Courts can interfere in arbitration proceedings: CHC

The Calcutta High Court recently ruled that there is no blanket ban on courts to pass orders in arbitration proceedings in the interest of justice.

The High Court was dealing with the issue of granting injunction against an arbitration proceeding. Arbitration notice was issued by one party against several others under the guise of a Bilateral Treaty Agreement when already arbitration proceedings were undergoing between some of the parties.

The Court, after going through arguments about the extent of judicial interference in arbitration proceedings, said there was no blanket ban on courts to pass orders. The courts in the interests of justice could pass anti-arbitration injunctions under the following situations: –

1) If an issue is raised whether there is any valid arbitration agreement between the parties and the Court is of the view that no agreement exists between the parties.

2) If the arbitration agreement is null and void, inoperative or incapable of being performed.

3) Continuation of foreign arbitration proceeding might be oppressive or vexatious or unconscionable.

The Court further reiterated that even though arbitration tribunals could rule over their own jurisdiction, in cases where there is no valid arbitration agreement, courts can pass anti-arbitration injunction and there was no need to refer the matter to the arbitration tribunal for adjudication.

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