Disputes arising out of a contract containing an arbitration clause, unless specified otherwise, are referred to arbitration.1
However, in many instances to safeguard their rights parties need to seek interim reliefs either from the courts or from the Arbitral Tribunal which may be done before or after invocation of arbitration, during the arbitration proceedings and after the passing of the Arbitral Award. At such times the provisions provided in the Arbitration and Conciliation Act, 1996, come into play for providing interim reliefs to the contracting parties.
There has been an increased preference for arbitration over the years especially for resolving commercial disputes and this is because the law of arbitration encourages "party autonomy". However, certain provisions of the Arbitration and Conciliation Act, namely Section 9 and Section 17, safeguard the interests of one party over another, if the latter's actions are unbecoming in terms of equity, fair play or natural justice, or they inherently violate the underlying agreement – by granting interim protection to the former2 . Any contracting party is at liberty to file an application for interim measures during or before the arbitration proceedings. Under Section 9, a party is at liberty to file an application before the court for claiming interim reliefs and under Section 17 a party is at liberty to file an application before the arbitral tribunal for claiming interim reliefs.
INTERIM RELIEFS FROM THE COURT
Section 9 of the Arbitration and Conciliation Act, permits interim measures and any party to an arbitration agreement can seek relief by way of an interim application from the court3 under Section 9 of the Arbitration and Conciliation Act before the commencement of the arbitral proceedings or after the pronouncement of award but before its enforcement.
Sub sections (2) and (3) of Section 9 were introduced by the 2015 amendment. The sub Section (3) is a provision in the nature of an exception4 as the legislature has very clearly communicated its intent that the court does not have the mandate to entertain an application under Section 9 after the arbitral tribunal's constitution. The words being used by the legislature are "the Court shall not entertain", which makes it crystal clear that once Arbitration has been invoked and the Arbitral Tribunal has been constituted then court shall not entertain applications under Section 9 of the Arbitration and Conciliation Act. However, an exception to this rule has also been provided i.e., the court may entertain an application under Section 9 after the constitution of arbitral tribunal only under extraordinary circumstances, i.e., when the remedy available under Section 17 can be said to be becoming inefficacious5 . Otherwise, in other circumstances, remedy in form of an interim relief after the constitution of arbitral tribunal first lies under Section 17 of the Act.
The object of insertion of both the Sub-Sections i.e., (2) and (3) is to see that the steps are not unnecessarily resorted to for interim measure under Section 9 or that the measures under this section are not unduly protracted by the party who may have obtained the order for interim measures under Section 9 but would while away the time in commencing the actual arbitral proceedings in order to continue enjoying the interim measures. Therefore, by resorting to Sub-Section (2) in Section 9, it is provided that if before the commencement of arbitral proceedings a court has passed order of interim measure of protection under Sub-Section (1), arbitration proceedings shall have to commence within a period of 90 days from the date of such order.6
Therefore, the circumstances wherein the court can exercise powers under Section 9 of the Act for giving interim reliefs are as follows:
1. Before the Arbitral Tribunal has come into existence i.e., before the constitution of Arbitral Tribunal
2. After the pronouncement of Arbitral Award but before its enforcement
3. When the remedy available under Section 17 would be inefficacious
It is also pertinent to mention that a relief granted by a court under Section 9 in the form of an order may be enforced like any other order under any other statute passed by the court.
INTERIM RELIEFS FROM THE TRIBUNAL
Section 17 of the Arbitration and Conciliation Act gives power to the arbitral tribunal7 to grant interim reliefs to any of the parties when an application under the said Section is filed before the tribunal. Section 17 of the Act comes into play only when the arbitral tribunal has been constituted and an award has not been passed by the tribunals. Hence, the circumstances when the arbitral tribunal is at liberty to decide an application under Section 17 are:
1. During the continuance of arbitral proceedings, i.e., after the tribunal has been constituted
2. Before the arbitral tribunal passes an arbitral award
Before the 2015 Amendment Act came into force, Section 17 gave a wide range of powers to the arbitral tribunal as the tribunals had powers to issue any sort of interim measures of protection and there was no exception or limitation carved out in the 1940 Act.
However, the 2015 Amend ment Act limited the powers of the arbitral tribunal and carved out the situations and the manner of exercising powers under Section 17 of the Act.
However, even before the 2015 amendment, the courts had time and again made it clear that the powers granted to arbitral tribunal under Section 17 were limited in nature and less in comparison to Section 9 of the Act, i.e., the power vested with the court to grant interim relief has always been more than the arbitral tribunal.
In the case of M.D., Army Welfare Housing Organisation v. Sumangal Services Pvt. Ltd.8 , it was held "An arbitral tribunal is not a court of law. Its orders are not judicial orders. Its functions are not judicial functions. It cannot exercise its power ex debito justitiae. The jurisdiction of the arbitrator being confined to the four-corners of the agreement, he can only pass such an order which may be subject matter of reference.". It was further held, "In absence of an agreement to the contrary, in terms of the provisions of Arbitration Act, 1940 an arbitrator can pass only an interim award or a final award. Such awards are enforceable in law. The award of an arbitrator whether interim or final are capable of being made a rule of court, decree prepared and drawn up in terms thereof and put to execution." The Hon'ble Supreme Court further clarified in this judgment that an arbitral tribunal, under Section 17 of the Act, has no jurisdiction to pass interim measures against a third party.
It is also pertinent to mention here that all the orders passed under Section 17 of the Act are appealable only under Section 37 of Act. Though unclear earlier, the Amendment Act of 2015 has made it crystal clear that any order issued by an arbitral tribunal under Section 17 shall be deemed to be an order of the court for all purposes and shall be enforced in the same manner as if it were an order of the court.
Therefore, the powerplay between the courts and arbitral tribunals continues to exist in India. However, the recent amendments have aimed to clarify the scope of powers that the courts and arbitral tribunals possess under Section 9 and 17 of the Act respectively.
1 Section 7 of the Arbitration and Conciliation Act,1996 provides that in case of existence of arbitration agreement, parties can refer their disputes to arbitration c 2 Baby Arya v. Delhi Vidyut Board (AIR 2002 Del 50). 3 Defined under Section 2(1) (e) of the Arbitration and Conciliation Act
4 Manbhupinder Singh Atwal vs. Neeraj Kumarpal Shah [(2019)4GLR3229], Para 5.1.1
5 Manbhupinder Singh Atwal vs. Neeraj Kumarpal Shah [(2019)4GLR3229], Para 5.1.1
6 Manbhupinder Singh Atwal vs. Neeraj Kumarpal Shah [(2019)4GLR3229], Para 5.1.2
7 Defined under Section 2(1)(d) of the Arbitration and Conciliation Act
8 (2004) 9 SCC 619
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