Anti-Suit Injunctions – The Blog of Daksh Pandit

An injunction is an order of court which may be in the nature of a preventive or a mandatory relief, directing the Defendant to either restrain from performing a certain act or compel the Defendant to perform a certain act so as to prevent an irreparable injury from being caused to the Plaintiff. In India, injunctions are governed by the Specific Relief Act, 1963, more particularly, by Chapter VII and VIII of the said Act. For a detailed discussion on the law on injunctions applicable in India, refer here. Anti Suit Injunction is a species of injunction and as the name indicates, is an order by a court injuncting a party to a suit/proceeding before it from instituting or prosecuting a case in another court including a foreign court¹. The principles governing grant of injunction are common to that of granting an anti-suit injunction² and therefore a party seeking an anti-suit injunction must satisfy the triple test³ that the courts apply before granting an order of injunction viz.-

A Prima Facie case, which necessitates that as per the material placed on record, the Plaintiff is likely to succeed in the final determination of the case.
Balance of convenience, such that the prejudice likely to be caused to the Plaintiff duet to rejection of the interim relief will be higher than the inconvenience that the Defendant may face if the relief is so granted; and
Irreparable injury, which means that if the relief is not granted, the Plaintiff will face irreversible injury that cannot be compensated in monetary terms.

Forms of Anti-Suit Injunctions

In Interdigital Technology Corporation and Ors. vs Xiaomi Corporation and Ors.⁴, the Delhi High Court observed that the an injunction of legal proceedings in a foreign court may take the following three forms viz.-

Anti-Suit Injunctions- In which the court injuncts the party from following the main suit, pending before the foreign court.
“Anti-anti-suit injunctions”- Where court injuncts the party from proceeding with the anti-suit injunction application filed before the foreign court to injunct the local proceedings.
Anti-enforcement injunctions- Where the court injuncts one of the parties before it from enforcing against the other, a decree or order passed by a foreign court.

The Court further delineated anti-enforcement injunctions in the following two categories viz.-

The first, where the order, the enforcement of which is sought to be injuncted, is an order in the main suit/complaint/other proceeding in the foreign court and,
The second, where injunction is sought of an anti-suit injunction order passed by the foreign court.

Comity of Courts

An Anti-Suit injunction cannot be obtained as a matter of right, more particularly, when the Plaintiff is seeking an injunction on proceedings between the same parties, in a foreign court which may be just as much equipped as the Indian Court to adjudicate upon the dispute between the parties. Hence, the principle of Comity of Courts i.e. respect for the court in which the commencement or continuance of action/proceedings is sought to be restrained-must be borne in mind. Bearing in mind this principle, the Supreme Court in Modi Entertainment Network & Anr. vs W.S.G. Cricket PTE. Ltd.⁵ observed that the power to grant an anti-suit injunction should be exercised sparingly because such an injunction though directed again a person, in effect causes interference in the exercise of jurisdiction by another court. However, this principle is subject to just exceptions and cannot be applied absolutely. The Delhi High Court in Interdigital (supra) observed that when an order passed by the court of one sovereign country without justification, entrenches on the lawful invocation of remedies known to law, by a litigant in another sovereign country, the court in the latter sovereign country is duty bound to protect such incursion on its jurisdiction, and on the fundamental right of its citizen to seek legal redress. No consideration of comity can militate against the grant of relief in such a case.

Principles of Anti Suit Injunctions

The Court has to bear various factors in mind before granting an anti-suit injunction, as this kind of injunction effectively brings proceedings pending in a foreign court to a grinding halt. The court is also circumspect of the jurisdictional clause in the contract by way of which the parties have conferred jurisdiction upon one particular court, whether exclusive or non-exclusive, to adjudicate the dispute arising out of contract. In presence of such a clause, can a party bring an action in another court in contravention of the jurisdiction clause and then seek an anti-suit injunction against the other party from bringing an action in the court of choice of the parties as per the clause? The Supreme Court in Modi Entertainment (supra) inter alia, laid down the general principles governing the anti-suit injunctions and also addressed the aforesaid issue as follows-

