Documenti di Didattica
Documenti di Professioni
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RAMMANOHARLOHIYANATIONALLAW UNIVERSITY
LUCKNOW
2015-16
ALTERNATEDISPUTERESOLUTION
FinalDraft
“POWEROFNATIONALCOURTSANDARBITRALTRIBUNALTOGRANT
INTERIM MEASURES”
SUBMITTEDTO: SUBMITTEDBY:
MR.PRASENJITKUNDU ADITIMANGAL
ASSISTANTPROFESSOR(LAW) ROLLNO.11
SEMESTERVI
TABLEOFCONTENTS
TableofContents 2
InterimMeasuresbyNationalCourts 5
PositionundertheIndianLaw 7
InterimMeasuresbyArbitralTribunal 8
PositionundertheIndianLaw 9
DistinctionbetweenPowersunderSection9andSection17 10
PositionunderUNCITRALModelLaw 11
Conclusion 14
Bibliography 15
INTRODUCTION
Arbitrationisnowrecognizedasaprincipalprocessofresolvingdisputesbetween
individuals,corporationsandstatesinalmosteveryaspectofcommerce,investment
andinternationaltrade.Ithasbecomeanefficientmechanismthroughwhichabinding
decisionoveradisputemaybeobtainedwithoutrecoursetoacourtoflaw. 1Factors
likespeedofresolution,lowercosts,privacy,andneutralityofforumareofteninvoked
whendescribingitsadvantagesoverlitigationinnationalcourts.2Oneadditionaland
criticalreasonforinternationalarbitration’scontinuingpopularityisthatenforcing
foreignarbitralawardsisconsiderablyeasierthanenforcingforeignjudgmentsinmost
nations.ThisislargelybecauseoftheConventionontheRecognitionandEnforcement
ofForeignArbitralAwards(“New YorkConvention”),whichprovidesthatsignatory
nationsmustrecognizearbitralawardsissuedinforeignsignatorynations,subjectto
severalverynarrowexceptions.
Asthepopularityofinternationalarbitrationhasgrown,sohaverequestsforinterim
reliefinarbitralproceedings.3Interimreliefoccasionalyreferedtoas“provisional”or
“conservatory”reliefprotectsaparty’srightspendingthefinalresolutionofthedispute.
Interimreliefiscriticalinanyformofdisputeresolution.Partiesmusthavetheoptionto
seekinterim measures,suchaspreliminaryinjunctionsandatachments,wheretheir
adversariesthreatentotakeactionthatcannotbeundonebyafter-thefactdamages.
1N.Blackabyetal.,RedfernandHunteronInternationalArbitration(5thedn,2009OUP)2
2StephenM.Ferguson,InterimMeasuresofProtectioninInternationalCommercialArbitration:Problems,
ProposedSolutions,andAnticipatedResults,12CURRENTS:INT’LTRADEL.J.55,55-57(2003).
3RaymondJ.Werbicki,ArbitralInterimMeasures:FactorFiction?,57DISP.RESOL.J.62,64(Jan.2003)
Partiesininternationalarbitrationsarenoexception.4
Inthecourseoftheresolutionofcommercialdisputeswhetherbythecourtorinan
arbitraltribunal,itisalwaysnecessarytoensurethatthepropertyindisputeisnot
alowedtobewastedordepletedtothedetrimentofeitherparty.Theneedforan
interimmeasuremayarisebecauseitmaybetoolateifthetribunalhastowaituntilan
awardismadetoresolvethedispositionoftheproperty.Apartfromthehardshipwhich
suchdelaymaycreate,thevalueoftheawardmaygreatlyreduce.Suchinterim
measureofpreservationmaybeappliedtoaffectthescaleofperishablegoodsto
preventthemfromperishing.Mostcountrieshaveprovisionsintheirlawforthemaking
ofinterimordersfortheprotectionofpropertyindisputeinarbitration.
Atthispoint,nearlyalinternationalarbitrationrulesprovideforsomeformofinterim
relief.However,therearesignificantvariationsinwhenapartymayseekinterimrelief,
theamountoftimeitwiltakeanapplicanttoobtainthatrelief,thetypesofrelief
available,andthestandardsforobtainingthatrelief.Additionaly,althoughUNCITRAL
favorsexparteapplicationsforinterimrelief,otherinstitutionsdonot.Asanalternative
toseekinginterimreliefthrougharbitration,apartymightalsoapplytoanationalcourt,
wherepermitedtodosoundertheapplicablelawandRules.Indeed,nationalcourtsare
generalyinasuperiorpositiontoprovideinterimrelief.
