[Media rights for IPL] Bombay High Court sets aside arbitral award which upheld BCCI's termination of broadcast rights

The Bombay High Court on Thursday set aside an arbitral award that upheld the cancellation of media rights by the Board of Control for Cricket in India (BCCI) to World Sport Group (India) for telecast of the Indian Premier League (IPL) outside the Indian subcontinent. [World Sport Group (India) Private Ltd v. Board of Control for Cricket in India (BCCI)].Factual matrix.The BCCI issued a tender in 2007 to license media rights for the IPL. WSGI won the bid and was awarded the global media rights of IPL for the period of 2008-17. Since WSGI was only a trader in media rights, it entered into pre-bid negotiations with Multi-Screen Media (MSM), which had a broadcasting network in India.During these negotiations, MSM, for its own commercial reasons, instead of entering into a sub-licensing agreement with WSGI, desired to enter into a direct Media Rights License Agreement [MRLA] with the BCCI for India rights till 2012. Another MRLA was executed between the BCCI and WSGI for India rights for a sum of $550 million and a ‘rest of world’ rights for $92 million till 2017.On March 14, 2009, the BCCI terminated the MRLA with MSM after which the India rights of IPL were reverted to the BCCI. However, since the first season of the IPL in 2008 was a resounding success, the BCCI wanted to re-auction/re-sell the India Rights for the IPL for the entire period of 2009-2017 for a higher license fee.In light of this, the BCCI at the outset entered into a Deed of Mutually Agreed Termination (DMAT) with WSGI in 2009. With this agreement, the composite MRLAs entered into by the BCCI with WSGI came to be terminated.Immediately following this, the BCCI entered into a fresh agreement with WSGM (affiliate of WSGI) for India rights that was transferred to MSM through a facilitation deed between MSM and WSGM. Another MRLA was executed between the BCCI and WSGI that restored global rights back to WSGI.The BCCI later alleged that all agreements of 2009, including the DMAT, formed part of a fraudulent composite transactions that gave them the right to terminate the second MRLA with WSGI. It alleged that all the aforesaid agreements were executed only for the purpose of diverting funds to WSGM, a sister concern with WSGI, which showed that both companies were complicit.The fraud alleged by the BCCI was that the monies under the facilitation deed were actually due to BCCI, and since the WSGI companies had indulged in fraud, BCCI was entitled to rescind the MRLA for RoW rights.The rescission was challenged by WSGI in arbitration. Out of the 3-members on the tribunal, 2 members upheld the decision of the BCCI to rescind the agreement. This majority award was challenged in the High Court.WSGI contended that by virtue of the agreements entered into in 2009, the BCCI benefited to the tune of approximately ₹1791 crore. Failing to consider this enormous benefit that inured to BCCI and the fact that BCCI retained the same, was a fundamental error on the part of the arbitral tribunal, WSGI submitted..High Court's observations.Justice BP Colabawalla accepted the submission and opined that the benefit which BCCI received by virtue of the agreements ought to have been considered.“…it is trite law that a party cannot be permitted to approbate and reprobate at the same time. A party cannot be permitted to blow hot and cold, fast and loose or approbate and reprobate. When one party knowingly accepts the benefits of a contract, it is estopped by denying the validity and binding effect of that contract on him. Once a party takes advantage of any instrument, he must accept all that is mentioned in the said document,” the Court emphasized.Justice Colabawalla observed that failing to consider this fundamental issue rendered the arbitral award susceptible to challenge, as it clearly suffers from patent illegality, and is therefore liable to be set aside on this ground alone.He noted that the majority award failed to explain why the BCCI was entitled to the facilitation fee. He deduced after perusing the minority award that huge chunks of important evidence was missed out in the majority award.“Such an Award with the greatest of respect to the arbitrators who passed the majority award, cannot be allowed to stand.” the Court ruled..The majority award was passed by an arbitration panel of former Supreme Court judges Justices Sujata Manohar and Mukundakam Sharma. The dissenting award dated July 20, 2020 was passed by another retired Supreme Court judge, Justice SS Nijjar..Senior Advocate Aspi Chinoy with Advocates Rajat Taimni, Saurajay Nanda, Anubhav Dutta briefed by Tuli & Co appeared for WSGI.Senior Advocate Rafiq Dada with Advocates Indranil Deshmukh, Gathi Prakash and Rishabh Malaviya briefed by Cyril Amarchand Mangaldas appeared for the BCCI.