has approached the court docket with affordable expedition.  If these necessities are fulfilled, the court docket acknowledged that it’s inside its energy to grant the requisite interim reduction within the type of an injunction. On this case, the Dubai court docket decree was held to be oppressive and vexatious, in consequence, the court docket granted the anti-enforcement injunction as an interim reduction.

Additional, the court docket made an attention-grabbing remark on the subject of S.9 of Arbitration and Conciliation Act. In response to the respondents citing S.44 of UK Arbitration Act as a defence, the court docket held that S.9 of ACA combines S.44 of UK Arbitration Act and S.37 of the Senior Courts Act. S.44 of the UK Act empowers the court docket to go orders in assist of the Arbitral Proceedings. The court docket famous that the part didn’t comprise any “simply and handy” clause much like S.9(1)(ii)(e) of Indian ACA. Whereas S.37 of the Senior Courts Act did comprise a provision that permits the courts to go interlocutory orders as is “simply and handy.” Finally the court docket concluded that S.9 of ACA does give powers to the courts to intervene in international proceedings the place it’s within the curiosity of justice.

On the difficulty of worldwide comity:

Lastly, on the difficulty of comity of Courts, the court docket held that “the precept of comity of courts can haven’t any software the place a international Courtroom is manifestly appearing in extra of jurisdiction.” Right here, the respondent in manifest disregard of  the arbitration settlement contractually agreed upon by the events, instituted a swimsuit within the Dubai Courtroom in opposition to the unique selection of Delhi Excessive Courtroom because the seat court docket. On this regard, the court docket held that the precept of comity of courts just isn’t, jurisprudentially, a bar to grant of anti-suit or anti-enforcement injunction, the place the details of the case justify such grant.

Additional, whereas disregarding the precept of comity on this case, the court docket buttressed on the precept of contractual supremacy and the necessity to maintain events accountable to their contractual commitments. It acknowledged that adherence to contractual  covenants, voluntarily executed advert idem, is the very life breath of commerce. Finally it concluded that the defence of comity can’t be pleaded by the respondents on this case for the reason that decree of the Dubai court docket was coram non judice as per the contractual covenants.

Implications of the court docket’s evaluation :

The safety of contractual rights stands out as probably the most essential themes within the Courtroom’s strategy to grant anti-enforcement injunction within the current case. On this regard, the judgment has some constructive implications.

As an example, whereas disregarding the appliance of worldwide comity on this case, the court docket upheld the unique jurisdiction clause between the events and equated it to the unfavourable covenant within the settlement. This successfully implies that judgments from non-chosen jurisdictions could be in prima facie breach of such contractual clauses and wouldn’t be enforced ideally. That is according to the frequent regulation strategy to personal worldwide regulation that thrives on such contractual agreements.

This can be a refreshing strategy contemplating the truth that Indian courts have previously disregarded the selection of regulation agreements to impute the regulation of the lex fori. Only a 12 months in the past in TransAsia Personal Capital vs Gaurav Dhawan, the Delhi Excessive Courtroom had recorded that Indian courts usually are not required to routinely apply the chosen governing regulation to the dispute except the events introduce knowledgeable proof to that impact. The current judgment on this regard is a constructive deviation from the usual “default rule” utilized by Indian Courts. A logical corollary to the court docket’s emphasis on contractual supremacy and safety of the unique jurisdiction clause can be the respect for events selection of governing regulation. Within the current case Dubai Courtroom’s software of Dubai Regulation was seen as a violation of the contract which stipulated Arbitration and Conciliation Act because the governing statute. The precedential implication of that is that Indian courts can now transfer away from the default rule and respect the ideas of social gathering autonomy which is grounded on the precept of contractual supremacy. Thus, the court docket rightfully asserted the precept of contractual supremacy whereas granting an anti-enforcement injunction.

