Holding that “brushing aside such a vital party and taking the matter out of the purview of the Indian courts would have serious consequences” Bombay High Court in MSM Satellite (Singapore) Pte Ltd v World Sport Group (Mauritius) Limited restrained World Sport Group (WSG) from continuing with arbitral proceedings it had filed in the International Chamber of Commerce (ICC) in Singapore. The “vital party” the court was referring to was the Board for Cricket Control of India (BCCI), which is the source of the media rights and contracts that MSM Satellite and WSG are disputing.
The court also held that there was “inter-connection and close proximity in the obligations of parties under the subject deed with their earlier dealings” and to allow arbitration would mean allowing one dispute to be settled outside India while others are being settled within the country. This could result in conflicting verdicts that could impact on applicability of Indian laws and so impact the judicial process in India.
This ruling pertains to the arbitration clause in a facilitiation deed entered into by MSM and WSG in March 2009, after the latter agreed to give up its media rights for the Indian subcontinent in favour of the former. Although MSM had agreed to pay WSG a facilitation fee of Rs4.25 billion (US$96 million), it paid Rs1.25 billion and then stopped when BCCI claimed these rights were with BCCI itself, as WSG failed to live up to its contract with BCCI.
While granting this injunction the court said it “would ordinarily not interfere with arbitration proceedings”, and that this was one of the “rarest of rare cases” where it would do so. Despite this it may deter foreign parties from resorting to arbitration with Indian entities, wherever there is scope for Indian courts to interfere.
The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at [email protected] or [email protected] Readers should not act on the basis of this information without seeking professional legal advice.