The Viewpoint: International Anti-Suit Injunctions – Personal Amenability of Foreigners in India

The Viewpoint Bar and Bench, Bar & Bench

Introduction

When a Court restrains a party to a suit or proceeding before it from instituting or prosecuting a case in another Court including a foreign Court, it is known as an anti-suit injunction. Anti-suit injunction is specie of injunctions and is governed by the principles governing grant of injunction, an equitable relief, by a Court. Of the various forms of provisional relief in the context of international litigation, none has sparked as much interest and controversy as the international anti-suit injunction.[1] It is a common ground that the Courts in India have power to issue an anti-suit injunction to a party over whom it has personal jurisdiction, in an appropriate case. It follows that, Courts of equity, exercise jurisdiction in personam. However, having regard to the rule of comity, this power would be exercised sparingly because such injunction though directed against a person, in effect causes interference in the exercise of jurisdiction by another Court. In this respect, this article seeks to address (1) the need for and content of the threshold requirements that a party seeking an anti-suit injunction must meet and (2) the personal amenability of foreign entities and/or persons before the Indian Courts with the existence of a non-exclusive jurisdiction clause in the contract.

International Anti-Suit Injunctions: meeting thresholds

Under the Civil Procedure Code, 1908 (“CPC”), one or more Courts have jurisdiction to deal with a subject matter having regard to the location of immovable property, place of residence or work of a defendant or place where cause of action has arisen.

However, the Supreme Court of India in Modi Entertainment Network v WSG Cricket Pte Ltd,[2] (“Modi Entertainment”) held that parties to a contract can agree to submit to the exclusive or non-exclusive jurisdiction of a foreign “neutral” Court and that such contracts are an exception to the well settled principle under Section 20 of the CPC. Further, the Hon’ble Court stated that in exercising discretion to grant an anti-suit injunction, the Court must be satisfied of the following aspects, (a) the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the Court; (b) if the injunction is declined, the ends of justice will be defeated and injustice will be perpetuated; and (c) the principle of comity- respect for the Court in which commencement or continuance of action or proceeding is sought to be restrained- must be borne in mind.

Although the test for issuance of an anti-suit injunction to a person amenable to the jurisdiction of the Court in person has been varying, it follows that, the underlying principle is that jurisdiction is exercised over the defendant “where it is appropriate to avoid injustice”[3] or where the foreign proceedings are “contrary to equity and good conscience”.[4]

Personal jurisdiction is the power which a court has over a person as opposed to jurisdiction over property, etc. In this behalf, reference can be made to Blacks Law Dictionary[5], which defines the expressions ‘personal jurisdiction’ and ‘in personam’ as under:

“Court’s power to bring a person into its adjudicative process; jurisdiction over defendant’s personal rights, rather than merely over property rights”

In other words, power which a court has over the defendant himself in contrast to the courts power over the defendants interest in property (quasi in rem) or power over the property itself (in rem); the power of the court to require a party (usually the defendant) or a witness to come before the court. Tests usually applied by American Courts for the exercise of personal jurisdiction over non-resident defendants are:

(a) existence of sufficient minimum contacts with the forum state; (b) claim asserted must arise out of the contact; (c) exercise of jurisdiction must be reasonable; (d) the non-resident defendant must do some act or consummate some transaction within the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections; (e) the claim must be one which arises out of or results from the defendants forum-related activities; and (f) exercise of jurisdiction must be reasonable.[6]

In GTE Media Services Incorporated v. Bell South Corporation et al.[7] , the US Court of Appeals, District of Columbia Circuit observed that, to establish personal jurisdiction over a non-resident, a court must engage in a two part inquiry; (a) the court must first examine whether jurisdiction is applicable under a states ‘long arm’ statute; and (b) then determine whether a finding of jurisdiction satisfies the constitutional requirement of due process. The Court held that that personal jurisdiction over non-residents in the District of Columbia could not be based solely on the ability of District residents to access the defendants’ websites as this would not by itself show any persistent course of conduct by the defendants in the District within the meaning of the Sub-section of the District Long Arm statute pertaining to causing tortuous injury in the District. It was observed that the plaintiff must show sufficient minimum contacts between the defendant and the forum establishing that the maintenance of the suit does not offend the notions of fair play and justice.

