This article has been written by Shivaprakash Nagarale, from Christ University.

Introduction

In every arbitral proceeding, inclusive of domestic and international arbitrations, it is very essential for the parties to be provided with a provision for interim measures as it aids in providing a party with immediate protection of the interest such as to protect the property, evidence, or any specific right for a temporary period. Such interim measures prove to have crucial practical importance, they also are often very essential in giving effectiveness for an award rendered. 

In practice the parties to the arbitration who have an agreement can file before the appropriate court or tribunal an application for interim measures at any stage of the arbitration proceeding, such can be before the commencement of arbitral proceedings, during the course of the arbitral proceedings, or after the Award is rendered.

However, in the latter particular case where an award has been already rendered with, only the successful party may choose to approach the appropriate court or tribunal through interim measures for the enforcement of the arbitral award, to secure and safeguard the effectiveness of the award. Interim measures can be sought in several instances such primarily include, injunctions, orders seeking for safeguarding and protecting property especially those which are perishable in nature, seeking payment partly or fully of a claim, or seeking security for the costs, such may be granted by the appropriate courts or tribunals.

Provisions for interim reliefs

The provisions under Section 17 are derived from Article 17 of the UNCITRAL Model Law, which provides for the parties to seek interim measures from the tribunals unless otherwise there exists an agreement contrary to this provision. This provision can be invoked only in the interest of the parties. This provision holds good until a final arbitral award is passed by the tribunal, and it cannot be made applicable thereafter.

The object of these provisions is safeguarding the interests of one party over the other if there is a violation of the agreement between the parties.^[1] The general practice is such that once the arbitrary proceedings are initiated, the parties can choose to seek interim measures by filing an application before the appropriate tribunal as under Section 17 of the Act.^[2] Whereas in the court’s interim applications are allowed only if there is substantial proof of any circumstance that would make the order passed by the arbitral tribunal inefficacious.^[3] In simpler terms, it can be said that the scope of Section 17 of the Act extends only to such extent where it can be enforceable in lieu of Section 27(5) of the Act, for such reason that no two proceedings shall be entertained for the same relief sought in the same matter.^[4]

The scope and extent of Section 17 remain overshadowed by Section 9, as observed by SC in the case of M.D. Army Welfare Housing v. Sumangal Services Pvt. Ltd.,^[5] that the power of the tribunal to issue order is limited only to the extent of agreement as entered by the parties, such that the interim relief shall be only to protect the subject matter of the arbitration and hence cannot order the parties beyond this ambit. The Amendment Act however tries to address this issue of court supremacy system in domestic and international commercial arbitration, by bringing parity between the aforesaid provisions by enhancing the powers of the tribunal to grant interim relief.

Interim measures in international commercial arbitration

In such matters relating to International Commercial Arbitrations, and so also in foreign seated arbitration by the Indian parties, there has to be an application be made by the parties seeking for interim relief as provided under Section 9 of the Act as these are made applicable to foreign seated arbitrations. This principle was also enumerated in a recent case of Big Charter Pvt. Ltd. v. Ezen Aviation Pty Ltd.^[6] by the Delhi HC, it was observed that Part I of the Act can be extended to foreign seated arbitrations, by Indian parties.

The court in its capacity may intervene, in such cases if the arbitrator is found to be partly or entirely mistaken, or while exercising the inherent powers that are found to be malicious.^[7] Whereas unless there is a necessity for the intervention of Indian courts by way of interim relief in a foreign seated arbitration, as the order passed by the arbitrator remains inefficacious if such an order passed by the arbitrator or interim relief by the courts were to be enforced in India.^[8]

In an SLP filed before SC, the court observed that Section 9 cannot however be made applicable once the arbitral tribunal has been formed in terms of foreign seated arbitrations by Indian parties, where there is such an efficacious remedy which is available to the parties.^[9] This clause was introduced by the Amendment Act, 2015 under Section 9(3). This comes after the objects placed upon UNCITRAL Model Law which was amended in 2006. Hence, the SC emphasized on following the ‘court-subsidiarity’ model for interim reliefs by India, as also observed by the Law Commission of India^[10] which gives an upper hand to the tribunals over the courts in Foreign-Seated Arbitrations.

Developments through recent amendments

In the important BALCO^[11] case, the Supreme Court opted to redefine the scope and extent of interim measures. Prior to or after this particular case, the stance was that no such application seeking interim measures in the foreign seated arbitrations were per se maintainable. So also, there cannot be any applications made before the courts for the foreign seated arbitrations, or international commercial arbitrations having two or more of the Indian parties on both sides of the arbitration. The award passed by arbitral tribunals present outside of India, could not be enforced in India, this was seen to be a major problem for parties opting for foreign seated arbitrations. This, however, was addressed by the Amendment Act, 2015 through Section 2(2), which provides parties with a right to seek interim relief in the Indian courts and tribunals.