Theneedtobringininterimmeasuresofprotectionintherealmofarbitrationwasto
protecttherightsofthepartiesduringthependencyofthedisputes.Keepingthis
objective,theModelLawcontainsprovisionsforinterimmeasurestobegrantedbythe
4
PeterJ.W.SherwinandDouglasC.Rennie,“Interim ReliefunderInternationalArbitrationRulesand
Guidelines:AComparativeAnalysis”,TheAmericanReviewofInternationalArbitration(ARIA),v20/no3, 317-366.
CourtsandArbitralTribunal.In2006,theModellawhasbeenfurtheramendedandnew
chapterIVAwasintroducedtohaveamorecomprehensivelegalregimedealingwith
interimmeasuresinsupportofarbitration.
Onsimilarlines,Section9andSection17oftheActalsoprovidesforinterimmeasures
ofprotectionfortheparties.TheArbitrationandConciliationAct,1996(“theAct”)was
enactedseekingtoconsolidateandcreateauniform codeinlinewiththeUNCITRAL
ModelLawonInternationalCommercialArbitration,1985(“ModelLaw”).Section9of
Tribunalitself,therebyminimizingthecostandpreventslitigation.Theobjectiveof
theseprovisionsistopreservetheprevailingsituationtilthefinaladjudicationofthe
disputes.Interim measuressuchasatachmentofproperty,issuingofcommissions,
protectionofassets,injunctionsetc.areeffectiveremediesforachievingtheidealsof truejustice.
INTERIMMEASURESBYNATIONALCOURTS
[I]nterim reliefismorereadilyavailableinlitigationthaninarbitration.Incontrastto
arbitration,wheretheneedtoselectthearbitratorsmaydelayforweeksormonthsthe
commencementofarbitralproceedings,acourtcanrespondimmediatelytoarequest
forinterimrelief,suchasanorderofprejudgmentatachmentofthedebtor’sassets.
Additionaly,arbitratorsmaylackthepowertoorderinterimrelief.Finaly,unlikeacourt,
infashioningprovisionalrelief,arbitratorsdonothaveauthorityovernon-partiestothe
arbitration.Forthesereasonsitmaybenecessarytotheeffectivenessofarbitration
thatpartieshavetheabilitytoturntoacourttoobtainprovisionalrelief. 5
Giventhepotentialproblemsassociatedwithseekinginterimreliefthrougharbitration,
thismayappeartobeanatractiveoption.Moreover,thereareseveralsituationswhere
despiterecentrevisionsoftheapplicableRulesrecoursetoanationalcourtwilbe
absolutelynecessary.One,suchsituationiswhereapartyurgentlyneedsenforceable
expartereliefbecauseofalegitimateconcernabouttheotherparty’sbadfaith.
Asecondproblemthatcannotberesolvedthroughthearbitralprocessiswhereathird
partypossessesinformationorassetsthatareimplicatedbythearbitration.6Insuch
instances,theoptiontoapplytoanationalcourtforinterimreliefiscritical.Whetherthe
nationalcourtoptionisavailabletoapartyisaquestionthatmustbeaddressedunder
boththeapplicablelawandRules.
SomeAmericancourtshaveinterpretedArticleI(3)oftheNewYorkConventionto prohibitthem
I(3)providesthatanationalcourtwithinanationthatispartytotheConvention“shal”
referthepartiestoarbitrationattherequestofoneoftheparties.Thecourtsviewedthe
applicationsinthosecasesasatemptstobypassorcircumventthearbitration
agreementcompletely.7Someauthorsalsosupportthisviewbystating“thatArticleI(3)
divestsanationalcourtofjurisdictiontoorderatachmentinaidofarbitration,ortodo
anythingelseotherthancompelarbitration.”8
5KarenHalversonCross,ArbitrationasaMeansofResolvingSovereignDebtDisputes,17AM.REV.INT’L
ARB.335,337-38(2008)
6GaryB.Born,InternationalCommercialArbitration1960-61(2009).