In exercising discretion to grant an anti-suit injunction the court must be satisfied of the following aspects-
1. The defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the court;
2. If the injunction is declined, the ends of justice will be defeated and injustice will be perpetuated; and
3. The principle of comity.
In a case where more forums than one are available, the court in exercise of its discretion to grant anti-suit injunction will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties and may grant anti-suit injunction in regard to proceedings which are oppressive or vexatious or in a forum non-conveniens.
Where jurisdiction of a court is invoked on the basis of jurisdiction clause in contract, the recitals therein in regard to exclusive or non-exclusive jurisdiction of the court of choice of the parties are not determinative but are relevant factors and when a question arises as to the nature of jurisdiction agreed to between the parties, the court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case.
A court of natural jurisdiction will not normally grant anti-suit injunction against a defendant before it where parties have agreed to submit to the exclusive jurisdiction of a court including a foreign court, a forum of their choice in regard to commencement or continuance of proceedings in court of choice, save in an exceptional case for good sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relieved of the burden of the contract or since the date of the contract the circumstances or subsequent events have made it impossible for the party seeking injunction to prosecute the case in the court of choice because the essence of the jurisdiction of the court does not exist or because of a vis major or force majeure and the like.
Where parties have agreed, under a non-exclusive jurisdiction g clause, to approach a neutral foreign forum and be governed by the law applicable to it for the resolution of their disputes arising under the contract, ordinarily no anti-suit injunction will be granted in regard to proceedings in such a forum conveniens and favoured forum as it shall be presumed that the parties have thought over their convenience and all other relevant factors before submitting to the non-exclusive jurisdiction of the court of their choice which cannot be treated just as an alternative forum.
A party to the contract containing jurisdiction clause cannot normally be prevented from approaching the court of choice of the parties as it would amount to aiding breach of the contract; yet when one of the parties to the jurisdiction clause approaches the court of choice in which exclusive or non-exclusive jurisdiction is created, the proceedings in that court cannot per se be treated as vexatious or oppressive nor can the court be said to be forum non-conveniens.
The burden of establishing that the forum of choice is a forum non-conveniens or the proceedings therein are oppressive or vexatious would be on the party so contending to aver and prove the same.

From the aforesaid principles succinctly culled out by the Supreme Court, the law that emerges is that the jurisdiction clause in the contract, whether exclusive or non-exclusive, will not operate as an absolute bar upon the parties to approach another forum. However, it will only serve as a relevant factor when the question arises as to the nature of jurisdiction, in which case the court will interpret the contract on the facts and circumstances of each case. In case of an exclusive jurisdiction clause conferring jurisdiction upon a particular court, the court will not grant an anti-suit injunction, injuncting the defendant from commencing or continuing its action in the forum created by exclusive jurisdiction clause unless “sufficient cause” is shown by the Plaintiff that it would lead to miscarriage of justice if injunction is not granted. Proceedings instituted in a forum of choice, created by jurisdiction clause whether exclusive or non-exclusive cannot per se be treated as vexatious or oppressive. However, a party can still anti suit injunction against the defendant from prosecuting in the forum of choice by establishing that proceedings in the choice of forum would be oppressive or vexatious. In which case the burden to prove so is on the Plaintiff.

The Delhi High Court in Interdigital (supra), after going through a conspectus of case laws on the subject from the Indian Courts, observed that although the Supreme Court has pronounced the circumstances in which anti-suit injunctions may be granted, however, there is still a grey area which needs to be addressed which gives room for play in view of the usage of the words “oppressive”, “vexatious” and “interests of justice”. The Delhi High Court also observed that there is no precedent in India throwing light upon anti-enforcement injunctions. Therefore, the Court laid down the following general principles relating to anti suit and anti-enforcement injunctions, emerging from “foreign jurisprudence” as follows-

