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Anti-arbitration Injunctions in Investor-State Arbitration: Instruments of “Abuse of Process”

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Handbook of International Investment Law and Policy

Abstract

A host State, depending upon the situation and circumstances, may approach the national court seeking anti-arbitration injunction either before the establishment of the arbitral tribunal or once the arbitration tribunal enters into reference. The reasons, often, cited for seeking an anti-arbitration injunction can vary from admissibility issue to jurisdictional objection to prohibition of abuse of process. Jurisprudence on this issue is limited; however, it allows an understanding that some domestic courts inherently retain the jurisdiction to restrict the initiation of international treaty arbitrations which are oppressive or vexatious or cause severe prejudice to the legal process. The decision of the Delhi High Court in the Vodafone case brings forth some pertinent questions about the law and interpretation of the competence principle and the role of domestic courts in enjoining international treaty arbitrations. Noting the uncertainty that could result from anti-arbitration injunctions for the foreign investor, this chapter attempts to understand the scope of the inherent jurisdiction located within the national law. It also analyzes and evaluates the rationale offered by the Vodafone court and examines whether anti-arbitration injunctions could possibly lead to abuse of process.

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Notes

  1. 1.

    Richard Garnett, ‘National Court Intervention in Arbitration as an Investment Treaty Claim’, (2011) 60 International and Comparative Law Quarterly 485, 488–490; see, Julian Lew, ‘Does National Court Involvement Undermine the International Arbitration Process?’, (2009) 24 American University International Law Review 489; see also, Sharad Bansal and Divyanshu Agarwal, ‘Are Anti-Arbitration Injunctions a Malaise? An Analysis in the Context of Indian Law’, (2015) 31Arbitration International 613, 618; see, SGS Société Générale de Surveillance SA (SGS) v Islamic Republic of Pakistan, Civil Appeal No. 459 & 460, Supreme Court of Pakistan (2002); Union of India v Vodafone Group Plc, United Kingdom & Anr, CS(OS) 383/2017 & I.A. No 9460/2017 (Delhi High Court, 7 May 2018); Union of India v Khaitan Holdings (Mauritius) limited & ors. CS (OS) 46/2019, I.As. 1235/2019 & 1238/2019 (Delhi High Court, 29 January 2019); see also, British Caribbean Bank Ltd. v The Government of Belize, Caribbean Court of Justice, 10 December 2013.

  2. 2.

    Julian Lew, supra note 1, 536–537; see also, S.I. Strong, ‘Anti-Arbitration Injunctions in Cases involving Investor-State Arbitration: British Caribbean Bank Ltd. V. The Government of Belize’, (2014) 15 Journal of World Investment and Trade 324.

  3. 3.

    Richard Garnett, supra note 1, 491 (2011); see also, Christoph Schreuer, ‘Interaction of International Tribunals and Domestic Courts in Investment Law’, in AW Rovine (ed.) Contemporary Inssues in International Arbitration and Mediation: The Fordham Papers (Brill, 2010) 71, 87.

  4. 4.

    See, for example, Saipem S.P.A v The People’s Republic of Bangladesh, ICSID Case No.ARB/05/07, Decision on Jurisdiction (2007); see also, Masour Fallah S., ‘Judicial Expropriations: Difficulties in Drawing the Line Between Adjudication and Expropriation’, in Chaisse J. Choukroune L., Jusoh S. (eds), Handbook of International Investment Law and Policy, (Springer, 2020) 11.

  5. 5.

    Article 26 of the ICSID Convention reads;

