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Interim Reliefs - Section 9 Of The Arbitration And Conciliation Act, 1996

The Indian court system has been burdened with a lot of disputes which in turn creates a lot of pressure on the judiciary, resulting in many pending and unresolved matters. Therefore, the field of Alternative dispute resolution has gained a lot of importance.

Arbitration has turned out to be a very useful mechanism to resolve commercial and other disputes with greater efficiency and expediency. The main reason for the expansion of arbitration is the resilience that is available to the parties in matters such as the selection of law applicable and place and venue of convenience. The main focus of arbitration is on the freedom of the parties. Generally, the parties have the freedom to agree upon the procedure to be followed during the resolution of disputes.

The Arbitration and Conciliation Act 1996(hereinafter to be referred to as Act) is the law governing the field of arbitration in India which was enacted based on the United Nations Commission on International Trade Law (UNCITRAL), also called as the Model Law.

Many times it is observed that the parties try to use delaying tactics to delay the proceedings or to deplete the assets of the opposite parties.
This can negate the effect of the final relief or award given by the arbitrator. Therefore, to avoid these situations and to secure the interests of the parties, the Act is provided with the interim measures.

The interim measures can be sought by the parties in the following conditions:

  1. Before the commencement of the arbitral proceedings,
  2. During the arbitral proceedings,
  3. After the award has been given by the arbitral tribunal but before the execution of the award.
The parties prefer minimum intervention of courts in the arbitration proceeding to ensure speedy resolution of the disputes. Therefore, the Act focuses on minimum intervention of the courts. With the new amendments in the Act which were introduced in the year 2015, the Arbitral Tribunal has wide powers for granting the interim reliefs.

Interim Relief Provided Under Section 9

The Act provides for the interim measures under section 9 through courts and under section 17 through the arbitral tribunal. Section 9 and section 17 of the Act are based on article 9 and article 17 respectively of the Model Law.

Though section 9 of the Act is based on Article 9 of the Model Law but along with the option to seek relief before and during the arbitral proceedings, it provides an extra option of seeking interim relief after the award has been granted by the arbitral tribunal (before the execution of the award).

The Amendment of 2015 in the Act provides for certain changes such as if any interim order has been passed by the court before the constitution of the arbitral tribunal, the parties are required to initiate the arbitral proceedings within 90 days. After the arbitral proceedings start, the parties have to approach the arbitral panel for seeking interim relief. Generally, the courts will not allow a petition seeking interim relief after the tribunal has been constituted unless the party proves that the remedy given by the arbitral tribunal will be ineffective.

After the arbitral panel passes the final award, the winning party can seek the court for getting interim relief to ensuring the security and efficaciousness of the award. But generally, the application for the interim relief should be made before the enforcement of the award.

Where to apply under section 9?

As per section 2(I)(e) of the Act, a court can be a Principal civil court of original jurisdiction in a district and also a High court exercising its ordinary original civil jurisdiction except in international commercial arbitration. But for international commercial arbitration, a court will be a High court having an ordinary original civil jurisdiction.

An arbitration application is called as International commercial arbitration if one of the parties belong to a nation other than India. A party under an International commercial arbitration can be an individual, a corporate body, or a Government of a foreign country.

The question of jurisdiction was raised before the Supreme court in the case of Bharat Aluminum Company v. Kaiser Aluminium[i], where the court stated that the court of the seat of arbitration will have the jurisdiction.

Also in Indus Mobile Distribution Private Ltd. v. Datawind Innovations Private & Ors[ii], the Supreme court explained that fixation of the seat for arbitration will exclude the jurisdictions of all other courts.

Applicability of Section 9 in Foreign Seated International Commercial Arbitration

The Supreme Court has many times dealt with the question of applicability of section 9 in foreign seated International commercial arbitration.

In Bhatia International v. Bulk Trading S.A. and Another[iii], the Supreme court held that Part I of the Arbitration Act 1996 will also apply to international arbitrations held outside India unless the parties have agreed to exclude the applicability of the Act expressly or impliedly.

But later the Bhatia International judgment was prospectively overruled by a constitutional bench in Balco v. Kaiser[iv]. The Balco judgment was only applicable to the disputes arisen from the agreements entered into after 6th September 2012.

One of the very important amendments made in 2015 in the Act is that it allows an application for seeking interim reliefs under section 9 in Indian courts in an international commercial arbitration. Now the parties of a foreign seated international commercial arbitration can also apply for interim relief in Indian courts under section 9 of the Act provided that they have not in any way (express or implied), agreed-upon excluding the applicability of section 9. This was achieved by amending section 2(2) of the Act. The amendment settled the principle established under the Bhatia International Judgment.