Insofar as the personal jurisdiction of the courts in India is concerned, the same can be found in Section 20 of Code of Civil Procedure, 1908. Under the said provision, courts could exercise jurisdiction over a Defendant when, (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided that, in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. It can be seen that personal jurisdiction of Courts in India, over a defendant, for the purposes of granting anti-suit injunctions, is restricted to  (a) and (b) above. As cause of action for filling an anti-suit inunctions, would naturally be, proceedings initiated against a party seeking anti-suit injunctions from Indian Courts. It is a well settled proposition under the Indian law that cause of action is bundle of facts, which a plaintiff must prove, if traversed, will entitle him to judgement in his favour. In other words, the cause of action is a summation of all facts which are necessary to determine lis between parties. It is therefore clear that for the purpose of deciding whether a defendant in an anti-suit injunction is personally amenable to jurisdiction of an Indian Court, such defendant either has to actually and voluntarily reside within the territorial jurisdiction of the court (or must have an office/ place of business in case of companies) Or carry on business, or personally work for gain within the territorial jurisdiction of such court.

However, merely because a defendant in an anti-suit injunction is personally amenable to jurisdiction of a court, that by itself may not be sufficient to grant anti-suit injunctions. There are other factors viz., courts conferred with exclusive jurisdiction or forum non conveniens.

Non- exclusive jurisdiction clauses and international anti-suit injunctions

Exclusive jurisdiction is conferred, where only one Court has jurisdiction. In the event that more Courts than one have jurisdiction over a subject matter, they are formally known as Courts of available or natural jurisdiction. It is a matter of practice where parties to a contract agree beforehand to approach either of the available Courts of natural jurisdiction thereby creating an exclusive or non- exclusive jurisdiction. Thus, parties to a contract may agree to have their disputes resolved by a foreign Court termed as a “neutral Court” or “Court of choice” thereby creating exclusive or non-exclusive jurisdiction in it. Non-exclusive jurisdiction clauses expressly provide for disputes to be heard in the Courts of a particular jurisdiction but without prejudice to the right of one or other of the parties to take a dispute to the Courts of any other jurisdiction if appropriate. Normally, the Court will give effect to the intention of the parties as expressed in the agreement entered into by them except when strong reasons justify disregard of the contractual obligations of the parties. Whilst a non-exclusive jurisdiction clause permits concurrent jurisdiction of two or more Courts, it is pertinent to note that such jurisdiction is exercised in personam and the Court must have personal jurisdiction over the defendant. Thus, it must be possible to serve process upon the party against whom the order is sought.[8]

In the exercise of judicial discretion, it shall be presumed that the parties have thought over their convenience and all other relevant factors where parties have agreed under a non-exclusive jurisdiction clause, to approach a neutral foreign forum and be governed by the law applicable to it for the resolution of their disputes under the contract. On the other hand, a party to the contract containing exclusive jurisdiction clause cannot normally be prevented from approaching the Court of choice of the parties as it would amount to aiding in breach of the contract. The burden of establishing that the forum of choice is a forum non-conveniens is on the party to contending to aver and prove the same.

In this respect, the Delhi High Court, in Piramal Healthcare v DiaSorin SpA,[9] held that since the parties have agreed to submit to the non-exclusive jurisdiction of the English Courts, such jurisdiction clause indicates the intention of the parties as evidenced by their contract must be given effect to. Therefore, since the parties had agreed to resolve their disputes arising under the agreement, it evidences that they had forseen possible breach of agreement by any of the parties and provided for the resolution of the disputes which might arise therefrom. Further, the foreseeability test cannot be extended to the manner of breach of the contract so as to turn the forum of choice into forum non-conveniens. The Delhi High Court pronounced that circumstances such as comparison of litigation expenses in England and in India or the hardship of taking the witnesses to the English Court, is insufficient to render a contractually agreed forum as a FNC as they were foreseeable at the time of entering into the contract.

