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2021 Supreme(Bom) 1415

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. Kathawalla, J.
Majmudar And Partners - Appellant
Versus
Michael Marshall & Ors. - Respondents
Commercial Arbitration Petition (L) No. 24347 of 2021
Decided On : 01-11-2021

Advocates appeared:
Rohaan Cama, Advocate

The main legal point established is that parties are bound by the arbitration clause they have knowingly accepted, and courts may grant injunctions to prevent parties from circumventing agreed arbitration processes.

Headnote:

Arbitration - Jurisdiction - Anti-suit Injunction - Arbitration and Conciliation Act, 1996 - Section 9

Fact of the Case:

The Petitioner, an Indian law firm, entered into an engagement letter with Respondent No. 1, a law firm based in the United States, for providing legal services under Indian law. Disputes arose regarding payment, leading the Petitioner to invoke arbitration in Mumbai. Respondent No. 1 contested the arbitration clause and threatened to file proceedings in the US courts. The Petitioner sought an injunction to restrain Respondent No. 1 from pursuing proceedings in US courts.

Finding of the Court:

The Court found that the arbitration clause provided for arbitration under Indian law in Mumbai, and Respondent No. 1 had knowingly accepted this provision. The Court held that granting an injunction was necessary to prevent Respondent No. 1 from circumventing the agreed arbitration process and to avoid conflicting decisions between Indian and US courts.

Issues: The issues involved the enforceability of the arbitration clause, the jurisdiction of Indian courts, and the appropriateness of granting an anti-suit injunction.

Ratio Decidendi: The Court relied on the principle that once parties have designated an arbitral seat, it is akin to an exclusive jurisdiction clause. It also considered the likelihood of conflicting decisions and the unfairness of forcing the Petitioner to defend a litigation in US courts contrary to the agreed arbitration mandate.

Final Decision: The Court granted an ad-interim injunction restraining Respondent No. 1 from filing and pursuing any proceedings against the Petitioner in US courts, and scheduled the matter for further hearing.

JUDGMENT

S.J. Kathawalla, J. - The present Petition has been filed by the Petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 ("the said Act") and has been moved before me today for urgent ad-interim relief, ex-parte. The reason for moving ex-parte has been set out in paragraph 25 of the Petition. In the circumstances set out below, it is the apprehension of the Petitioner that if notice had been given for todays hearing, there would have been a likelihood of Respondent No. 1, a law firm based in the United States of America, proceeding to institute legal proceedings in a Court in Illinois, USA, in a manner contrary to the contemplation of the Petitioner and Respondent No. 1 who have agreed for any disputes between them to be resolved under Indian law and by arbitration in Mumbai under the said Act.

2. The brief facts leading to the filing of the Petition, and so far as they are relevant for the purpose of this order, are set out below.

3. The Petitioner is a partnership firm and a leading Indian law firm stated to be servicing clients nationally and internationally since 1943, in various fields, as set out in the Petition. Respondent No. 1 through its concerned associates, is a law firm by the name Huck Bouma P.C. based in Illinois, USA. Respondent Nos. 2 to 5 are the clients of Respondent No. 1.

4. Under a document dated 26th February 2021, referred to as the Engagement Letter, the Petitioner and Respondent No. 1 entered into an arrangement, whereby it was agreed that the Petitioner was being engaged by Respondent No. 1 for providing legal advice/services with respect to certain matters under Indian law, to clients of Respondent No. 1. Under the Engagement Letter, certain pecuniary terms were set out and clause V which deals with governing law specifically provides as under:

"V. Governing Law

This agreement will be governed by Indian law and any claim hereunder will be determined by arbitration in Mumbai under the Rules of Arbitration of Indias Arbitration and Conciliation Act of 1996."

5. This Engagement Letter, on the letterhead of the Petitioner, was countersigned by Michael J. Marshall, Attorney on behalf of the Respondent No. 1 law firm, in acceptance of the terms thereof.

6. From the record before the Court, it appears that from March 2021 onwards various emails were exchanged between the parties evidencing the work being carried out by the Petitioner for the clients of Respondent No. 1. My attention has been invited to the various emails on record to contend that at all times the Petitioner rendered good services to Respondent No. 1, and until recently no objection or protest was raised by Respondent No. 1 to the legal work / services performed by the Petitioner.

7. It appears that thereafter in or about May 2021, there were discussions on certain further steps to be taken, and by an email dated 11th May 2021 (Exhibit J to the Petition) Respondent No. 1 called upon the Petitioner to indicate the next steps in the matter, and to submit a revised fee budget. Pertinently, at this stage, there does not appear to have been any objection raised to the services provided by the Petitioner, and in fact Respondent No. 1 sought clarity on the further steps to be taken in the matter and called upon the Petitioner to furnish the budget for the same.

8. On 13th May 2021, the Petitioner responded by an email (Exhibit K to the Petition) inter alia furnishing the revised fee budget. Upon follow up by the Petitioner on 18th May 2021 as to the proposed budget and steps set out by the Petitioner, Mr. Michael Marshall of Respondent No. 1 addressed an email of even date to the Petitioner (Exhibit L to the Petition) requesting the Petitioner to "Please hold (temporarily) while we ensure we have consensus on a decision.".

9. The Petitioner has averred that the Petitioner had raised various invoices totaling to US$ 53,932.67, out of which US$ 14,513.33 had been paid or adjusted and a principal sum of US$ 39,419.34 was due and payabl

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