INTERIM RELIEF IN INDIA: MAXIMISING LEGISLATIVE INTENT AND JUDICIAL WILL THROUGH EMERGENCY ARBITRATION

-Shubhankar Sharan and Sahsransh Pandey*

INTRODUCTION

The Arbitration & Conciliation Act of 1996 was brought to enable parties to settle their disputes speedily and cost-effectively, while not having to go through the rigours of Courts. However, there are certain situations, wherein a party seeks interim relief before the Courts with the motive of preserving the subject matter of the dispute from alienation, distortion, etc. Such interference of courts, even within the legal parameters of Section 5, defeats the fundamental purpose of choosing Arbitration as a measure for resolving disputes. Therefore, the amendment to Section 17 has been a step forward in furthering the legislative intent behind passing of the Arbitration Act i.e., Judicial Non-Intervention. However, the bone of contention with the effective application of the said section is that the constitution of an Arbitral Tribunal is a time-consuming process, which gives enough time for distortion and tampering of evidence, therefore, the party is left with no option but to avail Interim Relief before the courts under Section 9.

Key Words: Interim Relief, Section 9, Interference, Emergency Arbitration.

ANALYSIS OF SECTIONS 9 & 17

Under Section 9, parties to a dispute can approach the courts seeking interim relief. Precisely, Section 9(1) permits the parties to approach the court at any point before or after the arbitral proceedings, or after an award is made but before the enforcement of the same under Section 36 of the Act, as witnessed in the case of Union of India v. U.P. State Bridge Corpn. Ltd. Further, the Amendment to the Arbitration and Conciliation Act, 1996 in 2015, inserted sub-clause 3, under section 9, whereby certain constrictions were imposed upon the powers of the court to entertain interim relief applications, as mentioned under Section 9(1) of Act. It directed the Courts to preclude entertaining applications for interim relief after the Tribunal is constituted unless the relief provided by the Tribunal under Section 17 proves to be inefficacious after the constitution of the Tribunal. Further, the same is not possible in light of Section 32, where the mandate of the Tribunal is terminated after the proceedings. Therefore, in a situation wherein the party has to seek interim relief before the constitution of a tribunal or after the end of the proceedings, he is left with the option of approaching courts under Section 9, which even after falling within the legal parameters of Section 5, must not contravene the principle of ‘judicial minimalism’ in arbitration proceedings. This principle has come under significant scrutiny vis-à-vis interim relief. The Amendment Act of 2015 emboldens section 17 and proffers an option, to the parties, of an agreement to exclude the jurisdiction of Courts. Further, the Gujarat High Court in Arcelor Mittal Nippon Steel (India) Ltd. V. Essar Bulk Terminal Ltd., mentioned, “The 2015 Amendment also introduces a deeming fiction, whereby an order passed by the Arbitral Tribunal under Section 17 is deemed to be an order of Court for all purposes and is enforceable as an order of Court.” Apart from the amendment, the Delhi High Court in Avantha Holdings Ltd v. Vistara ITCL (India) Ltd. has identified the aspect of ‘emergent necessity’ as a sine qua non for courts to consider before granting interim relief. These two judgments whereby the courts have strengthened the provisions of Section 17, while also curtailing the powers of courts under section 9, have furthered the legislative intent of judicial minimalism with reference to granting interim relief.

However, the term ‘efficacious’ as mentioned in Section 17 ushers in subjectivity, therefore, expanding the scope of intervention by the courts. In cases where the parties seek interim relief before the Tribunal, if such relief by the tribunal is found by the courts to be not ‘efficacious’, such situations would invoke the intervention of courts, thereby defeating the underlying essence of Arbitration i.e., Judicial Minimalism.

In light of the same, the courts must adopt a strict approach towards the application of Section 9(3). To illustrate, in the case of Manbhupinder Singh Atwal v. Neeraj Kumarpal Shah, the party, against whom such relief was sought, protracted the proceedings by employing baseless accusations of the arbitrator’s efficacy, propriety, and neutrality to develop a case of “inefficacy”, in light of which, the intervention of courts into the confines of Arbitration took place, thus going against the legislative intent of Judicial Minimalism. Furthering this contention, the Delhi High Court in Leighton India Contractors Private Ltd. V. DLF Ltd., observed that the scope of section 9 is considerably broad and expansive that doesn’t whittle down the powers of the courts.