In the case of Spiliada Maritime Corporation v Cansulex Ltd[10], the House of Lords discussed the principles applicable in injunction cases as equivalent to those in forum non conveniens cases, for the purpose of ordering stay of the suit before a foreign Court. The Court would examine that forum with which the action had the most real and substantial connection in terms of convenience or expense, availability of witnesses, the law governing the relevant transaction and the places where the parties resided or carried on business. In a similar light, the Supreme Court in Enercon (India) Ltd and Ors v Enercon Gmbh and Anr,[11] examined the criteria laid down in Modi Entertainment (supra) and held that once the seat has been established, it is the Court in the forum of the seat that would exercise exclusive jurisdiction.  Further, in Oil and Natural Gas Commission v Western Co of North America,[12] the Supreme Court held that when it was necessary or expedient to do so or when the ends of justice so required, the Courts had undoubted jurisdiction to grant an anti-suit injunction and that it would be unfair to refuse the restraint order as the action in the foreign Court would be oppressive in the facts and circumstances of the case. Therefore, if a prima facie case of oppression or vexation has been made out by the applicant, the respondent will be entitled to show why it would nevertheless be unjust for an injunction to be granted: the interests of both the parties must be borne in mind.

Thus, as per Modi Entertainment, a contractually agreed Court can be declared as forum non conveniens only in exceptional circumstances though an anti-suit injunction by the Court of natural jurisdiction. This anti-suit injunction can be granted by the court to prevent injustice if the scenario is such that it permits a contracting party to be relieved of the burden of the contract. The exceptions include events since the date of the contract which have made it impossible for the party seeking injunction to litigate the case because the essence of the jurisdiction of the contractually chosen court no longer exists, or due to force majeure.

Concluding remarks

Anti-suit injunctions are important remedies in private international law, however there is still much to rationalize in the parameters for invoking the anti- suit injunction remedy. There have been instances where in order to defeat the jurisdiction of a natural court, or court conferred with exclusive jurisdiction, proceedings are instituted before forums which either have no jurisdiction to decide claims or are not even remotely connected with the claims. In such cases, parties are required to seek anti-suit injunctions and litigate on jurisdictional and procedural aspects rather than resolving the disputes on its own merits. It is therefore incumbent that an effort to control modern day international litigation and multiplicity of suits must be undertaken. The Courts have laid down a set of rules for granting anti-suit injunctions, which are now more or less established. On the other hand, rules however comprehensive, may not be able to anticipate the plethora of scenarios that may arise thereby necessitating a degree of judicial discretion. In such cases it would be advisable to for parties entering into commercial transactions, to clearly define the jurisdictions of the courts and laws applicable, beforehand.

Sachin Mandlik is a Partner and Pranav Sampat and Sanjna Pramod are Associates at Khaitan & Co.


[1] George A. Bermann, The Use of Anti-Suit Injunctions in International Litigation, 28 COLUM. J. TRANSNATíL L. 589 (1990)

[2] 2003 AIR SCW 733

[3] Castanho v Brown & Root (UK) Ltd [1981] AC 58, 81

[4] Carron Iron Co v Maclaren, (1885) 5 HLC 416

[5] Blacks Law Dictionary, (10th Ed.), page 982

[6] In Cybersell Inc v. Cybersell Inc and Ors. Case No. 96-17087 D.C. No. CV-96-0089-EHC

[7] 199 F. 3d 1343

[8] Dicey, Morris and Collins, Conflict of Laws, (15th Edition), Volume I, p 585

[9] 172 (2010) DLT 131

[10] Spiliada Maritime Corporation v Cansulex Ltd (1986) 3 All ER 843

[11] Civil Appeal No. 2086 of 2014 dated 14 February 2014

[12] (1987) 1 SCC 496