Indian Supreme Court Sets the Playing Field in Cricket Dispute
A recent opinion from the Supreme Court of India in a case over cricket broadcasting rights settles the score on how the country will deal with foreign arbitration. An online search for cricket—by far the most popular sport in India—will, on most days, yield coverage of the Indian national cricket team or India’s professional cricket league, the Indian Premier League (IPL). These days, a search will return news about the dispute over cricket media rights that made its way to the Indian Supreme Court. In World Sport Group (Mauritius) Ltd. (WSG) v. MSM Satellite (Singapore) Pte. Ltd. (MSM), the Supreme Court signaled that India’s courts will not interfere in foreign arbitration by concluding that a contractual dispute between WSG and MSM must be decided by the International Chamber of Commerce (ICC) in Singapore, as agreed to by the parties, despite an allegation of fraud.
The Pre-Game (a.k.a. Background)
In 2009, WSG and MSM entered into a deed for the provision of facilitation services (the Facilitation Deed), whereby MSM would pay WSG a facilitation fee to acquire the rights to broadcast IPL matches in India. Subsequently, MSM withheld a part of the facilitation payment and rescinded the Facilitation Deed, alleging fraud and misrepresentation by WSG on the grounds that WSG’s media rights to IPL in India had lapsed.
Pursuant to the Facilitation Deed, WSG sought to commence arbitration at the ICC in Singapore, while MSM filed suit seeking to block the proceedings and declare the Facilitation Deed null and void. The Division Bench of the Bombay High Court ultimately granted MSM’s injunction request, and WSG appealed to the Supreme Court.
The Box Score
The Supreme Court overturned the decision by the Division Bench by applying the “principle of separability” to the facts of the case and determining that the alleged fraud or misrepresentation regarding WSG’s media rights was separate and independent of the arbitration clause in the Facilitation Deed and thus was not rendered “inoperative or incapable of being performed” as required by section 45 of part II of the Indian Arbitration and Conciliation Act of 1996.
Further, the court differentiated this case from its approach in domestic arbitration matters, where the Indian courts have determined that allegations of fraud could only be inquired into by the court and not by an arbitrator.
The Supreme Court’s opinion puts some teeth into the enforceability of foreign arbitration clauses in India and should be a consideration when drafting dispute resolution provisions.