- (1.) This suit has been filed by the plaintiff/petitioner, Balasore Alloys Limited (hereinafter referred to as "Balasore") against the defendant/respondent, Medima LLC (hereinafter referred to as "Medima"), primarily seeking an anti- arbitration injunction, restraining the respondent from going forward with its intent to arbitrate in the dispute that has arisen between them, before the International Chamber of Commerce (hereinafter referred to as "ICC") in London, United Kingdom.
(2.) The facts of the lis between the two parties is circumscribed within the following compass: a) Balasore is a public limited company, registered under the Companies Act , 2013 with its corporate office at 71, Park Street, Park Plaza, First Floor, Kolkata - 700 016. Balasore is engaged in the commercial activity of manufacturing as well as exporting ferro-alloys. Balasore has an established factory focused on the manufacturing of the said products located in Balgopalpur, Odisha since 1984 wherein Balasore sources its chrome ore from mines located in the Sukinda Valley of Odisha. b) Medima, on the other hand, is a limited liability company incorporated as per the laws of New York in the United States of America, with its registered office at 5727, Strickler Road, Clarence, New York, USA. Medima is engaged in the business of trading of ferro-chrome in the USA and Canada. c) In the year 2017, both the plaintiff and the respondent entered into an arrangement whereby high carbon ferro chrome (hereinafter referred to as the "said goods") manufactured by Balasore would be sold and distributed exclusively by Medima in the territories of Canada and USA. As per the terms of this exclusive arrangement, the plaintiff exported the said goods to the respondent which in turn, re-sold the said goods to the end customers in the above territories. d) At the very onset, the inter-se arrangement between both the parties was such that their acts were governed by an agreement dated June 19, 2017 (hereinafter referred to as "the 2017 Agreement") wherein a certain tonnage of the said goods was to be exported by the plaintiff and thereafter sold by the respondent in the above quoted territories during the period of June and July, 2017. Clause 14 titled "Miscellaneous" of this agreement under provided for the following: "14. MISCELLANEOUS a) This and the formal agency agreement to be executed in furtherance hereof, shall be governed by the laws of India. b) In the unlikely event of a dispute arising out of this or the agency agreement to the executed in furtherance hereof, the same shall be in the initial stage be attempted to be amicable resolved by the parties within a reasonable time, failing which the same shall be referred to the settlement through arbitration in accordance with the applicable arbitration laws of India. The venue of arbitration shall be a suitable location in India where the proceedings shall be conducted in English in accordance with applicable Indian law(s)." e) The 2017 Agreement provided for a dispute resolution mechanism wherein Indian arbitration was to be preferred with its seat of arbitration to be in India. Pursuant to this Agreement, certain purchase orders were issued by the respondent, to the plaintiff, which contained identical arbitration agreements to the one stated in the 2017 Agreement. However, as stated in clause 14 quoted above, the parties subsequently executed another agreement on March 31, 2018; the plaintiff has referred to the same as the "Pricing Agreement" while the respondent has referred to it as the "Long Term Agreement". But based on the recital noted under clause 29(b) of this agreement, I shall refer to it as the "2018 Agency Agreement". A point of active consideration apropos of this 2018 Agency Agreement is the fact that the term of this 2018 Agency Agreement was retroactively extended to be operative with effect from March 31, 2017 and is to continue till March 31, 2021, that is for a period of four years. f) At a brief glance, it is crystal clear that the scope of the 2018 Agency Agreement is that it is a detailed document governing and laying down the blueprint for all future transactions between the parties and while it would be operative on a retroactive basis, all individual shipments of the said goods, related to such subsequent cases of sale and purchase, between the plaintiff and respondent, would be governed by the 2018 Agency Agreement. g) However, clause 23 of this 2018 Agency Agreement introduced a sharp departure in relation to the applicable law and designated mode of a mutually acceptable dispute resolution mechanism between the two parties, in contradistinction to the 2017 Agreement and this clause is reproduced below: " 23. Governing Law; Disputes This Agreement shall be governed by and construed in accordance with the laws of the United Kingdom. Any claim, controversy or dispute arising out of or in connection with this Agreement or the performance hereof, after a thirty calendar day period to