7McCrearyTire&RubberCo.v.CEATS.p.A.,501F.2d1032,1038(3dCir.1974)
8GaryB.Born,InternationalCommercialArbitration1960-61(2009).
Othercourts,however,haverejectedthatreasoning.Notably,inthosecasesitappears
thattheapplicantsdidnotdisputethattheyhadtopursuearbitrationasprovidedin
theiragreementsthatiswherethereisnojurisdictionalchalenge.Mostobservers
regardthislaterlineofauthorityasmorepersuasiverationalastheformerthreatens,
ratherthanfurthers,thearbitralprocess,bydenyingwhatisoftentheonlyrealistic
meansofpreservingthestatusquo.Thatviewissharedbytheoverwhelmingmajority
ofcommentators.
Atleastonecommentatorhasatemptedtoharmonizethetwopositionsbyexplaining
that,incaseswherethecourtshavefoundinterimreliefinconsistentwiththeNewYork
Convention,theapplicantwasseekingthatreliefinlieuofthearbitration,notinaidof
it.9
PositionundertheIndianLaw
Section9oftheArbitrationandConciliationAct1996isfoundinPartIofthe
ArbitrationActandempowersIndiancourtstograntinterim measuresinaidof
arbitrationproceedings.Apartymay,beforeorduringarbitralproceedingsoratany
timeafterthemakingofthearbitralawardbutbeforeitisenforcedinaccordancewith
section36,applytoacourtfortheappointmentofaguardianforaminororapersonof
unsoundmindforthepurposesofarbitralproceedingsorforaninterim measureof
protectioninrespectofanyofthefolowingmatersnamely:-
Thepreservation,interim custodyorsaleofanygoods,whicharethesubject
materofthearbitrationagreement.
9GaryB.Born,InternationalCommercialArbitration1960-61(2009).
Securingtheamountindisputeinthearbitration;
Thedetention,preservationorinspectionofanypropertyorthingwhichisthe
subjectmaterofthedisputeinarbitration,orastowhichanyquestionmayarise
thereinandauthorisingforanyoftheaforesaidpurposesanypersontoenter
uponanylandorbuildinginthepossessionofanyparty,orauthorisingany
samplestobetakenoranyobservationtobemadeorexperimenttobetried, which
Interiminjunctionortheappointmentofareceiver
SuchotherinterimmeasuresofprotectionasmayappeartotheCourttobejust
andconvenientandthecourtshalhavethesamepowerformakingordersasit
hasforthepurposeofandinrelationto,anyproceedingsbeforeit.
Alsuchfactors,whichthecourtconsidersinpassinginterimorder,wouldbeapplicable
toorderspassedunderSection9oftheActalso.Basicaly,thepartyseekinginjunctive
reliefshouldestablishalikelihoodofsuccessonthemerits,ireparableharmsthat
mightbecausedtohimiftheinterimreliefisdeniedandthebalanceofconveniencein
itsfavour.10
INTERIMMEASURESBYARBITRALTRIBUNAL
Arbitraltribunals,similarlytonationalcourtshavethepowertograntinterim or
10
Pawan Agarwal,Interim Measures ofProtection in Arbitration– An Analysis,available at:
htps://international-arbitration-atorney.com/wp-content/uploads/arbitrationlaw10962dec04p715-722.pdf
provisionalmeasurespendingfinaldeterminationofthedisputebeforethem.However,
arbitratorscannotactuntiltheyhavebeendulyappointed.Incasesofurgency,the
courtsoftheseatmaybeempoweredtosupportanascentarbitrationbyordering
interimmeasureswherethetribunalisnotyetabletoact.Insuchcases,thenational
courts‘holdthering’untilsuchtimeasthetribunalhasbeenconstituted.Theymayalso
assistatribunalwhereitlacksthepowertomakeanecessaryorder.11
Internationalarbitraltribunalswilusualyhavebeengrantedwidepowerstogrant interim
conservatorymeasureitdeemsappropriate”,andtorequestappropriatesecurityfrom
therequestingparty.12ThenewICCRulesalsocontainprovisionsfortheappointment
ofanemergencyarbitrator,whocangrantinterim reliefexpeditiouslybeforetheful
tribunalhasbeenappointed.However,theICC’semergencyprocedureisnotavailable
wherethepartiesenteredintotheirarbitrationagreementbefore1January2012.