An anti-suit injunction should be granted only in rare cases, and not for the mere asking. The Court should be mindful of the fact that even an injunction in personam interferes with the functioning of a sovereign forum, not subject to the writ of the court granting the injunction.
An ant-suit injunction could only be granted by a court possessing “sufficient interest” in the lis forming subject matter of the proceedings which it intends to injunct. In other words, qua the said lis, the court was required to be the natural forum.
The possibility of palpable and gross injustice, when injunction not granted, remains a definitive test. In doing justice in accordance with law, the court will try and preserve the subject matter of the lis so that the beneficiary of the final verdict can enjoy the fruits thereof.
Interference with the right to pursue one’s legal remedies, before the forum which is competent to adjudicate thereon, amounts to “oppression”, especially where there is no other forum which the litigant could approach.
In patent infringement matters, it is the right of the patent holder to choose the patents which it desires to enforce. The only practical relief available to an SEP holder is by way of ant- infringement action. The right to seek legal redressal against infringement, is a fundamental right. A proceeding or an order which results in divesting the patent holder of the authority to exercise this fundamental right, is ex facie oppressive in nature. Protection of the jurisdiction of the court is also a guiding factor.
Comity, as a concept, is grating to the ear, when it proceeds from a court of justice. Where the proceeding or order, of which injunction is sought, is oppressive to the applicant seeking injunction, comity is of relatively little importance, as a factor telling against the grant of injunction. Even if grant of injunction, in such circumstances, is likely to offend the foreign court, the consideration could not operate as a factor inhibiting against such grant. Considerations of comity are, moreover, subject to the condition that the foreign law, or the foreign proceedings or order was not offensive to domestic policy or customary international law. Comity, in any event is a two-way street.
Mere possibility of conflicting order being passed cannot be a ground for a court, in one sovereign country to injunct proceedings before the court in another, over which it has no dominion at all.
There is no reason to treat anti-enforcement injunction application as “exceptional”, to the extent that, even if grounds for grant of injunction are made out, the court would hesitate.

The court then laid down the following instances in which an anti-enforcement injunction would be justified-

Where the judgment of the execution of which injunction was sought, was obtained too quickly or too secretly to enable the applicant (seeking injunction) to take pre-emptive remedial measure, including by way of applying for anti-suit injunction while proceeding was pending.
Where the order of the execution of which injunction was sought was obtained fraudulently.
Where the applicant seeking anti-enforcement injunction had no means of knowing of the passing of the judgment or order against, until it was served on him.

Case Laws

Oil and Natural Gas vs Western Company of North America⁶

The jurisprudence on the subject by the Indian Courts emanates from this case. Shorn of unnecessary factual details, an award was passed by the Umpire under the Arbitration and Conciliation Act, 1940, in favour of the Respondent. Thereafter, the Respondent filed a Plaint in the US District Court inter alia seeking a confirmation of the Award passed by the Umpire and a judgment against the Appellant, ONGC, awarding the amount as stated in the Award passed by the Umpire. The Appellant, ONGC initiated proceedings before the High Court under Section 30 and 33 of the Arbitration Act, 1940, for setting aside of the Award rendered by the Umpire. It is pertinent to note that the arbitration clause in the contract categorically stated that the proceedings shall be in accordance with the provisions of the Arbitration Act, 1940. The ONGC also sought an anti-suit injunction which was granted by the High Court restraining the Respondent from proceeding with the action brought before the US District Court. However, the said injunction order was later vacated by the High Court resulting in Appeal before the Supreme Court.

The Supreme Court took the cognizance of the Arbitration Clause in the contract and observed that the only recourse available with the Respondent to enforce the Arbitral Award is by way of approaching “court” under the Arbitration Act, 1940 i.e. the Indian Court which will render a judgment and decree under Section 17 of the Act, and not by way of approaching the foreign court in contravention of the arbitration clause. Otherwise, it would give rise to an anomalous situation wherein the American Court will adjudicate the case and confirm the award, on the other hand the Indian court will find the award invalid and set aside the same. The court also observed that proceedings in the US court would also be prejudicial to the rights of the Appellant, ONGC as the American Court would take into account the American law and not the Indian Law or the Arbitration Act, 1940. Not only the matter will be decided by a court other than the court agreed upon between the parties, but it will be decided by a court under a law other than the law agreed upon which will put the Appellant in a “tight corner” and make the proceedings “oppressive” to the Appellant, ONGC. Therefore, the Supreme Court observed that there is good and sufficient reason to injunct the Respondent from continuing with the proceedings in the US Court.