The 2015 amendment sought to change the principle approach held in the BALCO^[12] judgment, this led to major developments regarding the interim reliefs in India. This Amendment Act chose to follow several suggestions and recommendations made by the 246th Law Commission in its reports.^[13] 

The 2015 amendment tries to bridge the gap between the powers conferred on courts and tribunals, it tries to bring tribunals at par with the courts in terms of the powers vested upon them as under Section 17. This is aimed at mineralizing the interference of courts and to appraise the parties to approach the tribunals, to an extent where courts shall not allow interim applications after there is an arbitral tribunal being constituted.

However, an exception to this is when the order passed by an arbitral tribunal is seen to be inefficacious, courts can admit interim applications in such matters. Any such order passed by the tribunals holds the same merit as if it was passed by the courts, prior to this amendment the orders passed by the tribunals could not be enforced, thereby having any significance. Parties cannot approach the tribunals for the enforcement of the orders passed by themselves, in such cases, applications have to be made before the courts for the enforcement of such orders, as held by the High Court of Kerala in the case of K. N. Pradeep v. Tata Motors Finance Ltd.,^[14] Hence the courts hold more significance in view of the 2015 Amendment Act in this regard.

Section 2(2) of the Act, has overturned the BALCO judgment, and has become principle approach taken by the SC in the case of Bhatia International v. Bulk Trading.,^[15] it was held that the said provision of the Section can be made applicable in matters where the Indian parties choose a foreign seat of arbitration, or any other international commercial arbitrations, having the seat of arbitration in India or outside. Such arbitral awards passed are enforceable in India under part II of the Act. This was also held by SC in the case of Venture Global Engg. v. Satyam Computer Services Ltd.,^[16] the said proviso was inserted to establish parity between the courts and tribunals empowering them to issue interim orders, subject to an agreement to the contrary.

The Amendment Act of 2015 also inserts Section 9(3), which comes to light after the recommendations made by the 246th Law Commission Report^[17], having the intent to give more significance to the tribunal over courts, wherefore to reduce the burden on the courts with regard to the interim reliefs.

In the case of Ashwani Minda and Ors. v. U Shin Limited^[18] Delhi HC observed that parties seeking interim relief under Section 9 of the Act are not maintainable, in matters of foreign seated arbitration. The court gave out certain requisites for admission of interim applications, such that an application shall not be admissible before the courts after the arbitral tribunal is constituted unless there is no efficacious remedy available before the tribunal.

Extent of enforceability

The Act does not acknowledge the interim orders which are duly passed by the emergency arbitrator, seemingly has no mention about it in the texts. Otherwise, the interim orders which are passed under Section 17, in the matters of domestic arbitrations having the same value as of a decree passed by a court, which is enforceable under the CPC. There are no provisions under the Act providing for the enforcement of the interim orders which are passed by foreign seated arbitrations or any international commercial arbitration.

In the famous Raffles Designs case^[19], it was held that it is a primary requisite by the parties to file another new application under Section 9 of the Act, for the enforcement of orders or interim reliefs passed in foreign seated arbitrations which are inclusive of foreign seated arbitrations. In this case, the Delhi HC granted interim relief under Section 9, for enforcement of the orders passed by the emergency arbitrator.  

In the case of Ashwani Minda v. U-Shin Limited,^[20] it was observed by the Delhi HC that once the parties have approached the emergency arbitrator seeking for interim relief, an application cannot be maintainable before the court having the same circumstances. The interim order passed by the emergency arbitrators, or foreign arbitral tribunals. Therefore the present situation of the interim orders which are passed by the emergency arbitrators and so also by the foreign arbitral tribunals are of eloquent in nature, it cannot however be equated with the orders passed by the courts, even tough are not enforceable in India

Conclusion

The amendments provide a more pro-arbitration approach and reduce the overall intervention of the courts in terms of interim measures in commercial international arbitration. However, courts still hold supremacy over the tribunals with regards to the enforcement mechanism and the scrutiny of the orders passed by the arbitral tribunals. There have been several Indian judgments as discussed hereinabove which have interpreted the extent of the provisions relating to the interim measures in the Amendment Act. The amendments made are a great leap towards the development of more autonomy and relevancy for the arbitral tribunals, however, they fall short in various aspects.

It is high time that the global regime of arbitrations is taken into consideration in the Indian legal system, be it Singapore and Hong Kong, or the New York Arbitration Tribunal, which value the interim orders and provide for a mechanism for the enforcement of orders in matters of foreign seated arbitration, and so also the orders passed by the emergency arbitrator, whereas in India, the enforcement regime require the intervention of courts.