Rule of Implied Exclusion

The question of Implied exclusion of section 9 is one of the frequently discussed topics. It is very important to understand the legal meaning of implied exclusion if we have to assess the effect of the Amendment Act on international arbitrations. In multiple cases, the Indian courts have excluded the applicability of Part I based on implied exclusion by considering many factors. Such factors include:
  1. Seat of arbitration,
  2. Law governing the arbitration,
  3. Procedural rules of foreign Arbitration Institutions.

Procedure to conduct the proceedings under section 9

The Act has not specified any specific procedure to conduct the proceedings under section 9 of the Act. Therefore, there always has been skepticism regarding the precise procedure to be followed.

There is a lot of ambiguity concerning this point as many high courts have given contradicting judgments. Despite this the Amendment Act has not made it clear.

In various judgments, the courts have tried to set certain general standards applicable to the proceedings under section 9. There are various Supreme Court judgments as regards to this.
In Adhunik Steels Ltd. vs. Orissa Manganese and Minerals Pvt. Ltd.[v], the court was of the view that the grant of the interim injunction is governed by the well-known principles and that it is difficult to imagine that the legislature while enacting Section 9 of the Act intended to make a provision which was not in conformity with the accepted principles that governed the grant of an interim injunction.

In Arvind Construction v. Kalinga Mining Corp[vi], the court affirmed that whenever a power is conferred upon an ordinary court of the land under a special statute, then the general rules of procedure of that court would apply. In this case, the court also mentioned that determining whether or not the provisions of The Civil Procedure Code (hereinafter referred to as CPC) will apply or not to the proceedings of section 9 will be left open to be considered in relevant cases.

The Supreme court in ITI v Siemens Public Communication[vii] held that even though there is no reference as to the applicability of the provisions of CPC in the Act, the court could use the provisions under CPC in the proceedings under this Act. Also, various High courts have tried to interpret these Supreme Court judgments.

In Anantji Gas Service v. Indian Oil Corporation[viii] the Delhi High Court stated that to succeed in the claim of interim measures, the petitioner will have to establish three things mentioned under Order 39 Rule 1 and 2:
  1. Prima facie case,
  2. Balance of convenience and
  3. Irreparable loss.
On the other hand various High courts have taken a view that the provisions under CPC will not apply to the proceedings under section 9.

In Delta Construction Systems Ltd.v. M/S Narmada Cement Company Ltd.[ix], the Bombay High Court held that the power of the court under section 9 is not constrained to the provisions of Order 38 Rule 5 and that while seeking reliefs under section 9 the petitioner only needs to show that the interim relief should be granted.

In The National Shipping Company of Saudi Arabia v. Sentrans Industries Ltd.[x], the court stated that while drafting section 9, the legislature had an intention to make the Act a self-contained, self operative code regarding matters of Arbitration and Conciliation and therefore there is no reason to make the provisions of CPC applicable to the Act.

Reliefs provided under section 9:

  1. Appointment of guardians for minor and person of unsound mind for the arbitral proceedings,
  2. Preservation, sale of goods, and providing interim custody of the subject matter,
  3. Securing the amount in dispute,
  4. Detention and inspection of the subject matter,
  5. Interim injunction and appointment of the receiver,
  6. Any other measure which the court will find just and convenient.

Appeals against the orders under section 9

Section 37(1)(b) allows for appeals against the orders provided under section 9 made to the suitable court provided under law.

End- Notes:
  1. Aluminum Company v. Kaiser Aluminium (2012) 9 SCC 552
  2. Indus Mobile Distribution Private Ltd. v. Datawind Innovations Private & Ors (2017) 7 SCC 678
  3. Bhatia International v. Bulk Trading S.A. and Another (2002) 4 SCC 105
  4. Balco v. Kaiser (2012) 9 SCC 552
  5. Adhunik Steels Ltd. vs. Orissa Manganese and Minerals Pvt. Ltd. AIR 2007 SC 2563
  6. Arvind Construction v. Kalinga Mining Corp. (2007) 6 SCC 798
  7. ITI v Siemens Public Communication. (2002) 5 SCC 510
  8. Anantji Gas Service v. Indian Oil Corporation. 2014 SCC OnLine Del 3732
  9. Construction Systems Ltd.v. M/S Narmada Cement Company Ltd. (2002) 2 Bom LR 225
  10. The National Shipping Company of Saudi Arabia v. Sentrans Industries Ltd. AIR 2004 Bom 136

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