Modi Entertainment Network & Anr. vs W.S.G. Cricket PTE. Ltd.⁷

The Appellants entered into an agreement with the Respondent who held exclusive right to grant commercial rights relating to broadcasting the cricket event organized by International Cricket Council in Kenya. Under the terms of the Agreement, the Appellants were required to pay a minimum guaranteed amount of USD 35 Lakhs to the Respondent. The Agreement also provided a non-exclusive jurisdiction clause which stated that the agreement shall be governed by the English Law and parties submit to the non-exclusive jurisdiction of the English Courts. Disputes arose between the parties, resulting in a notice issued by the Respondent to the Appellants to furnish minimum guaranteed amount of USD 35 Lakhs. Appellants, as a counterblast, filed a suit for damages before the Bombay High Court. On the other hand, the Respondent launched a separate proceeding before English Court i.e. the forum of choice between the parties. In response, the Appellant moved an Anti-Suit injunction application before the Bombay High Court seeking injunction on the proceedings launched by the Respondent in the English Court. The Single Judge of Bombay High Court allowed the application injuncting the proceedings before the English Court. However, in appeal before the Division Bench, the said order was set aside. The Appellant then challenged the Division’s Bench order before the Supreme Court on the premise that the proceedings before the English Court would be oppressive and vexatious thus warranting an anti-suit injunction.

The Supreme Court took cognizance of the non-exclusive jurisdiction clause in the agreement and culled out the principles as mentioned hereinabove and also stressed that it cannot be laid down as a general principle that once the parties have agreed to submit to the jurisdiction of a foreign court, the proceedings or the action brought either in the court of natural jurisdiction or court of choice will per se be oppressive and vexatious. It depends on the facts of each case and the question whether the proceedings in a court are vexatious or oppressive has to be decided on the basis of the material brought before the court. The Supreme Court, after perusing the material on record observed that proceedings in the English Court cannot be said to be vexatious or oppressive and since the parties themselves, by way of contract submitted to the jurisdiction of the English Court then unless good and sufficient reasons are shown, the intention of the parties as evidenced by their contract must be given effect to. Observing in above terms, the Supreme Court dismissed the Appeal.

Interdigital Technology Corporation and Ors. vs Xiaomi Corporation and Ors.⁸

The Plaintiff filed a Suit before the Delhi High Court alleging infringement by the Defendants of Standard Essential Patents (SEPs) held by the Plaintiff registered in their name. In order to use the Patents held by the Plaintiff, the Defendant was required to apply to the Plaintiff for grant of the license to use their Patent at rates which are fair, reasonable and non-discriminatory (FRAND). The Plaintiff, by way of the said suit sought for an injunction against the Defendants in the event the defendants are not willing to obtain license from the Plaintiff at FRAND royalty rates. Prior to the aforesaid suit filed by the Plaintiff, the Defendant had already filed a Complaint in the “Wuhan Court”, in China, seeking determination of a global FRAND royalty rate on the basis of which they could obtain license from the Plaintiff. However, as soon as the Delhi High Court issued notice on the Plaintiff’s Suit, the Defendants filed an anti-suit injunction application before the Wuhan Court for a restraint against the Plaintiff’s from prosecuting the suit filed before the Delhi High Court. The Wuhan Court inter alia allowed the application filed by the Defendants and injuncted the Plaintiff from continuing proceedings before the Delhi High Court and also imposed a fine of RMB 1 million yuan per day if the said order is violated by the Plaintiff. The Plaintiff, in response, filed an IA in the aforesaid suit before the Delhi High Court, seeking anti-enforcement injunction against the Defendants from enforcing the directions of the Wuhan Court.