That stated, the court docket’s try in reducing the edge for anti-enforcement injunction to the identical degree as anti-suit injunctions could result in uncertainty concerning its precedential worth for different jurisdictions. On this regard, the judgment does endure from sure deficiencies. First, setting a low customary for such injunctions can run the danger of courts steadily granting injunctions in opposition to international judgments in breach of worldwide comity. Shelling out with the requirement of “exceptionality” in instances of anti-enforcement injunctions is harmful in India, particularly when the regulation on unique selection of court docket agreements continues to be at its nascent stage. Prior to now, Indian courts have wrongfully granted anti-suit injunctions regardless of there being an unique selection of court docket clause between the events. Decreasing the edge for anti-enforcement injunctions to the identical degree would pose related dangers, with courts fully disregarding the rule of comity as has been completed in instances granting anti-suit injunctions.

It was crucial for the court docket to understand the distinction between anti-suit and anti-enforcement injunctions. The distinction between an anti-suit injunction and an anti-enforcement injunction just isn’t one in every of materials however of diploma. There’s a spectrum. That is manifested in the truth that injuncting a celebration from executing a international judgment in a international court docket is a higher interference than injuncting a celebration from initiating international proceedings which can be nonetheless at an early stage. Within the current case, the petitioners might have sought an anti-suit injunction whereas the respondents initiated a swimsuit within the Dubai Courtroom, moderately than ready for the court docket to complete proceedings and ship its judgment. As argued by students, the sooner an injunction is sought, the much less harm is completed to worldwide comity, since there may be important wastage of sources of the international court docket in instances of anti-enforcement injunctions.

Thus, protecting the edge for an anti-enforcement injunction the identical as an anti-suit injunction creates important dangers. Indian courts ought to as a substitute adhere to the high-threshold strategy taken by the SCA in Solar Travels whereas granting an anti-enforcement injunction and relegate it to “distinctive instances” the place the defendants are in clear breach of their contractual obligations, as within the current case.

Second, the court docket’s comment on the distinction between S.9 of ACA and S.44 of the UK Arbitration Act is a vital remark. Although the UNCITRAL Mannequin Regulation on Worldwide Industrial Arbitration (on which the Indian ACA relies) underneath Article 9 gives for interim measures, it doesn’t elucidate the character of such measures or the conditions the place they are often granted. The inclusion of the “simply and handy” clause in S.9 offers Indian courts an additional diploma of discretion that isn’t contemplated in different jurisdictions. Within the UK, the discretionary energy of the court docket to grant interim measures when it’s “simply and handy” doesn’t circulate from the UK Arbitration Act, however moderately from the Senior Courts Act, which is used exceptionally. In India, this energy is enunciated within the ACA itself. This distinction is essential because it highlights the diploma of judicial intervention envisaged by Indian and UK laws. Ordinarily, S.151 of the CPC does present the requisite energy to the courts to grant treatments within the curiosity of justice. The particular inclusion of the “simply and handy” clause inside the ACA dangers the next diploma of judicial intervention in arbitration. Moreover, incorporating the ability to grant an anti-enforcement injunction inside the clause can set a harmful precedent.

Extra prominently, with out delineating particular concerns as to when such injunctions will be granted and by concurrently lowering the edge of rarity in granting such injunctions, the court docket has normalized the next diploma of judicial intervention in instances of transnational litigation. Right here, though the court docket rightly handed an anti-enforcement injunction, it sourced its legality from S.9(1)(ii)(e) as being “simply and handy,” moderately than acknowledging the exceptionality of the current case and limiting such injunctions to uncommon circumstances. The court docket fully failed to acknowledge  the dangers of reducing the edge for granting such injunctions particularly in India the place extreme judicial intervention has been the largest obstacle to the event of transnational litigation.

The considerations raised above change into extra outstanding contemplating  the absence of a selected authorized framework governing the grant of such injunctions. The court docket’s transfer to decrease the edge might considerably affect choices in different jurisdictions, given the shortage of a uniform procedural regulation on this concern. To additional contextualize this concern, I’ll briefly talk about the worldwide framework—or moderately, the shortage thereof surrounding anti-enforcement injunctions and the considerations that come up resulting from this authorized lacunae.

Which regulation governs Anti-Enforcement Injunctions?

There isn’t a specific home or worldwide procedural framework that provides the court docket the ability to grant such injunctions. S.9 of the Arbitration and Conciliation Act adopts Article 9 of the UNCITRAL Mannequin Regulation on Worldwide Industrial Arbitration (Mannequin Regulation) that permits courts to grant interim measures on the request of a celebration. The Mannequin Regulation doesn’t present for an specific provision authorising the grant of an anti-enforcement injunction in assist of arbitration.