heLCIARulescontainalitlemoredetail,andrefertotheprovisionofsecurityfor
claimsorcounterclaims,the“preservation,storage,saleorotherdisposalofany
propertyorthingunderthecontrolofanypartyandrelatingtothesubjectmaterofthe
arbitration”,andgrantinganyreliefthatmightbethesubjectofafinalawardona
provisionalbasis,includingthepaymentofmoneyorthedispositionofproperty.13
BoththeICCandtheLCIARulespermitapartytoapplytoacompetentnationalcourt
forinterimmeasureswherethetribunalhasnotyetbeenappointed,orinexceptional
11
Melanie Wilems,“That’s A Relief(Interim):The English Court’s Approach In Arbitrations”,
htps://www.andrewskurth.com/insights-1084.html
12ICCRules,Article28.1
13LCIARules,Article25.3
caseswherethetribunalcannotact.Thepowersofacompetentnationalcourtwil
naturalybedeterminedbythearbitrationlawsoftherelevantjurisdiction.
PositionundertheIndianLaw
Section17oftheActisessentialybasedontheModelLawwithveryfewdepartures
andcontainstwoconditions–FirstlythattheArbitralTribunalmustregardtheinterim
measureofprotectionasnecessary,andsecondly,thereliefhadtobeinrespectofthe
subjectmaterofthedispute.TheArbitralTribunalisempoweredbySection17toorder
apartytotakeanyinterimmeasuresofprotectioninrespectofthesubjectmaterof
thedispute,andalsodirectthepartyinwhosefavourtheorderhasbeenpassedto
provideappropriatesecurityasprovidedinSection17(2)oftheAct.Theexpression ‘interim
measureofprotection’inSection17iswideenoughtoincludealthose
measureswhichthepartiesthemselvescouldhaveachievedbyagreement.The
protectionenvisagedisinrelationtosometangiblepropertyandnotanindeterminate
monetaryclaim.
However,therearevariouslimitingfactors.Firstly,apartyhastowaitforthecreationof
mechanismtoenforceanyorderoftheArbitralTribunal.Asfarasthefirstlimitationis
concerned,thesolutionlieswithinthe1996Actitself.Section9oftheActprovides
powertotheCourttograntinterimrelieftoanyparty.ThepowersunderSection9are
muchwiderinasmuchastheyextendtotheperiod“pre”and“post”theawardaswelas
withregardtothesubjectmaterandnatureoftheorders.Further,thependencyofan
applicationunderSection17doesnotdenudetheCourtofitspowerstomakeanorder
forinterimmeasuresunderSection9oftheAct.
Tribunalthepowertopassorders,thesamecannotbeenforcedasordersofaCourt.
TheActnowhereprovidesfortheconsequencesofbreachofanorderoftheArbitral
TribunalunderSection17oftheAct.Section37(2)(b)oftheActonlyprovidesforan
appealwithrespecttograntorrefusaltograntaninterim measurebytheArbitral
TribunalunderSection17.
DISTINCTIONBETWEENPOWERSUNDERSECTION9ANDSECTION17
ThepowerconferredonaCourttomakeinterimmeasuresunderSection9oftheActis
muchwiderincontent,sweepandextentcomparedtothepoweravailabletoArbitral
TribunaltomakeinterimmeasuresunderSection17oftheAct.ArbitralTribunalderives
jurisdictionbyreasonofthearbitrationagreement.ThepartiestotheArbitration
proceedingsalonewould,therefore,bewithinthescopeofthejurisdictionexercisedby
theArbitralTribunal.Also,itisobviousthatarbitraltribunalcangrantanyinterim
measureonlyafteritisconstituted.ThislimitationisnotapplicabletoCourtsand
therefore,inmatersofgraveurgency,partiesmayfinditappropriatetoinvokethe
Court’sjurisdictioninstead.
TheCourtcanexercisepowerunderSection9oftheActatanytimeevenbeforethe
arbitralproceedingsarecommenced.Thereisanauthoritativepronouncementofthe
SupremeCourtinthisregardinSundaram FinanceLimitedVs.NEPCIndiaLimited 14
posingaquestionastowhetherthecourthasjurisdictiontopassinterimevenbefore
thearbitralproceedingscommenceandbeforeanarbitratorisappointed.Supreme
CourtsaidthatthepoweroftheCourttopassanyorderunderSection9oftheActcan
141999(2)SCC479
beexercisedatanystageevenbeforethecommencementofthearbitralproceedings.
