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Indian court orders stay of foreign arbitration in Sony TV-BCCI facilitation fees case

Luthra & Luthra Vijay Sondhi
Luthra & Luthra Vijay Sondhi
Luthra & Luthra has won an anti-arbitration injunction for Sony-owned Multi Screen Media Satellite (MSMS) against former Indian Premier League (IPL) sports marketing company World Sports Group (WSG) restraining it from invoking or continuing with any international arbitration.

The decision follows an earlier suit filed by MSM for the protection of its broadcasting rights and recovery of Rs 147 crore facilitation fees.

A Bombay High Court order dated 17 September was passed by the division bench comprising chief justice Mohit M Shah and justice S C Dharmadhikari in favour of Luthra clients MSM after a single judge of the same court declined to grant relief in a WSG initiated arbitration proceeding before a Singapore tribunal.

“This is probably the only reported instance of an international commercial arbitration involving two foreign parties being stayed by Indian Courts and is bound to serve as a precedent for more such judgments by Indian Courts in future,” said Luthra & Luthra in an analysis of the case.

MSMS was ordered by the court to deposit a sum of Rs 300 crores with the court within six weeks as surety for the outcome of the suit.

Luthra team consisted of senior partner Vijay Sondhi (pictured), partner Sanjay Kumar along with senior associates Ashish Prasad and Anirban Bhattacharya while senior advocate Dushyant Dave led the arguments in the second appeal.

WSG was represented by Mumbai law firm Legasis Partners which instructed senior advocates Abhishek Manu Singhvi and Aspi Chinoy for arguments.

MSMS rescinded the facilitation deed contained in the media rights licensee and sued WSGI and BCCI on 25 June for the recovery of an alleged fraudulent payment soon after the ouster of former IPL chairman Lalit Modi and subsequent enquiries which brought to the fore certain grave irregularities.

Thereafter, WSGI moved an arbitration tribunal at Singapore for setting aside the recession and for upholding the facilitation deed upon which first appeal was preferred in the Bombay High Court by MSMS.

The single judge’s refusal to stay the Singapore arbitration led to a second appeal before the division bench which resulted in this anti-arbitration injunction.


Dave relied particularly on the textbook Russel on Arbitration which was cited in the judgment (page 23) and stated: “Injunctions to restrain arbitrations are, at least in England, few and far between and becoming fewer still over time. This is principally because of the acceptance of the principle that the arbitrator should usually determine his own jurisdiction and so to restrain an arbitration by way of injunction would be inconsistent with the scheme of the Arbitration Act 1996. However, there are exceptional circumstances where an injunction to restrain an arbitration may be obtained.” (emphasis added by the court).

Citing Russel, the court said such an exceptional case was "where one party commences an action before the court [and] successfully opposes a stay (whether under s.9 or the court’s inherent jurisdiction) on the ground that the arbitration agreement is invalid and the arbitral proceedings based on the invalid agreement continue in defiance of the court’s findings. This case is also likely to cover situations where the court has decided that it, rather than the arbitrators, must decide an issue as to the jurisdiction of the arbitrators upon a s.9 stay application having been made and where there is a risk that the arbitrators might proceed to consider the same jurisdictional issue pending the court’s decision".

The court agreed that this case was one of those very rare cases and on page 59 it held: “In view of the above discussion, we are inclined to grant an injunction to restrain the respondent-Mauritius company from proceeding with the arbitral proceedings initiated by the respondent before the International Chamber of Commerce on 28th June, 2010 after the plaintiff filed Suit (Lodging) No.1901 of 2010 against World Sport Group (India), the respondent- Mauritius company and BCCI. Even so, having regard to the fact that injunction is an equitable remedy and that the legislative scheme of minimal judicial intervention is in order to ensure that the party not agreeable to go for arbitration does not succeed in avoiding or delaying discharge of its liability by taking recourse to judicial proceedings for restraining arbitral proceedings, we consider it appropriate to impose a condition that the appellant-plaintiff MSM Satellite [shall deposit a sum of Rs 300 crores before the court].”

Download the 17 September 2010 judgement in MSM vs WSGM here.

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