Section 5 of the Indian Arbitration and Conciliation Act 1996 (1996 Act) restricts judicial intervention in arbitration proceedings except where provided by the Act.

Section 16 confers power upon the arbitral tribunal to decide on any objections with respect to its jurisdiction and the existence or validity of the arbitration agreement and thereby restrains the courts from interfering with these issues.

Section 45 of the Act empowers the court to refer the parties to arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

The Board for Cricket Control of India (BCCI) floated tenders for the broadcasting rights of matches of the Indian Premier League (IPL). On 21 January 2008, the World Sports Group (India) Ltd (WSGI) won the tender to global media rights and entered into a Media Rights License Agreement (MRLA) with BCCI. On the same day BCCI entered into another MRLA with MSM Satellite (Singapore) Pte Ltd (appellant) for the Indian subcontinent media rights. In March 2009, BCCI (at a time when Mr Lalit Modi controlled IPL) terminated the MRLA with the appellant and the rights under that agreement were conferred on the respondent by executing a new MRLA.

Given that the respondent had no channel of its own in the Indian subcontinent, it could sub-license its broadcasting rights. The appellant negotiated with the respondent for relinquishing its existing media rights and for facilitating the appellant to acquire the media rights directly from BCCI in consideration for a facilitation fee of INR 425 crores. Those negotiations resulted in a facilitation deed between the appellant and the respondent.

In April 2010, a controversy erupted in the BCCI regarding alleged wrong doings of Mr Lalit Modi (who was the commissioner of IPL from its inception stage) in conducting the affairs of IPL. BCCI denied any knowledge about the facilitation deed and the fees agreed to be paid by the appellant to the respondent. In a show-cause notice issued to Mr Lalit Modi by BCCI, it was alleged that the respondent lacked the requisite qualifications to bag the media rights. BCCI intimated to the appellant that the facilitation fee payable to the respondent should be paid only to BCCI and no other party.

In view of the above developments, the appellant filed a suit on 25 June 2010 against the respondent, WSGI and BCCI, claiming for a declaration that the facilitation deed was illegal, null and void and for various other remedies. In turn, on 28 June 2010, the respondent invoked the arbitration clause in the facilitation deed and commenced ICC arbitration proceedings in Singapore.

The appellant then instituted a second suit in the High Court seeking an injunction restraining the respondent from proceeding with the Singapore arbitration. The single judge refused to grant the injunction sought by appellant, which gave rise to the present appeal.

The High Court exercised its discretion and judicially intervened, granting an anti-arbitration injunction restraining the respondent from continuing with the foreign arbitration proceedings.

The basis of the decision was that:

The appeal was allowed subject to the appellant depositing INR 300 crores with the High Court within six weeks from the date of its order.

An anti-arbitration injunction restraining the parties from arbitration in accordance with their prior agreement ought to be the exception rather than the rule. Although the present case is another example of an Indian court interfering with international arbitration, factors such as the 'facilitation fees' are prima facie indicative of fraud. Further, the interests of the third party, which in this case governs the national obsession (cricket), that were required to obtain the injunction may in fact have raised the bar for future applications of this nature.

Interestingly the Supreme Court of India in the past has held that BCCI is not an instrument of the state (that is, not a para-national organisation). Ironically that matter also related to awarding broadcasting rights. Here it appears that the appellate court viewed BCCI as a para-national organisation and that the dealings in broadcasting rights for cricket were a matter of utmost public interest.