enable the parties to resolve such dispute in good faith, shall be submitted to arbitration conducted in the English language in the United Kingdom in accordance with the Rules of Arbitration of the International Chamber of Commerce by 3 (Three) arbitrators appointed in accordance with the said Rules, to be conducted in the English language in London in accordance with British Law. Judgment of the award may be entered and enforced in any court having jurisdiction over the party against whom enforcement is sought." h) When it comes to the purchase contracts executed between the plaintiff and the respondent, there are three modes of payments which divides these orders into three distinct classes as stated below: a) The first category1 of purchase contracts executed from September 6, 2017 to January 8, 2018 provide under 'Payment' for the final payment to be settled on monthly basis after sales to end customers and was quoted as such: "80% of the provisional invoice against cash against documents and balance payment and balance payment to be settled on monthly basis after sale to end customer." b) The second category2 of these purchase contracts executed from February 12, 2018 to May 10, 2018 under 'Payment' provided for final settlement after sale to end customers to be as per the 2018 Agency Agreement and was quoted as such: "90% provisional payment against CAD and final settlement after sale to end customers as per agency agreement/contract." c) The third category3 of these purchase contracts executed after March 31, 2018, that is, post the coming into effect of the 2018 Agency Agreement which provided for the final settlement mechanism between the parties to be as per the 2018 Agency Agreement, and reads as such: 1 First category of these contracts is appended from page no. 52 to page no. 80 of the original petition, filed by the plaintiff, Balasore. 2 Second category of these contracts is appended from page no. 84 to page no. 144 of the original petition, filed by the plaintiff, Balasore. 3 Third category of these contracts is appended from page no. 148 to page no. 192 of the original petition, filed by the plaintiff, Balasore. "However, final pricing/settlement will be as per the exclusive off take Agreement dated 31.03.2018." The parties agree that the reference to the 'exclusive off take Agreement' means a reference to the 2018 Agency Agreement. i) The purchase orders also contained certain terms and conditions. The plaintiff has relied on clauses 7, 8 and 9 that are reproduced hereinbelow: "7. ARBITRATION: Disputes and differences arising out of or in connection with or relating to the interpretation of this contract/order shall be referred to the Arbitral Tribunal consisting of 3 Arbitrators of which each party shall appoint one Arbitrator, and the two appointed Arbitrators shall appoint the third Arbitrator who shall act as the Presiding Arbitrator as per the provisions of the Arbitration and Conciliation Act , 1996 and any modification or re-enactment thereto. The venue of the arbitration proceedings shall be at Kolkata and language of the arbitration shall be English. The arbitration award shall be final and binding upon the parties and the parties agree to be bound thereby and to act accordingly. When any dispute has been referred to arbitration, except for the matters in dispute, the parties shall continue to exercise their remaining respective rights and fulfil their remaining respective obligations. 8. GOVERNING LAWS and JURISDICTION: The contract shall be governed by, and construed in accordance with, the laws of India and the courts at Kolkata, West Bengal alone shall have exclusive jurisdiction over all disputes arising under, pursuant to and/or in connection with the contract/order. 9. EXECUTION OF AGREEMENT: Each of the parties to this agreement represents that it has full legal authority to execute this agreement and that each party shall be bound by the terms and conditions contained in the agreement. Notwithstanding anything contrary in any other previous documents/correspondence, the provisions of this agreement shall prevail." j) While independent purchase contracts executed thereafter persisted with the Indian arbitration law and its primacy in clauses 7, 8 and 9 of such contracts, clause 23 of the 2018 Agency Agreement clearly is a departure. k) With the brooding threat of a dispute between the plaintiff and respondent being apparent, a "Notice of Dispute" dated March 13, 2020 was issued by the attorneys of Medima to Balasore invoking the above quoted clause 23 of the 2018 Agency Agreement, placing on record that Medima was owed USD 2.6 million by Balasore as of January 31, 2020 with the hopes of amicably resolving the dispute within the mandated thirty (30) day period, failing which Medima would be compelled to push for the dispute to be resolved by arbitration before the ICC in London. l) In response to this notice of dispute, Balasore vide a reply dated April 13, 2020 alleged that this dispute pertains