Introduction

• The Supreme Court's judgment in this case is a significant decision that addresses issues pertaining to the validity of arbitration agreements, the determination of the seat of arbitration, and the grant of anti-suit injunctions in international commercial arbitrations.

Facts

• Enercon (India) Ltd. (EIL) was set up in 1994 as a joint venture between Enercon GmbH (Respondent No. 1) and members of the Mehra family (Appellants No. 2 and 3) to manufacture and sell wind turbine generators in India.
• The parties entered into various agreements, including a Share Holding Agreement (SHA), Technical Know-How Agreement (TKHA), Supplementary Share Holding Agreements (SSHAs), Supplementary Technical Know-How Agreement (STKHA), and an Intellectual Property License Agreement (IPLA) in 2006.
• Disputes arose between the parties, leading to legal proceedings, including a derivative suit by Appellants No. 2 and 3 in the Bombay High Court, and arbitration proceedings initiated by Respondent No. 1 before the English High Court.
• The Appellants challenged the validity of the IPLA and the arbitration clause, while the Respondents argued that the IPLA was a concluded contract, and the arbitration clause was valid.

Issues Involved

• Whether IPLA was valid and concluded contract?
• Whether the Appellants can refuse to join the arbitration on the plea that there is no concluded IPLA?
• Whether the arbitration clause is vague and unworkable?
• Whether the seat of arbitration is in London or in India?
• Whether the English Courts have concurrent jurisdiction for taking measures in support of the arbitration, given that the venue is in London?
• Whether the Appellants are entitled to an anti-suit injunction against the Respondents from pursuing proceedings in the English Courts?

Observation

• The Supreme Court held that the IPLA is a valid and concluded contract, and the Appellants cannot refuse to join the arbitration on the ground that there is no concluded IPLA.
• The arbitration clause was held to be unworkable, and the Supreme Court appointed Lord Hoffmann as the third arbitrator and the Chairman of the Arbitral Tribunal.
• The SC held that the seat of arbitration is in India, and not in London, as the governing law of the contract is the law of India, and the parties have chosen Indian laws as the applicable laws.
• The SC ruled that the English Courts do not have concurrent jurisdiction for taking measures in support of the arbitration, as the seat of arbitration is in India.
• The SC granted an anti-suit injunction restraining the Respondents from pursuing any proceedings in the English Courts that may delay or affect the constitution of the Arbitral Tribunal and its proceedings.

Conclusion

• The Supreme Court directed the parties to proceed to arbitration in India, in accordance with the law, and stayed the proceedings before Bombay High Court, subject to the parties' liberty to seek interim measures under Section 9 of the Indian Arbitration Act.