    ‘Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention.’; see also, Christoph Schreuer, supra note 3, 73–74, 76. Schreuer referred to the Helnan v Egypt, (Decision on Annulment, 14 June 2010, 9, 28-57) to reiterate that consent to investor-State arbitration allowed an understanding that exhaustion of local remedies may not be required. (Schreuer, at 73) Interestingly, Schreuer noted that the Romania – Sri Lanka BIT of 1981 included a provision related to exhaustion of local remedies. In Plama v Bulgaria (Decision on Jurisdiction, 8 February 2005, 13 ICSID Reports 272, para. 224) the exhaustion of local remedies clause in the Cyprus-Bulgaria BIT of 1987 was subjected to critique for its most likely effect being delay and additional cost. Two reasons that Schreuer identified as causing disenchantment with such provision are – the delay and expense to the investor because of the local proceedings, and the possible exacerbation of the dispute because of domestic public proceedings and its impact on the host State’s investment climate. Schreuer points out that Non-ICSID tribunals have also variously ruled against exhaustion of local remedies prior to instituting proceedings for international arbitration (CME v Czech Republic, Final Award, 14 March 2003, 9 ICSID Reports 264, para. 412; Yaung Chi Oo v Myanmar, Award, 31 March 2003, 42 ILM 540 (2003), para. 40; Nycomb v Latvia, Award, 16 December 2003, 11 ICSID Reports 158, sec. 2.4; Rosinvest v Russian Federation, Award on Jurisdiction, October 2007, para. 153). See, generally, C. Schreuer, ‘Calvo’s Grandchildren: The Return of Local Remedies in Investment Arbitration’, (2005) 4 The Law and Practice of International Courts and Tribunals 1, 3–5.

  6. 6.

    Julian Lew, supra note 1, 535; see also, see also, Christoph Schreuer, supra note 3, 92–93.

  7. 7.

    Gabrielle Kaufmann-Kohler, ‘How to Handle Parallel Proceedings: A Practical Approach to Issues such as Competence-Competence and Anti-Suit Injunctions’, (2008) 2(1) Dispute Resolution International 110, 111; see also, Julian Lew, supra note 1, 499.

  8. 8.

    Emmanuel Gaillard, ‘Abuse of Process in International Arbitration’, (2017) 32(1) ICSID Review 17, 32; see also, Sharad Bansal and Divyanshu Agarwal, supra note 1, 628.

  9. 9.

    See, Section 37 of the Supreme Court Act, 1981; see also, Hakeem Seriki, ‘Anti-Arbitration Injunctions and the English Courts: Judicial Intervention or Judicial Protection’ (2013) 16 International Arbitration Law Review 43; see, S.H. Sabbagh v W.S. Khoury & Others, [2018] EWHC 1330 (Comm), paras 17–18; Claxton Engineering Services Ltd v TXM Olaj-es Gazkutato KTF, [2011] EWHC 345 (Comm), paras 34 & 36; Elektrim SA v Vivendi Universal SA, [2007] EWHC 571 (Comm); Welex A.G. v Rosa Maritime Ltd, APP.L.R. 07/03 (2003), paras 34–40.

  10. 10.

    Jennifer Gorskie, ‘US Courts and Anti-Arbitration Injunction’, (2012) 28 Arbitration International 295, 307; see also, Satcom International Group PLC v Orbcomm International Partners, LP., 49 F Supp. 2d 331 (SDNY) 1999.

  11. 11.

    Societe Generale de Surveillance, SA, v Raytheon European Management and Systems Co 643 F.2d 863 (USCA, FC) 1981, para 13.

  12. 12.

    S.R. Subramaniun, ‘Anti-arbitration injunctions and their compatibility with the New York convention and the Indian law of arbitration: future directions for Indian law and policy’ (2018) 34 Arbitration International 185, 201–202; see, Sharad Bansal and Divyanshu Agarwal, supra note 1, 628; see also, Modi Entertainment Network v W.S. G. Cricket Pvt. Ltd., 4 SCC 341(2003); World Sport Group (Mauritius) v MSM Satellite Singapore, SC 968, AIR (2014); Union of India v Vodafone Group Plc United Kingdom & Anr, CS(OS) 383/2017 & I.A. No 9460/2017 (Delhi High Court, 7 May 2018); Union of India v Khaitan Holdings (Mauritius) limited & ors. CS (OS) 46/2019, I.As. 1235/2019 & 1238/2019 (Delhi High Court, 29 January 2019).

  13. 13.

    S.R. Subramaniam, supra note  12, 204.

  14. 14.

    In Re Cauvery Water Disputes Tribunal, AIR 1992, SC 522, [16].

  15. 15.

