HC sets aside 2020 arbitral award favouring BCCI

The HC has, however, permitted both BCCI and WSGI to initiate fresh arbitral proceedings until which the BCCI cannot appropriate the amounts lying in an escrow account.

Mumbai: In a setback for the Board of Control for Cricket in India (BCCI), the Bombay high court on Thursday set aside a 2020 arbitral award, wherein the decision of BCCI to cancel its agreement with World Sport Group (India) (WSGI) Pvt. Ltd for media rights of the Indian Premier League (IPL) outside the Indian sub-continent was upheld.

In November 2007 BCCI had invited bids to acquire the license for the IPL media rights for a period of 10 years from 2008 to 2017. (BCCI)

The HC has, however, permitted both BCCI and WSGI to initiate fresh arbitral proceedings until which the BCCI cannot appropriate the amounts lying in an escrow account.

The single-judge bench of justice B P Colabawalla, which had concluded the hearing of the interim application filed by WSGI against the arbitral award, was informed that petition was seeking setting aside of the majority award passed by an arbitration tribunal in July 2020.

The tribunal comprising of former Supreme Court judges Justices (retired) Sujata Manohar and (retired) Mukundakam Sharma had permitted BCCI to appropriate the ₹850 crore lying in the escrow account, however, Justice (retired) S S Nijjar, the third member of the tribunal had dissented the decision.

In November 2007 BCCI had invited bids to acquire the license for the IPL media rights for a period of 10 years from 2008 to 2017. The tender included media rights in two categories, for the Indian sub-continent and the second category of RoW territories. Even though WSGI won the bid, as it was only a trader in Media rights, it entered into pre-bid negotiations with Multi-Screen Media (MSM) Satellite (Singapore), which had a broadcasting network in India.

Another Media Rights License Agreement (MRLA) was executed between BCCI and WSGI for India rights for a sum of 500 million US dollars and RoW rights for 92 million US dollars till 2017.

After disputes arose between BCCI and MSM after the first season, BCCI cancelled the agreement in 2009.

The WSGI challenged the rescission before the Arbitration tribunal in 2010 and in July 2020, the panel upheld the BCCI’s decision with a majority, which prompted WSGI to approach the HC challenging the same.

While arguing against the majority award, WSGI through senior advocate Aspi Chinoy had submitted that arbitration tribunal’s decision to uphold the rescission by accepting BCCI’s contention that Media Rights License (MRLA) “was part of fraudulent composite transaction” was erroneous.

Chinoy had argued that as per the 2009 agreement, BCCI benefited to the tune of approximately ₹1,791 crore and the tribunal failed to consider the “enormous benefit” to BCCI and therefore there was “fundamental error” in the majority award.

However, senior advocate Rafique Dada for BCCI had argued that all agreements of 2009 formed part of fraudulent composite transactions, therefore the termination of the second MRLA with WSGI was justified.

In its judgement the bench noted, “Failing to consider this fundamental issue which goes to the root of the matter, renders the Majority Award susceptible to challenge as it clearly suffers from patent illegality and is therefore liable to be set aside on this ground alone...I have no hesitation in holding that huge chunks of important evidence are missed out and/or not even referred to in the Majority Award. Such an Award cannot be allowed to stand.”

The Court however clarified if either party chooses to once again invoke arbitration or commence fresh proceedings they would not be restricted by the law of limitation.