Within the absence of such specific provision, the query that arises right here is  “whether or not the scope of Article 9 is broad sufficient to embody the ability to grant anti-enforcement injunctions?” At this juncture, there appears to be no definitive reply to this.  Whether or not Article 9 is broad sufficient to restrain enforcement of a international court docket decree in assist of arbitration is a matter of conjecture. Mannequin Regulation’s silence with respect to this has already result in inconsistent judgments in home courts of States which have adopted it, as demonstrated by jurisprudence in Singapore and India. Thus, the necessity to incorporate a procedural framework with respect to such injunctions turns into essential.

One other concern that arises is the potential battle between anti-enforcement injunctions and legal guidelines associated to recognition and enforcement of international judgments.  Earlier on this weblog, the US Courtroom of Attraction for the Second Circuit’s choice on anti-enforcement injunction was mentioned. The court docket right here held that the Recognition Act of the US doesn’t enable pre-emptive anti-enforcement injunctions and the court docket granting such injunctions are in overreach of their powers. The court docket reasoned this on the bottom that anti-enforcement injunctions preclude the traditional operation of New York’s Legal guidelines on recognition and enforcement of international judgment. A celebration can problem such judgments on the Enforcement stage based on the legal guidelines of the imposing court docket however can not sought an injunction in opposition to a celebration to provoke such enforcement proceedings altogether.  The respondents on this case gave the same argument on S.13 of CPC which offers with executability of international judgments in India. They argued that the court docket can not grant “pre-emptive” Injunction in opposition to enforcement as the identical might be in opposition to S.13 of CPC.

The Hague Conference of the Recognition and Enforcement of Overseas Judgments doesn’t ponder the pre-emptive restrain in opposition to the enforcement of a judgment both.  Article 7(1)(d) of the Conference states that recognition and enforcement of a judgment possibly refused if the proceedings have been opposite to an Settlement. Thus, though the treatment of refusal of enforcement is on the market, each home and worldwide regulation is silent on an anti-enforcement injunction as a pre-emptive reduction. Not like the US courts that explicitly disallowed the ability to grant anti-enforcement injunctions, the Delhi Excessive Courtroom on this case rooted it in S.9 of Arbitration and Conciliation act as an interim reduction. Thus, with none worldwide authorized customary, home courts are free to interpret the legality of anti-enforcement injunctions of their jurisdictions. Whereas a whole bar on courts to grant anti-enforcement injunction just isn’t the right strategy, a liberal strategy in granting it’s harmful as effectively. Presently, such injunctions can solely be included as an interim reduction. This considerably lowers the exceptionality threshold. Anti-enforcement injunctions are inherently hostile and aggressive in nature, thus there’s a want for a global procedural framework to deal with such injunctions.

Conclusion:

Whereas the judgment gives much-needed safety of contractual rights, it falls wanting addressing the prevailing lacuna within the regulation. The court docket might have taken this chance to delineate particular tips for granting such injunctions, granted since this was solely the second occasion when it was granted in India. By failing to take action, the decreased threshold for granting anti-enforcement injunctions turns into much more harmful. The current case suits into the uncommon and distinctive class because the respondents have been in clear breach of the contract. Thus, the courts try in reducing the edge for granting anti-enforcement injunctions was not wanted. Anti-enforcement injunctions elevate critical considerations of comity and so they intrude considerably with international authorized programs. It’s due to this fact essential to find out the related components that necessitate the grant of an anti-enforcement injunction.

The court docket’s strategy on this case highlights the necessity for clearer tips. A extra outlined framework for when and the way anti-enforcement injunctions will be granted will assist be certain that home courts adhere to sure requirements set by the Mannequin Regulation. The present silence of the Mannequin Regulation on such injunctions is inflicting a patchwork of interpretations throughout completely different jurisdictions, resulting in uncertainty and inconsistency. Establishing clear worldwide requirements would assist courts handle these complicated authorized points extra successfully, paving the best way for extra predictable choices sooner or later.