    Tractor Export, Moscow v M/S Tarapore & Co AIR 1971 SC 1. The Court had approvingly quoted the Halsbury’s Laws of England (Vol 21, Page 407) and stated that it possessed the power to restrain a person within its jurisdiction from instituting or prosecuting suits in a foreign court whenever the circumstances of the case make such an interposition necessary or proper. It may be noted that on this point, i.e. the power of the Indian court to order anti-arbitration injunctions, there is no much disagreement; see also, Sharad Bansal and Divyanshu Agarwal, supra note 1, at 626.

  16. 16.

    Gabrielle Kaufmann-Kohler, supra note 7, at 111; see also, Julian Lew, supra note 1. at 499.

  17. 17.

    Matthias Scherer and Werner Jahnel, ‘Anti-Suit and Anti-Arbitration Injunctions in International Arbitration: A Swiss Perspective’, (2009) 4 International Arbitration Law Review 66; see also, Air (PTY) Ltd. v International Air Transport Association (IATA) and CSA in Liquidation, Case No C/1043/2005-15SP, Republic and Canton of Geneva Judiciary, Court of First Instance (2005).

  18. 18.

    John Savage & Emmanuel Gaillard, Fouchard Gaillard and Goldman on International Arbitration (Kluwer Law International, 1997)1, 407; see also, French New Code of Civil Procedure, Article 1458 – If a dispute pending before an arbitral tribunal on the basis of an arbitration agreement is brought before a State court, it shall declare itself incompetent. If the dispute is not yet before an arbitral tribunal, the State court shall also declare itself incompetent, unless the arbitration agreement is manifestly null and void. In neither case may the State court declare itself incompetent at its own motion.

    Available at https://www.jus.uio.no/lm/france.arbitration.code.of.civil.procedure.1981/doc.html#51

  19. 19.

    see, for instance, Elektrim SA v Vivendi Universal SA, [2007] EWHC 571 (Comm) para 51; Republic of Kazakhstan (ROK) v Istil Group Inc. (Istil), [2007] EWHC 2729 (Comm); J. Jarvis & Sons Ltd. v Blue Circle Dartford Estates Ltd., 2007, [40]; Claxton Engineering Services Ltd v TXM Olaj-es Gazkutato KTF, [2011] EWHC 345 (Comm), [34] & [36].

  20. 20.

    Excalibur Ventures v Texas Keystone Inc. & Ors., [2011] EWHC 1624 (Comm).

  21. 21.

    ibid[54] – [56].

  22. 22.

    Compagnie Nouvelle France Navigation, S.A. v Compagnie Navale Afrique du Nord [1966] 1 Lloyd’s Rep. 477.

  23. 23.

    J. Jarvis & Sons Ltd. v Blue Circle Dartford Estates Ltd, [2007] EWHC 1262 (TCC).

  24. 24.

    Satcom International Group PLC v Orbcomm International Partners, LP., 49 F Supp. 2d 331 (SDNY) 1999; Republic of Ecuador v Chevron Corporation 638 F. 3d 384, Court of Appeals, 2nd Circuit CA (2011); Union of India v Vodafone Group Plc United Kingdom & Anr, CS(OS) 383/2017 & I.A. No 9460/2017 (Delhi High Court, 7 May 2018); Union of India v Khaitan Holdings (Mauritius) limited & ors. CS (OS) 46/2019, I.As. 1235/2019 & 1238/2019 (Delhi High Court, 29 January 2019).

  25. 25.

    Julian Lew, supra note 1, at 490.; see also, Winnie Ma, ‘Parallel Proceedings and International Commercial Arbitration: The International Law Association’s Recommendations for Arbitrators’, (2009) 2 Contemporary Asia Arbitration. Journal 42, 53.

  26. 26.

    Saipem v Bangaldesh, ICSID Case No. ARB/05/07, Award, 30 June 2009.

  27. 27.

    ibid [167].

  28. 28.

    ibid; see also, Richard Garnett, supra note 1, at 495; see, Masour Fallah S., ‘Judicial Expropriations: Difficulties in Drawing the Line Between Adjudication and Expropriation’, in Chaisse J. Choukroune L., Jusoh S. (eds), Handbook of International Investment Law and Policy, Springer, 2020) 10–12.

