Order Of Emergency Arbitrator In Foreign Seated Arbitration, Can Be Considered While Dealing With Section 9 Application: Calcutta High Court

The bench of Justice Ravi Krishan Kapur noted that the A&C Act does not provide for enforcement of orders passed by an Emergency Arbitrator in cases of a foreign seated arbitration. However, it observed that both the parties had participated in the proceeding before the Emergency Arbitrator and had agreed to be bound by its order, which was well-reasoned and elaborate. Thus, the Court concluded that the order of the Emergency Arbitrator can be taken into account at the stage of considering a Section 9 application.

The respondent no. 1- Glocal Healthcare Systems Pvt. Ltd., is an Indian Company. Respondents 2 and 3 are the promoter directors of the respondent Company. The petitioner- Uphealth Holdings Inc, is a US based Company, who entered into an SPA with the respondents in order to acquire a majority stake in the respondent Company. The SPA contained an arbitration clause, providing for arbitration under the aegis of the International Chamber of Commerce (ICC).

Thereafter, certain disputes arose between the parties, with the petitioner alleging that the respondents had breached their obligations under the SPA.

Invoking the emergency powers under the ICC Rules & Regulations, the petitioner filed an application before the ICC, and sought urgent interim measures against the respondents. Allowing the application, the Emergency Arbitrator passed orders against the respondents, directing them to provide the petitioner access to all financial statement(s). The respondents were barred from restraining the petitioner from accessing the bank accounts of the respondent Company.

The petitioner filed an application under Section 9 of the A&C Act before the Calcutta High Court, seeking interim measures as granted by the Emergency Arbitrator.

The respondent- Glocal Healthcare Systems, argued before the Court that the order passed by the Emergency Arbitrator is not an award and thus, it cannot be enforced under the A&C Act. In view of the dispute between the parties, the respondents contended that they had filed proceedings against the petitioner before the National Company Law Tribunal (NCLT). Thus, it averred that the application under Section 9 was not maintainable.

Dismissing the contentions of the respondent, Court held that the proceedings before the National Company Law Tribunal are not a bar to the arbitration process. Referring to the arbitration clause between the parties, the bench ruled that since the clause was wide and explicit, the dispute was capable of adjudication by arbitration.

The bench noted that as per Section 17(2) of the A&C Act, an interim order issued by the arbitral tribunal under Section 17 shall be deemed to be an order of the Court for all purposes. Further, it shall be enforceable under the Code of Civil Procedure, 1908, in the same manner as if it were an order of the Court.

The Court ruled that there is no pari materia provision under Part II of the A&C Act similar to Section 17(2). The A&C Act does not provide for enforcement of orders passed by an Emergency Arbitrator in cases of a foreign seated arbitration, the Court held.

However, the High Court observed that both the parties had participated in the proceeding before the Emergency Arbitrator and had agreed to be bound by the orders of the Emergency Arbitrator. It took note that the order of the Emergency Arbitrator was elaborate, detailed and reasoned. Further, the order was not interfered with or set aside.

While holding that there was no illegality, perversity, or contravention of any law shown in the order of the Emergency Arbitrator, the Court said “Thus, in my view, the order of the Emergency Arbitrator is an additional factor which can be taken into account at this stage of the proceeding. This approach is also in conformity with the principle of autonomy of parties which is fundamental to the Act. (Amazon.Com NV Investment Holdings LLC vs. Future Retail Limited & Ors. (2022) 1 SCC 209).”

The Court further observed that the petitioner had acquired a majority stake in the respondent Company and therefore, it had to comply with certain regulatory filings in the USA. Thus, it had sought certain information from the respondent Company, including financial statement (s), documents and necessary records. The bench reckoned that under the US laws, if the petitioner withholds such information and delays filing the requisite documents, it will have to face certain statutory consequences. However, there will be no prejudice caused to the respondents in providing such information, the Court noted.

The bench added that the said reliefs were sought by the petitioner for preserving its rights under the SHA and for protecting the subject matter of arbitration.

“In view of the aforesaid, the petitioner has a prima facie case on merits. The balance of convenience is also in favour of orders being passed as prayed for herein. I am also satisfied that the petitioner will suffer irreparable prejudice if orders as prayed for herein are not passed”, the Court said.

The Court thus allowed the application, granting the interim measures in favour of the petitioner.

Case Title: Uphealth Holdings Inc versus Glocal Healthcare Systems Pvt. Ltd. & Ors.

Dated: 23.12.2022

Counsel for the Petitioner: Mr. S.N. Mukherjee, Sr. Adv. Mr. Ratnanko Banerjee, Sr. Adv. Mr. Anand S. Pathak, Adv. Mr. Amit K. Mishra, Adv. Mr. Vijay Purohit, Adv. Mr. Shivam Pandey, Adv. Mr. Anujit Mookherji, Adv. Mr. Anirudhya Dutta, Adv. Ms. Didon Misri, Adv. Ms. Shyra Hoon, Adv.

Counsel for the Respondent: Mr. Jishnu Saha, Sr. Adv. Mr. Dipendra Nath Chander, Adv. . . .for the respondent no.1. Mr. Joy Saha, Sr. Adv. Mr. Debashri Karmakar, Adv. Mr. Ishan Saha, Adv. Mr. Satyam Ojha, Adv

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Citation: 2023 LiveLaw (Cal) 2