Civil Court Jurisdiction Not Ousted By Foreign-Seated Arbitration, Courts May Act To Prevent Abuse: Delhi High Court

The Delhi High Court recently reiterated that the jurisdiction of civil courts is not barred merely because arbitration is seated outside India but said that the power to restrain such proceedings must be exercised only in exceptional circumstances, refusing to stop arbitration initiated in London by Argo Coral Maritime Ltd. against SARR Freights Corporation and SARR Freights Limited.

Relying on the top court's ruling in Engineering Projects (India) Limited Versus MSA Global LLC (Oman), Justice Mini Pushkarna observed, “The jurisdiction of Indian Civil Courts is not excluded merely because arbitration is seated abroad, and Courts retain residual equitable powers to prevent abuse of arbitral process.”

The Court also clarified, “It is clarified that this Court is not sitting in appeal against the Partial Final Award dated 18th October, 2025 passed in the arbitral proceedings by the LMAA in London, and is not adjudicating on the merits of the said Partial Final Award.”

The dispute arose from a booking note dated 4 April 2023 for shipment of military cargo meant for the United Nations Interim Security Force for Abyei from Nhava Sheva Port in Mumbai to Port Sudan. The arrangement was made through Ocean7 Projects ApS, Denmark, acting for the vessel owner.

The cargo consisted of 159 items of military equipment, some classified as dangerous goods. Before the voyage began, armed conflict broke out in Sudan. On 18 April 2023, the United Nations issued an advisory declaring port and cargo movement unsafe. The purchase order was cancelled and the cargo was directed to remain in India.

The plaintiffs treated the contract as terminated due to force majeure. The vessel owner disputed this and claimed about USD 5.84 lakh as dead freight. Arbitration was invoked in London under the booking note. Two references were started after questions arose about which SARR entity was the contracting party. The arbitral tribunal later rejected the jurisdictional objections raised by the companies.

The companies approached the High Court seeking to stop the arbitration. They argued that no valid arbitration agreement existed with Argo Coral Maritime Ltd. and that the defendant was not a party to the booking note. They also said that starting two arbitration references for the same dispute amounted to procedural oppression.

The vessel owner opposed the plea. It submitted that London was the agreed seat of arbitration and pointed out that the companies had participated in the proceedings for a long time before raising objections. It also argued that the arbitral tribunal had already ruled on jurisdiction and that the suit was an attempt to challenge the award indirectly.

The Court first examined whether the suit could be entertained. Referring to earlier decisions, it said civil courts retain jurisdiction even in cases of foreign-seated arbitration, but an injunction can be granted only where the arbitral process is clearly abusive.

The Court observed that whether the proceedings were vexatious or oppressive involved disputed questions of fact that could not be decided at the interim stage.

On the argument that there was no arbitration agreement, the Court noted that the booking note described “SARR Freights” as the merchant and that the parties had participated in the arbitral proceedings for a substantial period. The tribunal had already ruled on jurisdiction. The Court held that it could not re-examine those findings while considering an interim injunction.

The Court also rejected the contention that the arbitration was abusive because two references were filed. It observed that the issue regarding the correct contracting party was already under consideration before the arbitral tribunal and that this by itself did not show oppression.

Holding that the plaintiffs had failed to show that the arbitration in London was vexatious, oppressive, or unconscionable, the Court found no prima facie case for an injunction and declined to interfere. The arbitration before the London Maritime Arbitrators Association will continue.

For SARR Freights Corporation and SARR Freights Limited: Senior Advocate Dayan Krishnan with Advocates Saurabh Seth, Sumer Dev Seth, Neelampreet Kaur, Abhiroop Rathore, Kabir Dev, Sukhvir Singh and Sukrit Seth.

For Argo Coral Maritime Ltd.: Senior Advocate Sandeep Sethi with Advocates Amitava Majumdar, Arvind Kumar Gupta, Tripti Sharma, Dushyant Kishan Kaul, Abhiesumat Gupta, Kishna Gambhir, Shreya Sethi, Riya Kumar and Ishan Prashar.