Interim Measures By the Court [Section 9 of the A&C Act]

Table of Contents :

  1. Introduction
  2. What does Interim Measures means?
  3. Interim Relief Under Section 9 of the Act.
  4. Jurisdiction of Court for the application of Section 9.
  5. Enforceability and appeal against interim relief granted under section 9.
  6. Conclusion
  7. Case Laws on Section 9

Introduction

Arbitration and Conciliation Act is effective and interrogative part of Alternative dispute resolution system accepted universally. Arbitration and Conciliation Act 1996 repealed old Arbitration Act existing in India and incorporated law relating to domestic arbitration, international commercial arbitration and law relating to conciliation. The new Act was enacted on the lines of the United Nations commission on International Trade Law (UNCITRAL) for ensuring a fair and efficient settlement of disputes in an international commercial contract. Whenever there is an ambiguity in arbitration matters, our Courts have relied on UNCITRAL rules for interpretation and application of the provisions of new act.

The concept of arbitration gained traction in the business world because of expenses and delays involved in formal court processes. The idea is to settle disputes quickly without incurring a lot of costs.

Arbitration typically begins when the disputing parties agree to the process. This agreement may have been made before the dispute arises through a clause in the contract that requires any dispute to be settled by arbitration and not court action.

How Arbitration is done –  A person or body that presides over the arbitration process is called the arbitrator. Usually, the arbitrator consists of a tribunal of members. The tribunal or arbitrator can be appointed by any of the three methods:

  • Directly. The disputing parties may directly choose the arbitrator. In this case, both parties must consent to the choice of arbitrator.
  • By Tribunal Members. Each side appoints one arbitrator and then the two arbitrators appoint a third member.
  • By an External Authority. In some cases, the arbitrator is appointed by a court or a body nominated by the disputing parties.

During the arbitration process, the arbitrator normally hears from the disputing parties. The parties may present witnesses and share relevant documents. When everything is concluded, the arbitrator will issue a ruling that may or may not be final depending on the rules of the initial contract between the two parties.

Forms of an Arbitration –

  • Commercial arbitration is normally for enterprise disputes.
  • Consumer arbitration is for disputes between a goods supplier and a consumer.
  • Labour arbitration is done in disputes arising from employment. Labor arbitration may be about employee grievances or interests.

Arbitration can also be classified into two categories depending on the arbitration authority: ad hoc arbitration and arbitration organized by dedicated arbitration institutions.

  • Ad Hoc Arbitration. Ad hoc arbitration involves the use of arbitrators who are appointed for that particular situation. Normally in this type of arbitration, the disputing parties have a say on who will arbitrate. The arbitrator will follow rules that are set by the disputing parties.
  • Arbitration By a Dedicated Authority. In this type of arbitration, a dedicated body is the arbitrator. Normally, this type of arbitration follows standard rules set by the arbitration body. Many businesses rely on the American Arbitration Association. The association has standard rules called the Commercial Arbitration Rules.

What does interim order means?

To start with Interim measures means any temporary measures, whether in the form of an arbitral award or in another form, by which, at any time before the issuance of the arbitral award by which a dispute is finally decided, the arbitral tribunal orders a party to. Actions taken to immediately control or abate threats or potential threats to human health or the environment from releases or potential releases of hazardous waste or hazardous constituents, which can be initiated before implementation of the final corrective measures for a Facility.

From a party’s perspective, seeking an interim measure of protection may be priority over commencement of arbitration proceedings or constitution of an arbitral tribunal and Indian law does consider this situation. Section 9(1) of the Arbitration and Conciliation Act, 1996 (the “Act”) empowers parties to an arbitration agreement to seek interim measures of protection by applying to a Court1 before or during arbitral proceedings or at any time after making of the arbitral award, but prior to the enforcement of the arbitral award2. To give effect to the words “before or during arbitral proceedings” occurring in Section 9 of the Act, Courts have held that an application under Section 9 of the Act is maintainable even before the commencement of the arbitral proceedings3 and that a Court is not debarred from dealing with an application under Section 9 of the Act merely because a party has not commenced arbitral proceedings in accordance with Section 21 of the Act4. Similarly, Section 17 of the Act empowers parties to an arbitration agreement to apply for interim measures of protection “during the arbitral proceedings”. The expression “during the arbitral proceedings” is elastic enough to also include emergency arbitration proceedings under the rules of an arbitral institution5.

A concern prior to 2015 was the possibility of party securing interim measures of protection from a Court and delaying the commencement and/or constitution of an arbitral tribunal. To address this concern, the Arbitration and Conciliation (Amendment) Act, 2015 (the “Amendment Act”), inserted Section 9(2) and Section 9(3) of the Act. Section 9 (2) requires that in the event a Court passes an order for any interim measure of protection under Section 9(1) of the Act before the commencement of arbitral proceedings6, then arbitral proceedings shall commence within a period of (90) ninety days from the date of such order or within such time as the Court may determine. Section 9(3) is a general rule that curtails the power of a Court to entertain an application under Section 9(1) of the Act once an arbitral tribunal is constituted, the exception to this rule being extra-ordinary circumstances which render the remedy under Section 17 of the Act inefficacious7. The object of introducing Section 9(3) of the Act was to avoid Courts being flooded with applications under Section 9 of the Act8.

