Interim Reliefs in Arbitration: Court Intervention vis-a-vis Competence of an Arbitral Tribunal.

Under the Arbitration & Conciliation Act 1996, Section 9 empowers the court to order a party to take interim measure or protection when an application is made. Besides this Section 17 gives power to the Arbitral Tribunal to order interim measures unless the agreement prohibits such power.

Nevertheless, at this juncture, what comes to our mind, is then the purpose and scope of Section 9 of Arbitration and Conciliation Act, 1996, as it relates to court intervention for the purpose of granting interim protection to either of the parties, in respect of its properties, money and other subject matter of dispute.

Section 9 of the Act is broadly based on Article 9 of Model Law and provides for the grant of interim measures by a court. Unlike Model Law, Section 9 provides for interim measures of protection not just before the commencement of arbitral proceedings and during the arbitral proceedings but also post the arbitral award has been rendered (but prior to its enforcement). In Sundaram Finance Vs NEPC India Ltd, the Hon'ble Supreme Court held as under:

“When an application under Section 9 is filed before the commencement of the arbitral proceedings, there has to be manifest intention on the part of the applicant to take recourse to the arbitral proceedings if, at the time when the application under Section 9 is filed, the proceedings have not commenced under Section 21 of the 1996 Act.”[1]

To be precise, the scheme of Section 9 postulates an application for the grant of an interim measure of protection after the making of an arbitral award and before it is enforced for securing the property for the benefit of the party which seeks enforcement of the award. Further to substantiate more, any party to the arbitration agreement can make an application for interim measures in the course of the arbitral proceedings.[2] 

However, after making of the arbitral award, only a successful party which is entitled to seek the enforcement of the award can apply to the court under Section 9 for protection in terms of Section 9 (ii) of the Act.

Where To Apply?

The ‘court’ as defined in Section 2(1)(e) of the Act can either be a district court or a High Court having ‘original jurisdiction’, which would have the jurisdiction to decide the subject matter of the arbitration as if the same were the subject matter of a civil suit. In case of an international commercial arbitration, i.e., an arbitration relating to a commercial dispute where at least one of the parties is non-Indian, only a High Court of a state in India will have powers under the Act.

The Post Amendment Position:

Key amendments were bought about to the Arbitration and Conciliation Act, 1996 to make the Act more functional, however one distinct purpose of the amendment was to cloth the Arbitral Tribunal with more powers and bring it in sync with powers vested in courts under Section 9 of the pre-amended Act. Subsequent to the amendments in Section 9 of the Act, the court can grant interim measures in the following circumstances:

·  Prior to the constitution of the tribunal. 

After the award has been made and prior to its enforcement.[3]

Previously, there was a debate whether the powers of an arbitral tribunal to grant interim reliefs were narrower compared to the power of a court under Section 9 of the Act. However, with the amendments in place, the powers of an arbitral tribunal to grant interim reliefs have been made at par with those of the court under Section 9 of the Act.

Interim Measures by an Arbitral Tribunal

Prior to 2015 Amendment, Section 17 was quite open textured in the scope of reliefs that could be provided; it permitted the tribunal to issue any interim measure of protection. However, Courts and tribunals took the view that the scope was  limited than that under  Section 9. It was certainly a development from the 1940 Act^[[4]] where no such power was conferred on the arbitral tribunal. 17(1) in the 1996 Act indicated that the parties may by agreement exclude the exercise of such a power thereby encouraging the autonomous nature of ADRs. However, even this provision had its shortcomings. The power was limited to the extent of reference to the arbitration agreement.^[[5]] Incidentally, the section did not provide for any means of enforceability in the manner a court’s orders are enforced.^[[6]] 

The arbitral tribunals don’t have powers to enforce their interim orders on their own accord and issuance of contempt proceedings by way of application to a court seemed like a long process which defeats the whole purpose of ADRs.

The Amendment Act of 2015 introduced much needed changes as it brought clarity on the kind of reliefs that may be granted, bringing them at par with Section 9 of the Act. The following are certain reliefs that may be granted by an arbitral tribunal.

i. securing the amount in dispute in the arbitration ;

 ii. the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration ;

iii. interim injunctions and the appointment of a receiver ;

iv. any other interim measure which is just and convenient .

Further,17(2) provided solution to the problems by stating that "any order issued by the arbitral tribunal under this section shall be deemed to be an order of the court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were an order of the court."

However, as has been settled by the apex court in MD. Army Welfare Housing Organisation v. Sumangal Services (P) Ltd. ^[[7]4], an arbitral tribunal, under Section 17 of the Act, has no jurisdiction to pass interim measures against a third party.

Non-adherence of orders issued under the section can lead to contempt of orders and the Tribunals do not have to approach the High Court anymore for enforcing its orders.^[[8]] 

The High Court of Kerala appropriated a detailed analysis of the term enforcement as used under the Act in the case of Pradeep K.N. vs. Station House Officer^[[9]]. It discussed how “enforcement” is different from “execution” and the former must be enforced in terms of Section 94 of CPC.

Further, in the case of Sundaram Finance Ltd. vs. P. Sakthivel^[7[10]] the High Court of Madras has laid down that any interim order for attachment of property delivered by an arbitral tribunal should be read with Section 94 and follow the procedure under  Section 136 of the CPC, and as such “any property” even if it is not the subject matter of the arbitration can be attached. This puts arbitral tribunals at par with courts. Following on these lines, the Supreme Court confirmed that tribunals do not have power to affect the rights and remedies of third parties.^{[ 8[11]]} 

The jurisprudence in India relating to the standards to be applied by an arbitral tribunal while granting interim reliefs under Section 17 has  normally required irreparable harm; (b) urgency; and (c) no prejudgment of the merits of the case. In some cases tribunals have also considered whether the party has established a prima facie case and that the balance of convenience weighed in favor of the party.

How are Interim Measures u/s 9 and u/s 17 distinguishable?

In Firm Asok Traders Vs Gurumukhdas Saluja[12], the Apex court observed that Section 17 would operate only during the existence of the Arbitral Tribunal. During that period power conferred on Arbitral tribunal u/s 17 and power of court u/s 9 may over lap to some extent but so far as the pre and post the arbitral proceedings are concerned, party seeking interim measure of protection has to approach only court.

Aditya Jain is an Advocate on Record at Supreme Court of India and Partner at J&G Advocates

Neha Gyamlani is an Advocate practicing at Supreme Court of India and Rajasthan High Court.

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[1] 1999(2) SCC 479.

[2] Dirk India Private Limited v. Maharashtra State Electricity Generation Company Limited 2013 (7) Bom.C.R 493.

[3] Indus Mobile Distribution Private Ltd. v. Datawind Innovations Private & Ors (2017) 7 SCC 678.

[4] Arbitration Act, 1940 (Act No. 10 of 1940).

[5] Managing Director, Army Welfare Housing Org. vs. Sumangal Services (P) Ltd., (2004) 9 SCC 619, 649.

[6] M. D. Army Welfare Housing organization vs. Sumangal Services Pvt. Ltd., 2004 9 SCC 619.

[7] 2004 9 SCC 619.

[8] Alka Chadewar vs. Shamshul Ishrar Khan, (2017) 16 SCC 119.

[9] AIR 2016 Ker 211.

[10] 2018 SCC OnLine Mad 3080.

[11] State Bank of India vs. Ericsson India (P) Ltd., 2018 SCC OnLine SC 497.

[12] AIR 2004 SC 1433.