to the independent purchase contracts and would therefore be governed by the Indian arbitration (clauses 7, 8 and 9) as contained therein and not the 2018 Agency Agreement; based on the same, Balasore informed Medima of its intent to invoke these Indian arbitration clauses under the Indian Arbitration and Conciliation Act , 1996 (hereinafter referred to as Arbitration Act of 1996). The attorneys for Medima responded on April 15, 2020 which espoused the reason for relying on the 2018 Agency Agreement stating therein that the Agency Agreement "controlled" aspects pertaining to the final price settlement mechanism, and therefore, clause 23 would be operative as the pertinent dispute resolution mechanism. m) The plaintiff thereafter initiated arbitral proceedings in terms of Section 21 of the Arbitration Act, 1996, which the plaintiff contends was before the initiation of proceedings before the ICC by the respondent and an application was filed before the Supreme Court under sub-section (6) to Section 11 of the Arbitration Act of 1996 as a legal recourse for taking appropriate measures in constituting an arbitral tribunal under the domestic arbitration agreements. n) With the expiry of the mandated 30 day period on April 13, 2020 and the dispute still simmering, and having furnished their response by April 15, 2020, Medima filed a "Request for Arbitration" (hereinafter referred to as "RFA") before the ICC in London on April 22, 2020 by invoking clause 23 of the 2018 Agency Agreement. In furtherance of such filing of the RFA, the ICC issued a communication to Balasore, whereby it was informed of the RFA filed by Medima and urged Balasore to nominate their arbitrator and to file its written response to the RFA within a period of 30 days. o) While communications were exchanged between the plaintiff and respondent on the more appropriate mode of triggering the dispute resolution mechanism, the ICC by its communication dated June 5, 2020 informed both parties that no response to the RFA had been received by its Secretariat within the specified time period. By a communication dated June 12, 2020 to the ICC Secretariat, the counsel for the plaintiff raised objections to the existence as well as the validity of the arbitration clause in the 2018 Agency Agreement, and urged the Secretariat to place this matter before the ICC Court to decide upon this preliminary issue before constitution of an arbitral tribunal. But the plaintiff also, at the same time recorded, that if such reference was not made to the ICC Court, then the plaintiff would reserve its right to press the objections directly before the arbitral tribunal once so constituted. The counsel for the plaintiff also requested that the arbitral tribunal be composed of a sole arbitrator instead of a panel of three arbitrators. p) By a communication dated June 16, 2020, the ICC informed Balasore that the requests made by them had not been referred to the ICC Court and would be decided by the arbitral tribunal once so constituted. While Medima vide its communication to the ICC dated June 17, 2020 reiterated the primacy of the 2018 Agency Agreement, by its communication dated June 20, 2020, they flatly rejected the plaintiff's plea for a sole arbitrator and pushed for a tribunal to be constituted comprising of a panel of three arbitrators. Pursuant to such communication, the ICC vide a communication dated June 22, 2020 confirmed that the arbitral tribunal would be constituted comprising a panel of three arbitrators. As a result of such communication from the ICC, Balasore has filed the present suit and the interlocutory application seeking the prayer for issue of an injunction against the aforesaid ICC arbitration proceedings.
(3.) Interestingly, given that a dispute has now arisen between the parties inter se, evident from the "Notice of Dispute" that was initially issued by the attorney for Medima to Balasore on March 13, 2020, a dichotomy of approach in resorting to arbitration has now appeared! While the plaintiff seeks to rely on the domestic or Indian arbitration clauses to seek a domestic arbitration and therefore, collaterally seeks the remedy of issuance of an anti-arbitration injunction against the ICC arbitration through this suit, Medima argues that it is the ICC arbitration under clause 23 of the 2018 Agency Agreement that has to be accorded primacy and this court therefore, does not have the power to issue an anti-arbitration injunction to restrain the concerted legal efforts of Medima. In my opinion, based on the trailing narration of oscillating events, I need to deal primarily, with two questions of critical importance: I. Does this court have the power and jurisdiction to grant an anti- arbitration injunction against a foreign seated arbitration, and if so, under what circumstances can it be so granted? II. If the answer to the above question is in the affirmative, do the facts and circumstances in the present case warrant the grant of such an ad interim injunction? ;