Interim Reliefs under Section 9 of the Arbitration and Conciliation Act, 1996

Introduction

To obtain interim reliefs under section 9 of Arbitration and Conciliation Act, 1996 (“Act”) from a court of law, there must be either a written arbitration agreement or an arbitration clause in an agreement governing the commercial relationship between two parties. The time for invoking the jurisdiction of a court under section 9 could be either (i) before, or (ii) during arbitral proceedings, or (iii) at any time after rendering of the arbitral award but before its enforcement under section 36 of the Act. It would not be necessary for the court to consider whether the arbitral proceedings are pending or a notice invoking arbitration clause has been issued before an application under section 9 is filed. This has further been clarified by the Indian Supreme Court’s verdict in Sundaram Finance Ltd. vs. NEPC India Ltd[1].

Interim Reliefs

Section 9 of the Act provides for interim measures of protection not just before and during arbitral proceedings, which is a step in aid to the fruition of the arbitral proceedings, but also during the interregnum between rendering of the arbitral award and before its enforcement. The object and purpose of an interim measure being available until the time of its enforcement is to secure property, goods, or money for the benefit of the party which seeks enforcement[2]. In Ultratech Cement Limited vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited,[3]it was held that an interim injunction, ordered even before invocation of the arbitration clause, goes on to be valid till the enforcement of the arbitral award.

When an application under section 9 is made, the court will first have to be satisfied that there exists a valid arbitration agreement and that the applicant intends to take the dispute to arbitration. Once satisfied, the court will have the jurisdiction to pass orders under section 9 giving interim protection as the facts and circumstances warrant. The Supreme Court in Sundaram Finance (supra) has held that, to ensure effective steps are taken to commence arbitral proceedings, the court while exercising jurisdiction under section 9, can pass a conditional order so that effective steps are taken by the applicant for commencing the arbitral proceedings. The amended section 9 envisages that if a court passes an order for any interim measure of protection under section 9, the arbitral proceedings shall be commenced within ninety days from the date of such order or within such further time as the court may determine[4].

The question that if the place of arbitration is not in India, whether an application under section 9 would be maintainable was considered by the Supreme Court in Bhatia International vs. Bulk Trading S.A. and Ors,[5] (“Bhatia International”) wherein it was held that for international commercial arbitrations held out of India, provisions of Part I of the Act would apply, unless the parties by agreement, express or implied, exclude all or any of these provisions. In such situations, the laws or rules chosen by the parties will prevail and any provision in Part I of the Act which is contrary to or excluded by the law or rules chosen by the parties will not apply. Thus, from the aforesaid view taken by the Supreme Court, it was understood that even when the place of arbitration is not in India, the remedy of section 9 is available to the parties to an arbitration agreement.

However, subsequently in Bharat Aluminium Co. vs. Kaiser Aluminium Technical Services Inc[6] (“Bharat Aluminium”), the Constitutional Bench of the Supreme Court held that Part I of the Act applies only to arbitrations which take place within the territory of India, thus overruling the decision of the Supreme Court in Bhatia International by exercising its power under Article 142 of the Constitution. The Constitutional Bench, however, held that the law declared in  Bharat Aluminium would operate only prospectively[7], in other words, all agreements executed before the date of the judgment in Bharat Aluminium, i.e., September 6, 2012, will be governed by  Bhatia International. In Swastik Gases Private Limited vs. Indian Oil Corporation Limited[8], the Supreme Court held that where more than one court has jurisdiction, it is open for the parties to choose from such court and exclude all other courts. However, the moment a seat is designated, it is akin to an exclusive jurisdiction[9]. But if a party is enforcing a foreign award and is seeking recourse to section 9, it cannot be left without an effective remedy[10].

If an application under section 9 is made at the instance of an unsuccessful party to the award before an arbitral tribunal, there will not be any occasion for the courts to grant interim measures which will be in the aid of the execution of the arbitral award as such unsuccessful party will not be entitled to seek enforcement under section 36[11]. Therefore, the court will not grant any interim relief in favour of a party, against whom an award has been passed by the arbitral tribunal.

A question was raised before the Bombay High Court on whether a court could entertain and grant interim relief under section 9, when the arbitration agreement is contained in a document that is unstamped or insufficiently stamped. Upon consideration, it was held that the arbitration clause is a separate agreement from the main contract, therefore, it is only the arbitration agreement that would have relevance for an application under section 9. It was held that the entire purpose of granting interim measure is to protect the matters set out specifically under section 9 (1) (ii) (a) to (e) at any stage before the arbitral award is enforced. If an objection as to the sufficiency of the stamp is entertained and accepted at the stage of hearing the application under section 9, a party who has a good chance of ultimately succeeding in arbitral proceedings, would suffer gross injustice[12]. 

Conclusion

A party to an arbitration agreement or arbitration clause can approach a court at three different stages of arbitration proceedings for interim reliefs. However, the unsuccessful party to an arbitral award cannot file application under section 9 of the Act. In cases where more than one court has jurisdiction, it is open for parties to choose any of such jurisdictional court while excluding other courts. Although Part I of the Act applies only to domestic arbitrations, recourse under section 9 can be obtained during enforcement of foreign awards as well, depending on circumstances of the case.

The views and opinions expressed in this article belong solely to the author and do not reflect the position of Tatva Legal, Hyderabad.

[1] (1999) 2 SCC 479

[2] 2013(7) BomCR 493

[3] 2017 (2) SCALE 96

[4] Section 9 of the Arbitration and Conciliation (Amendment) Act, 2015

[5] (2002) 4 SCC 105

[6] (2012) 9 SCC 552

[7] (2016) 4 SCC 126

[8] (2013) 9 SCC 32

[9] Indus Mobile Distribution Private Limited vs. Datawind Innovations Private Limited and Ors (2017) 7 SCC 678

[10] Bombay High Court in Trammo DMCC vs. Nagarjuna Fertilizers and Chemicals Ltd   2018 (1) ABR 1

[11] MANU/MH/1058/2017

[12] AIR 2019 Bom 149