India: Anti-Arbitration Injunction Issued Against Mcdonalds

Last Updated: 12 January 2015
Article by Alipak Banerjee and Nishith Desai
  • Delhi High Court holds that even in a situation where the parties have contractually opted for international arbitration, the jurisdiction of the civil court is necessarily not completely ousted;
  • Delhi High Court lays down the threshold for grant of anti-arbitration injunction;
  • Delhi High Court reaffirms that in a dispute of oppression and mismanagement, the dispute ought not to be referred to arbitration;
  •  Delhi High Court looked at the hardship of the Plaintiff and based on relevant factors decided that arbitration in London becomes forum non-conveniens to the Plaintiff.

Recently, the High Court of Delhi ("Delhi High Court") in Vikram Bakshi & Anr. v. Mc Donalds India Pvt. Ltd. & Ors. granted an anti-arbitration injunction, wherein the Defendants were restrained from pursuing arbitral proceedings under the London Court of International Arbitration Rules ("LCIA"). Vikram Bakshi and a company incorporated by Vikram Bakshi are the Plaintiff No. 1 and 2 respectively (collectively referred to as "Plaintiff"). Mc Donalds India Pvt. Ltd. & Connaught Plaza Restaurants Ltd. is being referred to as Defendant and 2nd Defendant respectively.


The Plaintiff and the Defendant entered into a Joint Venture Agreement ("JVA") in 1995 and incorporated 2nd Defendant. The Defendant had issued a "Call Option" notice offering to buy out the stake of the Plaintiff in 2nd Defendant. The Plaintiff filed a company petition before the Company Law Board ("CLB") claiming oppression and mismanagement and prayed for his re-election as the Managing Director of the 2nd Defendant, pursuant to Clause 7(e) of the JVA. The CLB in its ad interim order directed parties to maintain status quo with respect to their shareholding.

Thereafter, the Defendant filed an application under Section 45 of the Arbitration and Conciliation Act, 1996 ("Act") before the CLB, praying that the parties be referred to arbitration, in light of the provisions of the JVA. The CLB refused to stay the arbitration proceedings and subsequently, aggrieved by the CLB Order, the Plaintiff filed an appeal; however, as the said application under Section 45 of the Act was eventually withdrawn, the appeal became infructuous.

Subsequently, the Defendant terminated the JVA and invoked the arbitration clause, and consequently the dispute was referred to arbitration under the LCIA Rules in London. Additionally, the Defendant also filed a petition under Section 9 of the Act; however, this petition was also dismissed as withdrawn. In the meantime, the Plaintiff preferred an application under Order 39 Rule 1 and 2 of Code of Civil Procedure ("CPC"), praying for an ad interim injunction against the arbitration proceedings initiated under the LCIA Rules.


The crucial question before the Delhi High Court was to ascertain whether the civil courts had jurisdiction even when the parties had agreed to resolve their dispute by arbitration. The Delhi High Court also had to decide whether LCIA arbitration in London would be forum non conveniens and that if this is a fit case where anti-arbitration injunction should be granted.



Briefly, it was submitted that:

  • as the status quo Order has been passed in the CLB petition, initiation of arbitration in London is not only vexatious but also oppressive.
  • as the application under Section 45 of the Act was withdrawn, it amounted to tacit acquiescence on the part of Defendants to concede to the jurisdiction of the CLB.
  • the arbitral proceedings in London would be forum non convenience qua the Plaintiff because the parties except for the holding company of the Defendant were situated in India and carried out business in India. Moreover, the governing law, cause of action and the CLB petition between the parties all were in India and that the concept of comity of courts would not be applicable because arbitral proceedings are yet to be started.


Briefly, it was submitted that:

  • based on decided cases1, the present suit is not maintainable as the suit challenging validity of JVA has an arbitration clause embedded into it and the objective of the Act was to minimize the supervisory roles of Courts in the arbitral proceedings.
  • the validity of an arbitration agreement to which Part II of the Act applies can be decided either by the arbitral tribunal or by the Court pursuant to Section 45 or 48 of the Act.
  • reliance was placed on National Insurance Co Ltd. v. Boghara Ployfabs Pvt. Ltd.2 and Devinder KumarGupta (Dr) v. Realogy Corporation & Anr,3 and it was contended that the only remedy available to the Plaintiff is before arbitral tribunal and not before civil court to challenge the validity of the arbitration agreement. The doctrine of 'Kompetenz Kompetenz' was elaborately discussed and Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification Inc. and Ors4 was relied to submit that it is the arbitral tribunal who would have to decide the validity of the arbitration agreement.
  • a case of forum non-conveniens would not arise given that the parties had expressly agreed to arbitration in England. Any inconvenience caused due to the seat being in London, could not be classified as forum non conveniens.
  • merely because the application under Section 45 of the Act was withdrawn, that does not tantamount to waiver or abandonment of Defendant's right to go for arbitration and that that the termination of the JVA meant that the CLB petition had become infructuous.
  • the subject matter of dispute in the CLB petition and the arbitration are operating in different fields and therefore neither the application under Section 45 nor the continuance of the arbitration proceedings can be said to be oppressive and vexatious.


