Sunday, September 19, 2010

Bombay High Court's anti-arbitration stance

A division bench of the Bombay High Court consisting of Chief Justice Mohit Shah and Justice S C Dharmadhikari, allowed an appeal from a single judge, Justice Roshan Dalvi and restrained the World Sport Group ["WSG"] from proceeding with arbitration against MSM Satellite (Singapore) Pte Ltd ["MSM"].

The original agreement between WSG and MSM stated that any dispute between the parties would be settled through arbitration in Singapore under the auspices of the International Chamber of Commerce (ICC), following English law.

MSM, the official broadcasters of the Indian Premier League ["IPL"] agreed to pay WSG Rs 425 crore for the IPL media rights in March, 2010 but later scrapped the agreement when the Board of Control for Cricket in India ["BCCI"] claimed that WSG did not possess those rights and they were with the BCCI itself. MSM had already paid Rs 125 crore to WSG and it thus filed a suit in the Bombay High Court to reclaim the money paid.

WSG preferred arbitration in Singapore, as per the agreement. Therefore, the single judge dismissed the petition by MSM and favoured arbitration. On appeal however, this decision was reversed and the afore-mentioned division bench restrained WSG from proceeding with arbitration. However, it also required MSM to deposit Rs 300 crore with the court registry within six weeks of the order, failing which the order would be revoked.

This decision goes against internationally accepted judicial standards favouring arbitration and would yet again deter foreign parties from resorting to arbitration with Indian entities, where scope for interference by Indian judicial authorities exists.

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