Interim Reliefs from Court in International Arbitration
Under Section 9, the court has wide powers to grant interim measures of protection as may appear to the court to be just and convenient, including for preservation, interim custody or sale of goods which are the subject matter of arbitration, for securing the amount in dispute, interim injunction, appointment of a receiver or guardian, etc. Any party to the arbitration agreement can make an application for interim measures in the course of the arbitral proceedings. However, after making of the arbitral award, only a successful party which is entitled to seek the enforcement of the award can apply to the court under Section 9 for protection in terms of Section 9 (ii) of the Act. Consequently, even on the award being set aside, the party whose claim has been rejected vide the said award, cannot apply for interim measures.
Under the Act, the parties can seek interim relief from courts and arbitral tribunals under Sections 9 and 17 respectively.
A party may, before, or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced, apply to a court for seeking interim measures and protections, including interim injunctions, under Section 9 of the Act.
The Arbitral Tribunal, in accordance with Section 17, can also provide interim measures of protection or ask a party to provide appropriate security in connection with the matter of the dispute, as is found appropriate, during the course of the arbitral proceedings. However, the powers of the Arbitral Tribunal were narrow, as compared to the powers of the court under Section 9 of the Act.
Applicability of Amendment Acts
The 2015 Amendment Act has made significant changes which will affect the grant of interim reliefs in arbitration proceedings commenced after October 23, 2015.
A. Interim reliefs under Section 9
a. If an arbitral tribunal has been constituted, an application for interim protection under Section 9 of the Act will not be entertained by the court unless the court finds that circumstances exist which may render the remedy provided under Section 17 inefficacious.
b. Post the grant of interim protection under Section 9 of the Act, the arbitral proceedings must commence within a period of 90 (ninety) days from the date of the interim protection order or within such time as the court may determine.
B. Interim reliefs under Section 17
Section 17 has been amended to provide the Arbitral Tribunal the same powers as a ‘civil court’ in relation to the grant of interim measures. Notably, the Arbitral Tribunal will also have powers to grant interim relief post the award but prior to its execution. Further, the order passed by an Arbitral Tribunal in arbitrations seated in India will be deemed to be an order of the court and will be enforceable under the Code of Civil Procedure, 1908 (“CPC”) as if it were an order of the court, which provides clarity on its enforceability. The intention appears to be to vest significant powers with the Arbitral Tribunal and reduce the burden and backlog before the courts.
There was confusion on the extent and scope of arbitrator’s powers to grant interim relief, and enforceability of such orders has proven difficult. This issue has been aptly addressed by making the enforceability of orders issued under Sections 9 and 17 of the Act identical in case of domestic and ICAs seated in India. However, in certain situations, a party will be required to obtain an order of interim relief from a court only (e.g. injunctive relief against encashment of a bank guarantee).
The 2015 Amendment Act, gave the tribunal the power to grant interim relief “during the arbitral proceedings, or at any time after the making of the arbitral award, but before it is enforced in accordance with section 36”. This had created some ambiguity as the tribunal becomes functus officio once the final award has been rendered. However, the 2019 Amendment Act resolved this issue by omitting the words “or at any time after the making of the arbitral award, but before it is enforced in accordance with Section 36” from Section 17 of the Act.