The Delhi High Court discussed various authorities on the issue of anti-enforcement injunctions and culled out the principles as mentioned hereinabove. The Court firstly observed that the proceedings instituted in both the courts are fundamentally different. The action brought by the Plaintiff before the Delhi High Court is predicated upon perceived infringement of its Patents by the Defendants. While the proceedings initiated by the Defendants in the Wuhan Court is for determination of FRAND royalty rate at which they can obtain license from the Plaintiff. The court observed that the order of anti-suit injunction passed by the Wuhan court has effectively injucted the Plaintiff from prosecuting its suit and application for injunction, against infringement of the suit patents, which are amenable only to the jurisdiction of the Indian Court/Delhi High Court⁹. With due deference to the principle of comity, the court, however, observed that when a foreign court’s order impinges upon the invocation of legal remedy of a litigant in another country then the court in latter country is duty bound to protect such incursion on its jurisdiction and on fundamental right of its citizen to seek legal redress. In such a case no consideration of comity can militate against the grant of relief.

Observing in above terms, the Delhi High Court granted an anti-enforcement injunction against the Defendants from enforcing the Wuhan Court’s Order. Notably, this is the first time an Indian Court passed an anti-enforcement injunction order and laid down the jurisprudence on the grant of anti-enforcement injunctions after an in depth analysis of foreign judgements, since Indian judgments till now, had not dealt with the issue.

Honasa Consumer Ltd. vs RSM General Trading LLC¹⁰

The agreement between the parties contained an arbitration clause envisaging resolution of disputes arising out of the agreement by seeking recourse to arbitration governed by the Arbitration and Conciliation Act, 1996 and conferred exclusive jurisdiction upon the court at New Delhi. The Respondent however, filed a Suit in Dubai seeking damages and obtained a decree from the Dubai Court in his favour directing the Petitioner to pay an amount of AED 25,071,991/- in damages, equivalent to Rs 57,65,947/-. The Petitioner filed an Application under Section 9 of the Arbitration and Conciliation Act, 1996, before the Delhi High Court, seeking an anti-enforcement injunction against the Respondent from enforcing the decree of the Dubai Court.

The Delhi High Court observed that the Respondent acted in breach of the arbitration/jurisdiction clause by initiating proceedings in the Dubai Court which applied the Dubai law, according to which, it found the Petitioner guilty of breach of the agreement, entitling the Respondent to damages. The principle of comity of courts was pressed into service by the Respondent, however, the Delhi High Court repelled it by stating that the said principle has not application where a foreign court is manifestly acting in excess of jurisdiction. The court relied upon the earlier decisions explicating the law on anti-suit injunctions viz. Modi Entertainment and Interdigital (supra) and held that the proceedings instituted by the Respondent in the Dubai Court were ab initio, oppressive and vexatious of the rights of the Petitioner under the terms of the agreement between the parties. Therefore, the Delhi High Court granted an anti-enforcement injunction in favour of the Petitioner directing the Respondent to withdraw the execution proceedings instituted by it in the Dubai Court seeking execution of the Decree.

Coincidentally, this is the second anti-enforcement injunction order passed by an Indian Court (to the best of the knowledge of the Author) which is again authored by Justice C.Hari Shankar of Delhi High Court who previously passed the first anti-enforcement injunction order in Interdigital (supra).

Conclusion

Anti-Suit injunctions have the effect of halting the proceedings in a foreign court which may be just as equipped to adjudicate the dispute between the parties as the court granting the anti-suit injunction. Therefore, a party seeking an anti-suit injunction has to overcome a higher threshold to warrant an injunction in his favour by the court. In Modi Entertainment (supra), the Supreme Court has categorically stated that the power to grant anti-suit injunction must be exercised sparingly and not as a matter of routine. The Supreme Court in Dinesh Singh Thakur vs Sonal Thakur¹¹ observed similarly. The court, while exercising the power to grant an anti- suit injunction has to be circumspect of various factors viz. the jurisdiction clause, the intention of the parties and the possibility of proceedings in a foreign court being oppressive and vexatious The principle of comity of courts takes the center stage when a party seeks the extra ordinary relief of an anti-suit injunction. As much deference as the Indian courts have for the principle of comity, however, as held by the Delhi High Court in the cases of Interdigital and Honasa (supra), the principle of comity has no application when a foreign court is acting in excess of jurisdiction, especially when the judgment of a foreign court has the effect of impinging upon the legal right of the citizen to invoke his legal remedies in his home country. No consideration of comity can militate against the grant of relief in the nature of an anti-suit injunction, in such a case.

By Daksh Pandit