Speedy disposal and appropriate relief are always desirable in any dispute, especially in commercial disputes, for which arbitration is preferred as an alternate forum for dispute resolution. However, in such commercial disputes, immediate relief is often necessary to prevent harm to the parties involved, pending final adjudication of such disputes. Therefore, provisions for interim reliefs are crucial in such scenarios. In India, Sections 9 and 17 of the Arbitration & Conciliation Act, 1996 (“Act”) empower Courts and arbitral tribunals to grant such reliefs through interim measures.
As interim measures u/s 9 of the Act, Courts have the power to grant interim injunctions, appoint receivers, issue attachment orders, or take other measures to secure amounts or preserve property in dispute. The principle governing the issuance of interim measures is that a Court must exercise its judicial discretion while weighing factors such as balance of convenience, the likelihood of a prima facie case, and the potential for irreparable harm. Additionally, Courts can grant interim relief under Order 39, Rule 1 and 2 of the Code of Civil Procedure, 1908, or through their inherent power u/s 151[1] . Section 9 also allows Courts to issue interim measures beyond the dispute's subject matter, including those deemed equitable and convenient. Under section 9, a party may approach the Court seeking interim relief(s) at any time:
In comparison to section 9, under section 17 of the Act arbitration tribunal is empowered to grant same interim reliefs what the Court is empowered to grant under section 9. However, u/s 17 interim reliefs can be sought during the subsistence of the arbitral tribunal i.e. during the course of arbitral proceedings and after the award has been made but before its enforcement[2] .
A bare perusal of sections 9 and 17 of the Act demonstrates that the authority conferred upon the Court stands in contrast to the powers given to arbitrators, who may exercise their authority u/s 17 solely during the tenure of the arbitral tribunal.[3] Once the tribunal's mandate has expired, Section 17 can no longer be invoked. Thus, the power of Courts to grant interim relief under the Act and rules made thereunder, in general, is wider than that of an arbitral tribunal in most cases. Further, the constitution of an arbitral tribunal can be a protracted process, during which a dishonest party may attempt to undermine the arbitration process by interfering with the subject matter of the dispute. To prevent such actions, Court intervention through the granting of interim relief serves as a safeguard, ensuring that parties cannot disrupt or misuse the disputed assets. In such cases, Section 9 of the Act empowers parties to seek timely and effective interim relief from the Courts.
Allowing such intervention by the Court may appear to go against the basic principle of arbitration, but it is unavoidable for a variety of reasons as followed:
At this juncture, a legal issue arises regarding the Court's power to grant interim relief after the constitution of an arbitral tribunal, potentially undermining the tribunal's authority u/s 17. The 2015 Amendment addressed this by introducing Section 9(3), limiting Court intervention unless circumstances exist rendering the arbitral tribunal’s powers u/s 17 inefficacious. Such circumstances were elucidated by the Hon’ble Supreme Court in Arcelor Mittal Nippon Steel India Ltd. v Essar Bulk Terminal Ltd.[4] wherein the Court opined that even after an arbitral tribunal is constituted, various factors, such as the temporary unavailability of arbitrators due to illness, travel, or logistical challenges such as arbitrators being geographic dispersed, may render the tribunal ineffective in providing timely relief. In such cases, the Court may need to entertain applications for urgent interim relief u/s 9(1) of the Act. Further, the Hon’ble Calcutta High Court also held that an interim measure granted by the tribunal may be deemed ‘inefficacious’ for the purpose of section 9(3) of the Act in situations where arbitrators exhibit delays or lack diligence in granting interim relief concerning assets.[5] Thus, to safeguard the interests of the parties involved, the Courts have recognized that certain exceptional circumstances may still necessitate judicial intervention.
Apart from the aforesaid, an occasion arose before the Delhi High Court in Benara Bearings and Pistons Ltd. vs. Mahle Engine Components India Pvt. Ltd.[6] wherein the Court dealt with the issue – whether the constitution of an arbitral tribunal mandates relegation of a matter involving an application for interim measures that is pending before the Court. The Hon'ble High Court in that case observed that the constitution of an arbitral Tribunal does not bar the Court from entertaining a Section 9(1) application, as section 9(3) permits such action if the remedy u/s 17 is ineffective. Further, the Court also opined that the Act contains no provision mandating the transfer or relegation of pending Section 9(1) applications to the Tribunal upon its formation. Therefore, the constitution of an arbitral tribunal does not automatically require the relegation of a pending Section 9(1) application to the tribunal.
Contrary to the legislative intent and harmonious interpretation by the judiciary, Court’s intervention during arbitral proceedings, granting interim relief, was misused by the parties often, as was recognized by the Law Commission of India in its 176th report, published in 2001. Instances are there where unscrupulous parties exploited Court-granted interim measures by delaying the constitution of an arbitral tribunal, destroyed or tampered with evidence, attempted to concoct witnesses etc.[7] The Amendment Act 2015 sought to address these issues by inclusion of subsection (2) in section 9 prescribing time limit and widening the scope of powers of arbitral tribunal to issue interim measures. Nevertheless, the effectiveness of the said Amendment remained questionable by scholars.
An analysis of the aforementioned precedents clearly indicates that the powers conferred to Courts under the Act are broader than those conferred upon arbitral tribunals u/s 17, even after the 2015 amendment. However, these expansive judicial powers of the Courts should be exercised judiciously and regarded as complementary to, rather than conflicting with, the tribunal’s authority.
