Malhotra v Malhotra & Anor

An anti-suit injunction enforcing an English-law arbitration agreement requires a high degree of probability that the foreign proceedings fall within the agreement. A broad arbitration clause may cover disputes between parties to the transaction, not merely disputes involving an investor. However, the court must identify a sufficiently clear contractual promise to arbitrate the particular dispute. A disputed implied agreement requires strong evidence and proper particularisation. Where the foreign proceedings concern the management of companies and the threshold is not met, the court should not restrain them merely because they overlap with contractual issues.

The claimant sought continuation of an injunction restraining his father and brother from pursuing proceedings before the Indian Company Law Boards and from convening a meeting to replace directors of Indian companies. The claimant argued that the Indian proceedings were disguised disputes between parties to a restructuring transaction governed by an English-law arbitration clause. The defendants contended that the proceedings concerned shareholder rights, company management and alleged mismanagement, involving companies and directors who were not parties to the arbitration agreement. The central issues were whether the threshold for anti-suit relief was met and, if so, whether there was good reason to refuse an injunction.

1. Disposition. The application failed. The without-notice anti-suit injunction was discharged.
2. Applicable principles. The court had jurisdiction under section 37 of the Senior Courts Act 1981. The fundamental question was whether an injunction was in the interests of justice. Where breach of an English-law arbitration agreement was alleged, the claimant had to show a high degree of probability that the foreign proceedings were brought in breach of a contractual promise to arbitrate.
3. Scope of the arbitration clause. Clause 43.2 was broadly expressed and was not confined to disputes between Actis and the Supermax group. Applying the commercial presumption identified in Premium Nafta Products v Fili Shipping (also known as Fiona Trust v Privalov) [2007] UKHL 40, disputes between the Malhotra parties arising from or connected with the revised transaction were capable of falling within the clause.
4. Threshold not established. The Indian petitions, read as a whole, principally concerned alleged mismanagement, shareholder control and the conduct of directors of Indian companies. The defendants’ undertakings removed any real risk that the restructuring agreements themselves would be undone. The alleged inter-sponsor agreement was strongly contested and had not been established to the required standard. A bare assertion of agreement was insufficient without evidence addressing whether the agreement was express or implied and, if oral, who said what, when, where and in whose presence.
5. Clauses 18.10 and 41.1 did not establish the necessary contractual entitlement. Clause 18.10 did not place the companies’ funds at the claimant’s unrestricted disposal. Clause 41.1 appointed the claimant as representative for purposes of the transaction; it was not a general power of attorney authorising him to dispose of the father’s assets without reference to him. The management of the Indian companies was not shown to be contemplated by the revised transaction.
6. Further observations. The dressing-up argument could succeed only if the claims against the other respondents were vexatious or oppressive, as in Joint Stock Assets Management v BNP Paribas. That threshold was not met. Even if the contractual threshold had been satisfied, the Company Law Board was the appropriate forum to resolve the deadlock, company-management issues and overlapping allegations. The court therefore did not need to determine the good-reason requirement in detail.