Delhi High Court Grants Anti-Arbitration Injunction In Oman Dispute

SUMMARY:

[1]Engineering Projects India Limited challenged an ICC arbitration seated in Singapore, claiming nondisclosure by an arbitrator of his prior association with the defendant’s promoter. The Delhi High Court examined if the arbitration was being conducted in a vexatious and oppressive manner warranting judicial intervention. The court found the nondisclosure significant and the defendant’s litigation conduct oppressive, granting an interim injunction to stay the arbitration. This ruling affirms courts’ limited but crucial role in protecting fair arbitration processes from abuse.

FACTS:

• Engineering Projects India Limited (EPIL), a government PSU, was the main contractor for a border security project in Oman and subcontracted MSA Global LLC Oman for part of the work under a contract governed by Omani law.
• The contract included an arbitration clause that stipulated ICC arbitration seated in Singapore, with New Delhi courts having exclusive jurisdiction for certain matters.
• During arbitration proceedings, EPIL discovered that the co-arbitrator appointed by the defendant, Mr. Yeap, had failed to disclose a prior professional association with the defendant’s chairman, raising concerns about impartiality.
• EPIL challenged Mr. Yeap’s appointment with the ICC Court, but the ICC Court found the nondisclosure “regrettable” yet insufficient to remove him due to lack of proof of actual bias.
• EPIL then filed a suit in Delhi High Court seeking an interim injunction to stay the ICC arbitration proceedings, alleging oppressive and vexatious conduct by the defendant and breach of disclosure obligations by the arbitrator.

ISSUES:

• Whether the Delhi High Court has jurisdiction to entertain a suit seeking interim relief to restrain foreign-seated ICC arbitration proceedings.
• Whether nondisclosure by the arbitrator of a prior professional association with the defendant’s promoter breaches the ICC Rules and undermines arbitral impartiality.
• Whether the arbitration proceedings are being conducted in a vexatious and oppressive manner, justifying judicial intervention.
• Whether the defendant’s litigation conduct and continuation of arbitration despite challenges constitute abuse of process warranting an injunction.

JUDGEMENT:

1. Court’s Jurisdiction and Intervention Test: The Court emphasized minimal interference in foreign-seated arbitration except in exceptional circumstances involving abuse or oppression, adopting the “vexatious and oppressive” litmus test to evaluate intervention.
2. Findings on Nondisclosure and Conduct: The Court held that nondisclosure of any material fact by an arbitrator, especially one that might appear biased to a reasonable party, strikes at the core of arbitration fairness. It also found the defendant’s multi-forum litigation tactics vexatious and oppressive.
3. Grant of Interim Injunction: Considering prima facie case, balance of convenience, and irreparable injury, the Court granted an interim injunction staying the arbitration till final adjudication, safeguarding the integrity of the arbitral process.

ANALYSIS:

The Delhi High Court’s judgment in the Engineering Projects case shows how courts are generally careful when it comes to interfering with foreign-seated arbitrations. The Court made it clear that intervention should only happen in extreme cases where the arbitration process is clearly unfair or being misused. A big focus was on the importance of arbitrators fully disclosing any connections that might affect their impartiality, because even if there’s no proof of actual bias, hiding such information damages trust in the process. The Court also didn’t like the defendant’s way of dragging the case through different courts, calling it annoying and unfair. By granting a temporary stay on the arbitration, the Court balanced protecting the parties’ rights with respecting the autonomy of arbitration proceedings. Overall, the case highlights the tricky balance courts have to maintain between stepping in to ensure fairness and letting arbitration run its course.

[1] BEFORE THE HON’BLE DELHI HIGH COURT

Engineering Projects India Limited v. MSA Global Pvt. Ltd.

OMP (I) (COMM) No. 177 of 2025

Judgment Dated: June 08, 2025