POSITIONUNDERUNCITRALMODELLAW
TheUNCITRALModelLawonInternationalCommercialArbitration,whichhasbeen
adoptedinsomeform inmorethansixtyjurisdictions15,provides:“Unlessotherwise
agreedbytheparties,thearbitraltribunalmay,attherequestofaparty,orderanyparty
totakesuchinterim measureofprotectionasthearbitraltribunalmayconsider
necessaryinrespectofthesubject-materofthedispute.Thearbitraltribunalmay
requireanypartytoprovideappropriatesecurityinconnectionwithsuchmeasure.”16
The1985UNCITRALModelLawprovidedforinterim measuresvideArticle17.The
provisionhowevercontainedtwoexpressconditions:Themeasurehadtobeshownto
be"necessary"andbe“Inrespectofthesubjectmaterofthedispute”.Besides,there
wereatleasttwoinherenthurdlesinthepath.First,onehastoawaittheconstitutionof
thetribunalandalowforareasonableopportunityforittoassembleattheseatandfor
theoppositesidetorespondtotherequest.Thisessentialyruledoutreliefinthecase
ofurgency(andmoreoftenthannotanapplicationforinterimreliefcannotbrookdelay).
Secondly,therewasnomechanismtoenforceanorderofthetribunal.
The1985ModelLawproceededonanassumptionthatthepartieswouldvoluntarily
accepttheinterimorderofthetribunalandtherewouldbenoneedtoevencontemplate
ofanenforcementprocedure.Ontheotherhand,ifapartyfelttheneedforan
15UNCITRALStatus,htp://www.uncitral.org/uncitral/en/uncitraltexts/
arbitration/1985Modelarbitration_status.html
16Article17,UNCITRALModelLaw
enforceableorder,itwouldnotbeincompatibleforittoapproachacourtwitharequest
inthisregard.Thepositionwasnotsatisfactoryandafteranelaboratedprocess,in
December,2006theUNCITRALModelLawstoodamended.TheoldArticle17stands
completelyreplacedbyanextensiveschemeprovidinginteraliaforexparteordersand
forinterimmeasurestobebindingandenforceable.
Itdefinesinterimmeasureasatemporarymeasure,“whetherintheformofanawardor
inanotherform”soughtpriortothefinalresolutionofthedispute.TheModelLaw
furtherprovidesthatnationalcourtsgeneralyshalenforceinterim measuresand
explicitlypermitsapplicationstonationalcourtsforinterimmeasures.
“substantialyoutweighs”anyharmthatmayresulttotheopposingpartyandthatthere
isareasonable“possibility”thattheapplicantwilsucceed on itsclaim.One
commentatorhasarguedthatthisstandardrequiresapartyseekinginterim reliefto
establish:“imminentdangerorriskofseriousprejudice,”whichincorporatesanimplied
elementof“urgency,”and“thattheriskofharmtotheirlegalinterestsissogreatthat
anyresultingdamagecannotbeproperlycompensatedbyamonetaryaward,orthatit
cannotbefinancialycompensatedbyvirtueofitsverynature.”17Thus,thestandard
encompassesabalancingtest,wherebythebenefittotheapplicant“mustoutweighits
prejudicialeffectonthepartyagainstwhom itisdirected.”However,thetribunalhas
discretiontodeterminewhetherornottoapplythisstandardwheretheapplicantis
merelyseekingtopreserveevidence
17KieranRobertHickie,TheEnforceabilityofInterimMeasuresofProtectionGrantedbyArbitralTribunals
OutsidetheSeatofArbitration:ANewApproach,12VINDOBONAJ.INT’LCOM.L.&ARB.221,223 (2008).
Article17nowsetsforththepowersofthearbitraltribunalinthewidestterms.The
earliertwinconditionshavebeendoneawaywith.TheamendedArticle17interalia
empowersthearbitraltribunaltomaintainorrestorethestatusquo;directapartyto
refrainfromdoinganythingwhichmayprejudicialyaffectthearbitralprocess;providea
meansforpreservingassetsforsatisfactionoftheaward,orpreserveevidencethat
maybematerialforresolutionofthedispute.Thetribunalmaydosobyframingits
orderinaformofanawardorotherwiseasitmaydeemappropriate.