The Delhi High Court was of the opinion that the Plaintiff was able to show a prima facie case, the balance of convenience was in his favour and that the Plaintiff would suffer irreparable loss in case the injunction was not granted because a) prima facie it appeared that the arbitration agreement was inoperative or incapable of performance on account of the fact that the CLB petition is pending and a status quo order has been obtained with regard to the shareholding pattern; b) there will be certain overlapping disputes between the CLB petition and the arbitration proceedings sought to be conducted under LCIA Rules; c) the dispute sought to be raised before LCIA arbitration is suffering from forum non-conveniens.

The Delhi High Court reasoned its decision based on the following premises:

  • considered the judgment of the Supreme Court of India ("Supreme Court") in World Sport Group (Mauritius) Ltd v. MSM Satellite (Singapore) Pte. Ltd5, wherein it has been held that reference of a dispute to an arbitrator is not an absolute proposition because Section 45 of the Act has three provisos, namely that the agreement should not be null and void, in operative or incapable of being enforced etc.
  • highlighted the need to reconcile the ratio of Chatterjee Petrochem cas e6, which in essence excluded the jurisdiction of a civil court in case of an international arbitration and World Sport Group which ran contrary to the same in so far as it upheld the exceptions in Section 45 of the Act, as it would create an incongruous position of law in India.
  • the interpretation in World Sport Group was embraced since the facts were pari materia with the facts of the present case. Moreover, World Sport Group being a later judgment would have more persuasive value over a previous judgment on the same point.
  • the decision of the Supreme Court in Shi –Etsu Chemicals v. Aksh Optifibre Ltd7 was also considered, wherein the majority held that in case of an international arbitration, the civil court would have to refer the parties to arbitration unless the agreement between the parties was nul l and void, incapable of being pe rformed or inoperative, and this determination will have to be taken on prima facie basis.
  • relied on the Bombay High Court decision in Rakesh Malhotra v. Rajinder Kumar Malhotra8, wherein it was held that disputes pertaining to oppression and mismanagement would not be referable to arbitration, and therefore the jurisdiction of the civil court ought not be ousted.
  • observed that all parties except the holding company of the Defendant were Indian persons, that the cause of action had arisen in India, and that the governing law of the agreement between the parties was Indian law. It held tha t in light of these factors the venue of arbitration being London would constitute forum non conveniens.
  • clarified that the requirement fo r the grant of anti-arbitration injunction would be the fulfilment of the conditions required for the grant of an ad-interim injunction i.e. prima facie case, balance of convenience and irreparable harm; and the satisfaction of any of the three contingencies envisaged in Section 45 of the Act.


Although the India Courts have adopted a pro arbitration approach in the past couple of years, it might appear that the present ruling goes a step backward in so far as an anti-arbitration injunction was granted restraining the Defendant to pursue LCIA Arbitration. Notably, the Delhi High Court reconciled the conflicting decisions and concluded that the jurisdiction of civil court need not be necessarily ousted in a case where parties have contractually agreed to refer the dispute to international arbitration, and thereafter took a prima facie view that the agreement itself was inoperative, thus making the present case come under the proviso to Section 45 of the Act.

The Delhi High Court has further reaffirmed that in a dispute pertaining to allegations of oppression and mismanagement, the arbitral tribunal would not be the correct forum for adjudication of rights. However, the reasoning that LCIA would be a forum non conveniens appears to be contrary to the ruling of the Supreme Court in Modi Entertainment Network v W.S.G.Cricket Pte,9 wherein it was held that reasons such as hardship, subject matter being in India, or parties per se would not suffice to turn a forum conveniens into a forum non conveniens.

Although we have had landmark rulings on grant of anti-suit injunctions, generally anti-arbitration injunctions are rare in India and therefore the observation that in a case of an anti-arbitration injunction, in addition to a general threshold for grant of ad-interim injunction, the case should fall under one of the contingencies of Section 45 of the Act which would add necessary jurisprudence on the subject.


1.Chatterjee Petrochem (Mauritius) Co. and Anr. v. Haldia Petrochemicals Ltd., 2013 (4) Arb. L.R. 456 (SC)

2.2009 (1) SCC 267

3.2011 (125) DRJ (DB)

4. (2013) 1 SCC 641

5.2014 (1) Arb L. R. 197 (SC)

6.Supra Note at 1

7. (2005) 7 SCC 234

8. Company Appeal (L) Nos. 10, 11, 12, 13, 16, 17, 18, and 19 of 2013 and Company Appeal No. 15, 16, 17,18, 23, and 24 of 2013

9. (2003) 4 SCC 341

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Alipak Banerjee
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.