  29. 29.

    SGS v. Pakistan, ICSID Case No. ARB/01/13, Decision of the Tribunal on Objections to Jurisdiction, 6 August 2003; see also, SGS Société Générale de Surveillance SA (SGS) v. Islamic Republic of Pakistan, Civil Appeal No. 459 & 460, Supreme Court of Pakistan (2002).

  30. 30.

    Richard Garnett, supra note 1, at 492.

  31. 31.

    See, generally, Hakeem Seriki, Injunctive Relief and International Arbitration (CRC Press, 2014).

  32. 32.

    Jennifer Gorskie, supra note 10, at 295 (2012); see also, Gabrielle Kaufmann-Kohler, supra note 7, at 112.

  33. 33.

    Wasiq Abass Dar, ‘Abuse of Process’ and Anti-Arbitration Injunctions in Investor-State Arbitration: Analysis of Recent Trends and the Way Forward’, in Csongor István Nagy (ed.), Investment Arbitration and National Interest, (Council of International Law and Policy, Indianapolis, 2018) 53, 66–68.

  34. 34.

    Robert Kolb, ‘General Principles of Procedural Law’, in Andreas Zimmermann, The Statute of the International Court of Justice: A Commentary, (OUP, 2006) 1,831–832; see also, Eric De Brabandere, ‘Good Faith”, “Abuse of Process” and the Initiation of Investment Treaty Claims’, (2012) 3(3) Journal of International Dispute Settlement 609, 620; see, Djajić S., ‘Good Faith in International Investment Law and Policy’, in Chaisse J. Choukroune L., Jusoh S. (eds), Handbook of International Investment Law and Policy, (Springer, 2020) 22; see, Emmanuel Gaillard, supra note  8.

  35. 35.

    Yuval Shany, The Competing Jurisdictions of International Courts and Tribunals (OUP, 2003) 1, 257.

  36. 36.

    Michael Byers, ‘Abuse of Rights: An Old Principle, A New Age’, (2002) 47 McGill Law Journal 389, 441; Djajić S., ‘Good Faith in International Investment Law and Policy’, in Chaisse J. Choukroune L., Jusoh S. (eds), Handbook of International Investment Law and Policy, (Springer, 2020) 4,); see also, Abaclat and others v Republic of Argentina, ICSID Case No. ARB/07/5, Decision on Jurisdiction and Admissibility, 4 August 2011, paras 647-649; see, Phoenix Action Ltd. v Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009.

  37. 37.

    Eric De Brabandere, supra note 34, at 620.

  38. 38.

    Emmanuel Gaillard, supra note 8, at 2.

  39. 39.

    Yuval Shany, supra note 35, at 255; see also, Michael Byers, supra note 36, at 397; see, Robert Kolb, supra note 34, at 831–832

  40. 40.

    Toronto (City) v C.U.P.E., Local 7, [2003] 3 S.C.R. 77.

  41. 41.

    R v Scott [1990] 3 S.C.R. 979, p. 1007.

  42. 42.

    Rogers v The Queen [1994] HCA 42, see also, Australian Human Rights Commission, Federal Discrimination Law, 2016, at 332  https://humanrights.gov.au/our-work/legal/publications/federal-discrimination-law-2016#:~:text=Federal%20Discrimination%20Law%20is%20produced,the%20federal%20unlawful%20discrimination%20cases.&text=Federal%20Discrimination%20Law%202016%20has%20been%20updated%20to%2030%20June%202016

  43. 43.

    Attorney General v Baker [2000] The Times, 7 March 2000.

  44. 44.

    Kendra v Nazareth Hosp., 868 F. Supp. 733, 738 (E.D. Pa. 1994).

  45. 45.

    For discussion see, Hersch Lauterpacht, The Development of International Law by the International Court (CUP, 1982) 1, 164.

  46. 46.

    Emmanuel Gaillard, supra note 8, at 17.

  47. 47.

