Interim relief under section 9 and 17 of Arbitration and Conciliation Act, 1996

Interim relief under Section 9

 A plain reading of the section 9 indicates that a party may before or during the arbitral proceedings or at any time after making of the arbitral award but before it is enforced in accordance with section 36, may apply, to the court for interim measure of protection. Prayers for interim measures of protection may include:

-Appointment of a guardian for a minor or person of unsound mind

-Preservation or interim custody or sale of goods, if goods are of perishable nature.

-Securing the amount of claims

-Allowing inspection or interim injunction or appointment of receiver.

-Any other relief’s as the court may in its discretion may deem proper considering the circumstance of the case.

Interim relief under Section 17

Let us now examine the powers of Arbitral Tribunal under section 17. If the arbitration agreement does not prohibit, Arbitral Tribunal at the request of a party, may order the other party to take such interim measures of protection as it may deem necessary in respect of subject matter of dispute. In the process, it can order for providing appropriate security in exercise of its power. The power also has to be exercised within the terms of reference of arbitration agreement. It is very strange that Section 17 although permits Arbitral Tribunal to pass interim order, it does not give any power to Tribunal to enforce its order. Also there is no section in the new Arbitration Act which ensures enforcement of interim orders passed by the Tribunal or to treat interim order as an enforceable decree like that of final award. In other words, the powers of the tribunal is limited and any interim award necessarily has to merge with the final award for attaining enforceability.

In UNCITRAL model law similar power is given to arbitral tribunal under Article 16 and 21 of Arbitration Rules.

Comparison between Section 9 and Section 17

Analysis of Section 9 and Section 17 would lead us to the following conclusions:-

-The new arbitration Act empowers the arbitral tribunal to pass orders for giving interim relief while such power is not vested under the Old Act.

-Powers under Section 17 can be exercised only after the arbitral tribunal is constituted and it starts functioning.

-Powers of court under section 9 are wide as the words “before, during or after indicate so. A party can approach the court to seek interim measures of protection even before the arbitration commences.

-Court’s powers are wide and have supremacy in granting interim relief. However interference of court when Tribunal is constituted is minimum.

Judicial precedents:

Let us now refer to some important judgments for understanding the effectiveness or limited effectiveness of Section 17

No power to Arbitral Tribunal to enforce its orders under section 17

Supreme Court of India of MD Army WHO Vs Sumangal services (p) Ltd reported in AIR 2004 SC

1344 observed that even under Section 17 of the 1996 Act the power of the arbitrator is a limited one. It cannot issue any direction which would go beyond the reference or the arbitration agreement. Even under Section 17 of 1996 Act, an interim order must relate to the protection of subject-matter of dispute and the order may be addressed only to a party to the arbitration. It cannot be addressed to other parties. Even under Section 17 of the 1996 Act, no power is conferred upon the Arbitral Tribunal to enforce its order nor does it provide for judicial enforcement thereof.

Relief under Section 9 can be granted even before commencement of arbitration.

In the case of M/s Sundaram Finance Ltd. v. M/s NEPC India Ltd., AIR 1999 SC 565, Supreme Court was to examine the issue whether under section 9 of the Arbitration and Conciliation Act, 1996, the court has jurisdiction to pass interim orders even before arbitral proceedings commence and before an arbitrator is appointed. SC held that it is not necessary that arbitral proceedings must be pending or at least a notice invoking arbitration clause must have been issued before an application under Section 9 is filed.

Interim measure under section 9 and under section 17 are distinguishable

In Firm Asok Traders Vs Gurumukhdas Saluja AIR 2004 SC 1433, 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 under section 17 and power of court under section 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.

Conclusion

While drafting arbitration clause, one should keep in mind whether the arbitral tribunal should be given the power to grant interim relief or not. If arbitration clause provides for such power to arbitral Tribunal, then one need not approach the court for such relief. But there exists a doubt about its enforceability, if it is not complied with by the party. Courts can be approached only if interim relief as prayed is refused under section 37(2)b) but not for enforcing the interim relief granted by the arbitrator. It is high time that law makers should amend the Act to make interim award enforceable like that of final award.

Aishwarya Says:

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