A bench of justices A K Patnaik and Fakkir Mohamed Ibrahim Kalifulla set aside the Bombay High Court order restraining World Sport Group (Mauritius) from proceeding with the arbitration.
While WSG wanted the dispute to be resolved through arbitration in Singapore, as agreed in the contract between the parties, MSM insisted that it should be decided in a regular trial before the court. The companies have fallen out over a facilitation fee deal for the media rights for the IPL.
The court passed the order on a appeal filed by WSG against the division bench verdict of the high court which had set aside the order passed by a single judge bench allowing the arbitration.
"We allow the appeal, set aside the impugned judgment of the division bench of the high court and restore the order of the learned single judge," the bench said.
"It has been rightly held by the learned single judge of the Bombay High Court that it is for the arbitrator to decide this dispute in accordance with the arbitration agreement," it said.
According to a deal inked in 2009, MSM Satellite was to pay Rs 425 crore to WSG to acquire the global rights to broadcast the IPL 20-20 cricket tournament.
However, the Board of Cricket Control in India (BCCI) later wrote to MSM Satellite on May 30, 2010, stating that WSG had no role to play in execution of the contract and hence, the "facilitation fee" of Rs 425 crore was to be paid to the BCCI.
Given the directive, MSM Satellite had stopped payment to WSG, though it had already handed over Rs 125 crore. MSM Satellite went on to renegotiate a direct nine-year contract with BCCI for the worldwide telecast rights to the IPL for Rs 8,200 crore.
Subsequently, WSG initiated arbitration proceedings against MSM Satellite, claiming it was the original buyer of the worldwide telecast rights for the IPL between 2008 and 2017 for over USD 1 billion and was entitled to the facilitation fee.
Earlier, allowing the appeal of MSM Satellite, a division bench of Bombay High Court had on September 17, 2010, set aside the order of its single-member bench and restrained WSG from continuing with the arbitration proceeding.
The controversy over the Rs 425 crore facilitation fee erupted after BCCI ousted IPL Commissioner Lalit Modi, alleging financial irregularities in the media-rights deal signed by him, among other things. The BCCI had raised objections and claimed that any such fee should have been paid to it.