Lastly, in light of what has been mentioned hereinabove, it can be clearly understood that a party which seeks interim relief would be left with no other option but to approach the courts in cases when such relief is sought ‘before the constitution of the Arbitral tribunal and ‘after the passing of an award by the Tribunal’, as the words, “or at any time after the making of the arbitral award but before it is enforced in accordance with section 36” were dropped off from section 17, pursuant to the 2019 amendment.

In a similar vein, the court’s inherent powers of granting interim reliefs against third parties fall within the scope of Section 9, however the same cannot be granted by the Tribunal. Since the efficacy would be compromised on account of inaction of the Tribunal under section 17 against third parties, the relief-seeker would have no option but to approach the Courts for the same, and hence, accentuate the dependency on courts.

EMERGENCY ARBITRATIONAS A POSSIBLE CATALYST OF JUDICIAL MINIMALISM

The concept of Emergency Arbitration hasn’t been incorporated in the Arbitration and Conciliation Act of 1996. In this regard, attempts have been made by the Law Commission in its 246th Report, where the commission advocated for the statutory recognition of the provisions of Emergency Arbitration, so as to bring them at par with the Institutional Rules such as the SIAC Arbitration Rules. However, the same isn’t reflected by way of amendments in 2015 and 2019.

Since the constitution of Tribunals is a time-consuming task, the period between the initiation of dispute resolution and the constitution of the tribunal would give enough space to the parties to out maneuver the other party and engage in one-upmanship. Hence, in pursuit of interim relief, the concerned party lands up before the Court. Such an outcome is diametrically opposed to the mainstay of the act and it systematically erodes the credibility of the procedure. Recognition of emergency arbitration can fulfil the fundamental premise of Arbitration i.e., speedy resolution and Judicial Non-Interference as was also witnessed in the case of HSBC PI Holdings (Mauritius) Ltd. v. Avitel Post Studioz Ltd & Ors. Herein, the award of the Emergency Arbitrator in Singapore was concurred upon by the Bombay High Court, which granted a similar relief under Section 9. The judgement of the Supreme Court in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. remains appreciated in this regard. Therein, the Supreme Court allowed and enforced the award passed by an Emergency Arbitrator appointed under the SIAC Rules, and in holding so, the apex court has given judicial recognition to the Provisions of Emergency Arbitration within the existing legal framework.

Interestingly in Ashwani Minda v. U-Shin Ltd., the Delhi High Court had impliedly affirmed the competency as well as the legitimacy of an emergency arbitrator by the reasoning that, “The Applicants cannot be permitted to have a second bite at the cherry and resort to the present remedy. It is further contended that the Doctrine of Election postulates that when two remedies are available, the aggrieved party has the option to elect either, but not both. Having elected one of the two available remedies, by approaching the Emergency Arbitrator, which according to the Applicants themselves was the efficacious remedy, when invoked, Applicants cannot now exercise any right under Section 9 of the Act..” Several other cases, like Raffles Design International India P. Ltd.v. Educomp Professional Education Ltd., further signifies the possibilities of legislative amendments to include emergency arbitration within the spectrum of the Arbitration and Conciliation Act.

CONCLUSION

It can be understood that the parties could benefit from the judicial recognition of emergency arbitration as is displayed by the courts in purposively enforcing the Award given by Emergency Arbitrator, within the pre-existing legal parameters of the Arbitration Act, 1996. The judicial intellect reflected in granting Interim Relief under section 9 on similar terms as that of the relief given Emergency Arbitrator, implicitly validates the viability of Emergency Arbitration, particularly in the absence of any statutory provision regarding the same. The adoption of the provisions of Emergency Arbitration by The Madras High Court Arbitration Centre, Delhi International Arbitration Centre, and the Mumbai Centre for International Arbitration, also sets out a positive outlook toward the acceptance of the provisions of Emergency Arbitration.

This positive attitude of the institutions such as MCIA & DIAC towards the adoption of provisions of Emergency Arbitration within their institutional rules and that of the courts in granting relief under section 9 on similar terms as that of Emergency Award have further cemented the principle of Judicial Minimalism into the anvils of Arbitration, thereby taking the Arbitration Regime of India, a step further towards being on similar lines with those of Internationally Recognized Arbitration Regimes such as SIAC, etc.

*Shubhankar Sharan and Sahsransh Pandey are second year students of B.A.LL.B. (Hons.) and B.S.W.LL.B.(Hons.) respectivey at Gujarat National Law University, Gandhinagar. They can be emailed at shubhankar21bal069@gnlu.ac.in and sahsranshpandey2001@gmail.com, and can be reached at LinkedIn here and here respectively.


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