The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.
Before this Court is (1) Amaprop Limited's petition to compel arbitration pursuant to Section 4 of the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 9 U.S.C. §§ 201-208, 21 U.S.T. 2517, and (2) Amaprop's motion for a preliminary injunction compelling Respondents Indiabulls Financial Services ("Indiabulls") and Indiabulls Finance Company Private Limited (the "Finance Company") to dismiss or cause to be dismissed actions currently pending in India related to this matter, and enjoining Indiabulls and the Finance Company from bringing any further legal action in India or any other jurisdiction concerning the parties' current dispute.
On March 11, 2010, this Court ordered Respondents to show cause on March 17, 2010, why an order should not be entered that, inter alia, compelled them to arbitrate their dispute with Amaprop, enjoined them from further prosecuting any actions in India concerning the Share Subscription and Shareholders Agreement, and enjoined them from commencing any other action related to this dispute in any jurisdiction. [Docket No. 3] This Court also entered a temporary restraining order enjoining Respondents from further prosecuting actions pending in India and commencing any other action related to this dispute pending the outcome of the March 17, 2010 hearing.
For the reasons stated below, Amaprop's petition to compel arbitration and motion for an anti-suit injunction will be GRANTED.
Amaprop is organized under the laws of the Cayman Islands, while Indiabulls and its subsidiary, the Finance Company, are incorporated under the laws of India. (Cmplt. ¶¶ 5-7)
On May 31, 2005, Amaranth LLC entered into a "Share Subscription and Shareholders Agreement" ("the Agreement") (Matano Decl., Ex. A) with Indiabulls and the Finance Company. Under the Agreement, Amaranth purchased a 42.5% interest in the Finance Company, whose "core business" is providing financing for initial public offerings ("IPO") in India. (Id., Ex. A at 5) The Agreement contemplated an eventual IPO by the Finance Company itself, and granted certain buy back rights to Amaranth in the event that an IPO for the Finance Company was not consummated within 55 months of the transaction closing date -- i.e., by January 1, 2010 (the "Put Right"). (Id., Ex. A at 27)
On June 6, 2005, the Agreement was amended "so as to replace Amaranth with Amaprop as a party," and "[a]ll of Amaranth's rights and obligations under the . . . Agreement . . . [were] vest[ed] with Amaprop." (Matano Decl., Ex. B at 4)
The Agreement contains the following clauses related to arbitration:
Section 12.11 Arbitration.
(a) Arbitration. Any action arising relating to this Agreement or the other Transaction Documents shall be settled by arbitration in the State of New York in accordance with the rules of the American Arbitration Association, provided however, that a party, without prejudice to these procedures may seek a preliminary injunction or order provisional relief if, in its judgment, such action is deemed necessary to avoid irreparable damages or preserve the status quo. * * * *
(c) Binding Character. Any decision rendered by the arbitrator pursuant to this Section 12.11 shall be final and binding on the parties thereto, and judgment thereon may be entered by any state or federal court of competent jurisdiction. (Matano Decl., Ex. A, Section 12.11)
Amaprop alleges that no qualified IPO for the Finance Company had been consummated by January 2, 2010. Accordingly, Amaprop notified Indiabulls that it wished to exercise its Put Right. Amaprop further alleges that Indiabulls repeatedly stated that it had no intention of honoring Amaprop's Put Right under the Agreement. (Cmplt. ¶ 13; Matano Decl. ¶¶ 16-18) On January 19, 2010, Amaprop's agent, Amaranth, delivered a written notice to Indiabulls and to the Finance Company exercising Amaprop's Put Right under the Agreement.*fn1 (Cmplt. ¶ 14; Matano Decl., Ex. F) That same day, Amaprop filed a Notice of Arbitration and Statement of Claim with the International Centre for Dispute Resolution of the American Arbitration Association (the "ICDR"). (Matano Decl., Ex. G) Amaprop alleges that it commenced the arbitration on the same day that it exercised its Put Right because of "Indiabulls's repeated statements that it had no intention of honoring Amaprop's Put Right."*fn2 (Cmplt. ¶ 16)
Amaprop's Statement of Claim sought, inter alia, (1) a declaration that Indiabulls had anticipatorily breached the Agreement; (2) an order requiring Indiabulls and the Finance Company to consummate the Put Purchase; and (3) an injunction preventing Indiabulls and the Finance Company from initiating judicial proceedings in India related to the Agreement. (Cmplt. ¶ 17; Matano Decl., Ex. G)
In letters to the ICDR dated February 11, 2010, Respondents made their initial appearances in the arbitration proceeding and denied that they had breached the Agreement. (Matano Decl., Exs. L, M) On February 24, 2010, Respondents made a submission seeking an additional four weeks in which to file their Statement of Defense. Indiabulls stated in its submission to the ICDR, however, that it would proceed with appointing an arbitrator. (Matano Decl. Exs. O, P, Q) Amaprop then sought leave to file an amended Statement of Claim by March 5, 2010.*fn3 The ICDR granted Amaprop's request and ordered Respondents to submit Statements of Defense by April 5, 2010. (Matano Decl. Ex. S)
On March 4, 2010, however, the Finance Company sought and obtained an ex parte injunction from the High Court of Judicature at Bombay enjoining Amaprop from proceeding with the arbitration. (Matano Decl., Ex. U) Indiabulls likewise filed suit against Amaprop in India, and obtained an ex parte order from the same court enjoining Amaprop from proceeding with the arbitration.*fn4 (Matano Decl., Ex. V) Amaprop alleges that it was never given notice of Respondents' applications to the Indian court,*fn5 and further alleges that Respondents refused to provide the underlying papers in these actions to Amaprop even after the ex parte orders were issued. (Cmplt. ¶¶ 22-23; Pet. Br. 6)
On March 9, 2010, Amaprop filed this action seeking an order compelling arbitration and an anti-suit injunction. [Docket No. 1] Indiabulls and the Finance Company responded to this Court's order to show cause on March 17, 2010 [Docket No. 8] and appeared at the March 17, 2010 hearing.
The parties entered into a broad arbitration clause in the Agreement that clearly encompasses their current dispute. Accordingly, an order compelling arbitration is appropriate.
It is also apparent that Amaprop is entitled to an injunction compelling Respondents to terminate their Indian actions and barring them from commencing any new actions designed to interfere with the New York arbitration. While an injunction restraining a party from engaging in foreign litigation should only be granted with great caution, all of the requirements necessary to grant such an injunction are present here.
I. AN ORDER COMPELLING ARBITRATION WILL BE ISSUED
Under the Federal Arbitration Act, 9 ...