The Delhi High Court recently ruled that an anti-arbitration injunction cannot be given by courts in cases covered under Part II of the Arbitration and Conciliation Act unless it is incapable of being performed or inoperative.
Part II of the Act deals with enforcement of foreign awards, and Part I primarily deals with domestic arbitrations.
The Court further clarified that even in respect of Part I only cases where the court is of the opinion that prima facie no valid arbitration agreement exists, can an injunction be given. In all other cases it is mandated upon the court to refer the matter to the arbitration.
The Court said “the rule is for a reference to arbitration under Section 45 unless the court comes to the clear conclusion that the arbitration agreement is null and void, inoperative or incapable of being performed. This principle would also apply in the case of a party seeking an anti-arbitration injunction in respect of an agreement under the New York Convention. In other words, unless and until a party seeking an anti-arbitration injunction can demonstrably show that the arbitration agreement is null and void, inoperative or incapable of being performed, no such relief can be granted in the suit or as an interim measure therein.”