Anti-Arbitration Commercial Suit for permanent injunction

On 31.8.2023, the respondent no.2 ICA directed the parties to nominate their co-arbitrators since the respondent no.1 invoked the arbitration clause in their agreement dated 18.12.2009.

The appellant filed commercial suit for permanent injunction against respondent no.1 from continuing to resolve its claims through arbitration before respondent no.2 International Court of Arbitration in International Chamber of Commerce

Respondent No.1 filed interlocutory application under Order VII Rule 11(d) of CPC for rejecting the plaint since efficacious remedy of section 16 is available and that the civil suit is not maintainable to question existence or validity of arbitration agreement.

HELD that anti-arbitration injunction militates against party autonomy.  A Court should be extremely circumspect in granting an anti-arbitration injunction and such an injunction should only be granted on the considered view that the proceedings initiated are vexatious or oppressive to the party resisting arbitration.

An injunction may also be granted where the authenticity of the very Arbitration Agreement has been questioned or the arbitration proceedings are found to be unconscionable.

Injunction would not be granted to nullify the exercise of jurisdiction by the forum chosen by the parties.

In essence, the threshold tests for an anti-arbitration injunction are exacting and are rarely entertained or applied by the Courts, given the all-pervasive remedy under Section 16 of the 1996 Act.

Judgment dated 27.2.2025 of the Division Bench of the High Court of State of Telangana in Commercial Court Appeal (COMCA) No.3 of 2025 of M/s.