The Amendment Act has also amended Section 17 of the Act to give teeth to the interim orders of an arbitral tribunal. Section 17(1) of the Act redefined the scope of reliefs that may be granted by an arbitral tribunal and the amended Section 17(1) of the Act now empowers arbitral tribunals with powers identical to that of a Court as provided under Section 9(1) of the Act.

In this backdrop, an interesting question that arises is—What happens if the arbitral tribunal is constituted during the pendency of the application under Section 9(1) of the Act seeking interim measure(s) of protection?

The intent of this article is to examine this question based on the approach adopted by the High Court of Delhi.

Interim Relief Under section 9 of the Act

Section 9 of the Act mentions that a party may put up an application for interim relief to the court before the commencement of arbitration proceedings, during arbitration proceedings or at any point of time before the enforcement of the arbitral award. However, generally, courts do not allow a petition for interim relief after the arbitral tribunal has been constituted unless the aggrieved party proves beyond doubt that the interim relief that has been / may be provided by the arbitral tribunal under Section 17 of the Act is/shall be futile.

Nevertheless, the power to grant interim relief to the aggrieved party before the arbitral tribunal is constituted and after the arbitral award is passed lies with the courts only. Further, Section 9 also states that in case the court passes an order for interim relief before the commencement of arbitral proceedings, then the arbitral proceedings shall have to be commenced within 90 days from the date of the interim relief order or within such further time that the court may grant. 

Thus the interim measures/orders, are temporary measures/orders passed by the Court in the Course of, or during the pendency of litigation proceedings. Order XXXVIII (38) and XXXIX (39), and XL (40) of Civil Procedure Code,1908, make ample of provisions on interim measures.

In NV Choudhary v/s Hindustan Steel works Construction Ltd.[1], the high court in Andhra Pradesh, laid down the principles to be considered by a court when granting interim injunctions. According to the Court, it must be considered whether a prima facie case has been established by the person who seeks an interim (temporary) injunction. Secondly, it must be considered whether the balance of convenience is in the applicant’s favour.

Interim relief is like an urgent remedy granted in exceptional circumstances.

Generally, interim relief is granted when:

  1. prima facie there is a case;
  2. the balance of convenience lies with the aggrieved party who is seeking the relied; and
  3. irreparable damage or injury may be caused if the interim relief is not granted.

Jurisdiction of Court for the application of Section 9

The court of the seat of arbitration has exclusive jurisdiction over the arbitration proceedings under the Act. Therefore, Section 9 application by any party has to be made in the relevant district court or High Court. 

However, in the case of international commercial arbitration, i.e. when at least one of the parties is non-Indian, then Section 9 application may be made only in the High Court. After the amendment of the Act in 2015, a party of a foreign seated international commercial arbitration may apply for interim relief under Section 9 in Indian courts, provided they have not, in any express or implied way, agreed to exclude the applicability of Section 9 of the Act.

In case an application for interim relief is pending before a court and the arbitral tribunal is constituted in the meantime, it does not imply that the court cannot deal with the pending application. There is no provision in the Act which states that the court is required to relegate or transfer a Section 9 application to the arbitral tribunal the moment it is constituted.

It would also be pertinent to mention here that all subsequent applications under Part I of the Act must be made at the same court in which the Section 9 application has been made.

Enforceability and appeal against interim relief granted under section 9

The interim relief granted by a court has to be enforced like any other order of the court. Any willful non-compliance or disobedience of the interim relief order may be treated as contempt of court and dealt with according to the existing laws of the land. However, an appeal against an interim order may be made to the suitable court as per Section 37(1)(b) of the Act.

Enforcing an interim relief granted by an arbitral tribunal seated outside India

As Section 17 falls under Part I of the Act, parties can apply for interim relief under Section 17 only if the seat of arbitration is in India. Any interim relief order passed by an arbitral tribunal seated outside India cannot be directly enforced in India as there are no relevant provisions in the Act which permit the enforceability of interim orders granted by tribunals seated outside India. In order to enforce an interim relief order granted by an arbitral tribunal outside India, the party shall have to file an application under Section 9 of the Act provided the parties to the arbitration agreement have explicitly excluded the applicability of Section 9 from the contract.

Conclusion

Thus, it is clear that the right of the aggrieved party is protected at every stage, i.e. even before the commencement of arbitration, during the arbitration proceedings and even after the passing of the arbitral award. The interim relief orders granted by the court or the arbitral tribunal are enforceable. 

Case Laws Regarding Section 9 of Arbitration Act

Arcelor Mittal Nippon Steel India … vs Essar Bulk Terminal Ltd.[2]

Sundaram Finance Ltd vs Nepc India Ltd[3]

Bharat Aluminium Co vs Kaiser Aluminium Technical[4]


[1] https://indiankanoon.org/doc/837608/

[2] https://indiankanoon.org/docfragment/110706470/?formInput=section%209%20of%20arbitration%20act%20%20doctypes%3A%20supremecourt

[3] https://indiankanoon.org/docfragment/507484/?formInput=section%209%20of%20arbitration%20act%20%20doctypes%3A%20supremecourt

[4] https://indiankanoon.org/docfragment/173015163/?formInput=section%209%20of%20arbitration%20act%20%20doctypes%3A%20supremecourt

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