Antrix-Devas Dispute: Will The Anti-Arbitration Injunction Order Turn The Chain Of Events In Favour Of India In The New BIT Arbitration

Third Treaty Arbitration Dispute by Devas:

Devas Multimedia was a satellite communications company which lost out on a deal worth $190 million with Antrix Corporation, a Centre-owned space company.^[2] This was because the then government had terminated the contract between Devas and Antrix in 2011, citing corruption and collusion between the two parties. Miffed by the termination of the agreement, Devas foreign investors initiated the long-drawn battle that was fought at multiple forums, introducing arbitration proceedings in institutions such as the International Chamber of Commerce (ICC) and in this arbitral proceeding in 2015, Devas Multimedia was awarded close to $1.3 billion (in current value) in damages to be paid by Antrix.^[3]

However, India’s National Company Law Tribunal ordered Devas to be liquidated based on the allegations that it had been formed for a fraudulent purpose. Conversely, The Indian Supreme Court upheld the decision of the NCLT in January 2022 as well. Meanwhile, the Delhi High Court also quashed the ICC order in favor of Devas Multimedia, offering relief to the government. Aggrieved by these decisions of the judicial bodies of India, the Devas Mauritius’ shareholders initiated new arbitration proceedings against India under the India Mauritius bilateral investment treaty (BIT).

Anti Arbitration Injunction in Mauritius Court:

The anti-arbitration injunction, as the name suggests, is an injunction to restrain arbitration from commencing or continuing.^[4] This may be issued against the Parties or against the arbitral tribunals. Noticeably, though the anti arbitration injunction order issued by the Hon’ble Supreme Court of Mauritius may prove to be of considered importance for the Republic of India, scholars like Stephen Schwebel and Professor Gary Born have criticised anti arbitration injunctions as something which violate customary international law and which aims at disrupting the parties agreed arbitral mechanism. Many scholars are also of the opinion that it attacks the very foundations of "competence-competence" – a bedrock arbitral principle.^[5] Arbitral tribunals deploy that principle to determine their own jurisdiction.^[6] The principle of “Competence-competence” thus bestows the power on the tribunals to decide whether the arbitration agreement is invalid or inoperable and to conclude that the tribunal lacks jurisdiction. An anti arbitration injunction takes away this power of the tribunal.

However, anti arbitration injunctions are also said to save the time and costs of going through the arbitration process as the parties will end up in seat courts once they raise an objection against the tribunals jurisdiction. Lord Collins in the UK Supreme Court case of Dallah said that

“So also the principle that a tribunal in an international commercial arbitration has the power to consider its own jurisdiction is no doubt a general principle of law. It is a principle which is connected with, but not dependent upon, the principle that the arbitration agreement is separate from the contract of which it normally forms a part. But it does not follow that the tribunal has the exclusive power to determine its own jurisdiction, nor does it follow that the court of the seat may not determine whether the tribunal has jurisdiction before the tribunal has ruled on it.”^[7] Some of the circumstances warranting the grant of an anti-arbitration injunction are:^[8]

• the arbitration agreement appears to be void/ voidable;
• the claimant’s claim is time-barred;
• there has been breach of an agreement to not arbitrate;
• there is arbitration of an issue that was res judicata;
• an exclusive jurisdiction agreement has been breached;
• arbitration has been commenced against a third party who was not a party to the arbitration agreement.

In the present case, the Supreme Court anti arbitration injunction order does not negative the right of Devas to pursue its substantive rights and they may choose to proceed with arbitration, nonetheless, the Republic of India has got a powerful remedy against Devas. If at all Devas chooses to breach the orders issued by the Mauritius Court, this would amount to contempt and they may be punished by fine or imprisonment. However, it is to be seen as to how the arbitral tribunal will deal with the Mauritian Court order and what will be the corresponding impact on the enforcement of the award, if issued by the tribunal, in case the tribunal continues with the arbitration as the injunction order is against the Party not the tribunal.

The author is an Advocate based in Delhi and worked as a legal consultant with the Ministry of External Affairs previously. Views are personal.