    Vaughan Lowe, ‘Overlapping Jurisdiction in International Tribunals’, (1999) 20 Australian Yearbook of International Law 191, 203; see also, Robert Kolb, supra note 34, at 831–832; Emmanuel Gaillard, supra note  8, at 17, 33.

  48. 48.

    Vaughan Lowe, supra note 47, at 202.

  49. 49.

    See, for instance, Equitorial Guinea v France (Immunities and Criminal Proceedings (Equatorial Guinea v. France),Preliminary Objections, Judgment,I.C.J. Reports 2018, p. 292, paras 139-152); see, also, John P. Gaffney, ‘Abuse of Process in Investment Treaty Arbitration’, (2010) 11 Journal of World Investment and Trade 515, 519.

  50. 50.

    See, for example, Phoenix Action Ltd. v Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009; Philip Morris Asia Limited (Hong Kong) v The Commonwealth of Australia, PCA Case No. 2012-12, Award on Jurisdiction and Admissibility (2015); Renee Rose Levy and Gremcitel SA v Republic of Peru, ICSID Case No. ARB/11/17, Award (2015); Rachel S. Grynberg and Others v Grenada, ICSID Case No. ARB/10/6 (2010).

  51. 51.

    Chiann Bao., ‘Arbitral Procedure: Case Management and Selecting the Place of Arbitration’, in Chaisse J. Choukroune L., Jusoh S. (eds), Handbook of International Investment Law and Policy, (Springer, 2020), 19.

  52. 52.

    Jennifer L. Gorskie, supra note  10, at 295, see also, Julian Lew, supra note 1. at 494 and 510.

  53. 53.

    Ting-Wei Chiang, ‘Anti-Arbitration Injunctions in Investment Arbitration: Lesson Learnt from the India v. Vodafone case’ (2014) 11(2) Contemporary Asia Arbitration Journal 251, 265.

  54. 54.

    New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 – Article II

    […]

    3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

  55. 55.

    Richard Garnett, supra note 1, at 493.

  56. 56.

    Union of India v Vodafone Group Plc, United Kingdom & Anr, CS(OS) 383/2017 & I.A. No 9460/2017 (Delhi High Court, 7 May 2018).

  57. 57.

    ibid [76].

  58. 58.

    ibid [77].

  59. 59.

    ibid [86].

  60. 60.

    ibid [86].

  61. 61.

    ibid [104].

  62. 62.

    ibid [105] – [110].

  63. 63.

    ibid [111].

  64. 64.

    Morgan Stanley Mutual Fund v Kartick Das [1994] 4 SCC 225; Gujarat Bottling Co. Ltd & Ors v The Coca Cola Co. & Ors [1995] 5 SCC 545.

  65. 65.

    Union of India v Vodafone Group Plc United Kingdom & Anr, supra note 56,[129].

  66. 66.

    ibid.

  67. 67.

    ibid.

  68. 68.

    ibid [132].

Author information

Authors and Affiliations

  1. Faculty of Legal Studies, South Asian University, New Delhi, India

    Sai Ramani Garimella

  2. Jindal Global Law School, O.P. Jindal Global University, Sonipat, India

    Wasiq Abass Dar

  3. Visiting Senior Research Associate, Research Centre on Private International Law in Emerging Countries, University of Johannesburg, Johannesburg, South Africa

    Sai Ramani Garimella

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  1. Sai Ramani Garimella
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  2. Wasiq Abass Dar
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Correspondence to Sai Ramani Garimella .

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Editors and Affiliations

  1. School of Law, City University of Hong Kong, Kowloon, Hong Kong

    Julien Chaisse

  2. School of Business and Law, University of Portsmouth, Portsmouth, UK

    Leïla Choukroune

  3. Institute of Malaysia and International Studies, National University of Malaysia, Bangi, Selangor, Malaysia

    Sufian Jusoh

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Garimella, S.R., Dar, W.A. (2021). Anti-arbitration Injunctions in Investor-State Arbitration: Instruments of “Abuse of Process”. In: Chaisse, J., Choukroune, L., Jusoh, S. (eds) Handbook of International Investment Law and Policy. Springer, Singapore. https://doi.org/10.1007/978-981-13-5744-2_25-1

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