Article17Aprovidesfortheconditionswhichmustbesatisfiedforgrantofaninterim
irreparableharmand“areasonablepossibilitythattherequestingpartywilsucceedon
themeritsoftheclaim”.
Article17Bissomewhatrevolutionaryintherealm ofarbitrationasitintroducesthe
conceptofexparteadinterimorders(caled"preliminaryorders").Thescopeofsuch
ordersisnarrowerandisessentialyconfinedtomaintainingthestatusquo.Anexparte
ordershalbevalidonlyfor20daysfromthedateofitsissuance(withinwhichtimethe
tribunalmayaffirmormodifytheorderafternoticeandanopportunitytotheopposite
sidetopresentitscase).Thegeneralconditionforexparteordersisthatthetribunal
wilrequiretheapplicanttoprovideappropriatesecurityinconnectionwiththesame
unlessthetribunalconsidersitunnecessarytodoso.Anexparteordershalbebinding
onthepartiesbutshalnotbeenforceablebyacourtprocess.Furthersuchanorder
shalnotbeintheformofanaward.
PerhapsthemostfarreachingamendmenttotheModelLawisvideArticle17HandI.
This providesforrecognitionandenforcementofaninterimmeasureorderedbythe
tribunal(i.e.otherthananexparteorder).Article17Hinteraliastatesthataninterim
measureshalberecognizedasbinding,unlessotherwisestatedbythetribunal.Itmay
beenforceduponapplicationtoacompetentcourtirespectiveofthecountryinwhich
itwasissued.Recognitionandenforcementmayberefusedonlyonthegroundsstated
inArticle17I.
SubArticles(i)to(iv)ofArticle36(1)(a)oftheModelLawconstitutethefirstsetof
groundsforrefusaltoenforceaninterimmeasure.Further,aninterimmeasurewilnot
berecognisedifthecourtfindsthatthegroundssetforthinArticle361(b)(i)or(i) applytotheinterim
measureinquestion.Article361(b)(i)providesforrefusalto
enforceifthesubjectmaterofthedisputeisnotcapableofsetlementbyarbitration
underthelawsoftheenforcingStateandArticle36(1)(b)(i)providesforthepublic policyground.
CONCLUSION
Fromtimetotime,theinterestsofjusticemayrequirethemakingofordersinrelation
togoodsorotherproperty,pendingthehearingandtheaward.Suchordersfulfiltwo
distinctfunctions:
1.Theyensurethatthepropertywhichisthesubjectofdisputedoesnotcometo
harmuntilthedisputehasbeenresolved;and
2.Wheretheproperty,oranaspectofit,isanitemofevidenceinthereferencethey
ensurethatthepartiesareabletoexploititsevidentiaryvalueintheful.
Itissubmitedthatlacunasintheprovisionsofinterimmeasuresshouldbesetrightby
legislativeinitiation.Thesystem ofdualagencyforprovidingreliefneedstobe
abolishedorotherwisesomeenforcementmechanismbeprovidedforenforcementof
theinterimmeasuresofprotectionsorderedbytheArbitralTribunal.Itwouldbebeter
thatapplicationofinterimmeasuresisputtothearbitraltribunalsastheyareseizedof
thesubjectmaterunderdisputes.Onlywhenapartyisnotabletogetrelieffromthe
arbitraltribunal,orifitisamaterofurgencyandthetribunalhasnotbeenconstituted,
itshouldbealowedtoknockthedoorsoftheCourt.Thiswilbeinlinewiththe
objectivesoftheActtominimisetheinterventionoftheCourtinarbitralproceedings.
Toconclude,Indiahasputinplaceaprogressivepieceoflegislationwhichisessentialy
basedontheModelLawandtheUNCITRALArbitrationRules.Anydeparturetherefrom
isessentialyaimedatkeepingcourtinterventionatbay.
Indiahasaneffectivelawinplace.Whatitnowneedsisinculcationofthecultureof
arbitrationwithinthebar,thebenchandthearbitralcommunity.
BIBLIOGRAPHY
Books:
AlanRedfern,RedfernandHunteronInternationalArbitration
GaryB.Born,InternationalCommercialArbitration
Articles: