Interim Reliefs in

Arbitration

The Powers of Courts v. Tribunals

Samarth Dhar

18010533

LL.B. Section- B
Abstract
Arbitration is fast becoming the preferred solution for resolution of various commercial
disputes all over the world as well as India, this trend of increased preference towards
Arbitration may be explained by the fact that Arbitration offers flexibility, anonymity, and
convenience. This process thus naturally would require certain safeguards that protect the
interests of the parties involved. The following paper talks about such safeguards in the form
of Interim or Interlocutory Reliefs. Following the recent changes in the Arbitration and
Conciliation Amendment Act, 2015, Tribunals now possess a more comprehensive set of
powers to grant interim reliefs. Therefore, it becomes essential to understand the nature,
distinction, and limitations of interim measures that can be granted by Courts and Tribunals
respectively.

1
 CONTENTS

Introduction ................................................................................................................................ 3

Part 1: The (Indian) Arbitration & Conciliation Act, 1996 (hereinafter “Act”) ...............Error!

Bookmark not defined.

Part II: Interim Measures by Courts......................................... Error! Bookmark not defined.

• Standards to be followed by the Court while granting interim reliefs…………………….7

Part III – Interim Measures by Tribunals ................................................................................. 11

• Standards to be followed by the Tribunal while granting interim reliefs………….……..11

Conclusion: .............................................................................. Error! Bookmark not defined.

2
Introduction:
Even though Arbitration revolves around concepts of mutual consent and agreements to
arbitrate often stem from the fact that the parties view themselves on almost equal footing. The
truth of the matter is that parties often engage in underhanded tactics to delay the proceedings
or prejudice the rights of the other party by actively interfering with assets/subject matter of
the proceedings.

Using an example to illustrate the above: A and B initiate arbitration proceedings regarding X
assets, B inter alia disposes of the X assets. Now, any relief that may be granted to A by the
Arbitral Tribunal regarding the X assets would be effectually rendered nugatory as the assets
in question have already been disposed of by B.

The above example clearly illustrates the need for measures that enable the Court or Tribunal
to safeguard the rights of the parties while the arbitration proceedings are pending. It is clear
that without interim measures, it would be extremely easy for one of the parties, if they choose,
to effectually negate the entire arbitration process. Since the need has been established, the
questions that generally arise are;

• Who can apply for such relief?

• When are such reliefs granted?
• What kind of reliefs can be granted?
• Who can grant such reliefs?
• What standards need to be followed while allowing for such measures?

In the following parts, the questions presented above will be answered by tracing the evolution
of the law regarding interim reliefs in both the judicial and legislative avenue.

3
Part 1: The (Indian) Arbitration & Conciliation Act, 1996 (hereinafter “Act”)
Sections 9 and 17 are the provisions that provide for interim measures by Courts and tribunals,
respectively. Section 9 presents a clear timeline as to when the reliefs mentioned can be sought
before a Court. These protective measures/reliefs may be claimed from before the
commencement of the arbitral proceedings1, during the pendency of the proceedings, and even
after the final award has been rendered (however, it must be prior to the enforcement). The
2015 Amendment made a change in the time period for claiming such reliefs and now if an
order has been passed by the Court relating to granting of an interim relief before the Arbitral
Tribunal has been constituted, then it places an obligation on the parties to initiate the
Arbitration within 90 days from said date.

As per the scheme of the Act and its provision, it becomes clear that once the proceedings have
commenced the appropriate forum to approach for interims reliefs is the Tribunal (u/s. 17),
applications to the Courts will only be entertained in the rare situations where the party may be
able to prove that due to certain circumstances the relief granted by the Tribunal is
inefficacious. The Tribunal may be approached anytime between the commencement of
proceedings and prior to the time that the award is made. After the award has been passed, the
party in whose favour the award has been passed may also choose to approach a court to ensure
that their interests and rights are protected till the time the award is enforced.

Any of the parties to the Arbitration may move an application for interim reliefs in the entire
span of the arbitral proceedings. However, as mentioned above, after making the award, only
the successful party can move an application for protection in accordance; with Section 9 (ii)
of the “Act.” It was neatly summarised by the Bombay High Court in the as follows:

“If an application is made at the instance of such an unsuccessful party under section 9, there
will not be any occasion to grant any interim measure which will be in aid of the execution of
the arbitral award as such a party will not be entitled to seek enforcement under section 36.”2

The unsuccessful party can never be entitled to enforcement as there is nothing in its favour to
enforce. Even on the award being set aside, there lies no application on behalf of the
unsuccessful party as the merits of the dispute are not looked into by the Court. It does not act
as a court of appeal under Section 34 of the “Act.”

1
Sundaram Finance Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479
2
Wind World v. Enercon GmbH and others 2017 SCC OnLine Bom 1147 (Para 18)

4
Part II: Interim Measures by Courts
Section 2(1)(e) of the Act provides the definition of “Court” and it can either be the District
Court or the High Court possessing original jurisdiction (having jurisdiction to decide the
matter as if it was in the nature of a civil suit). In case of an arbitration wherein at least one of
the parties is non-Indian, then only the High Court of a State will have authority under the Act.
Another factor that significantly impacts the aspect of jurisdiction is the fixation of the seat of
Arbitration. The fixation in essence assigns exclusive jurisdiction (while ousting the
jurisdiction of all other Courts3) to the Courts of the seat for supervisory functions which also
includes granting interim measures. As per the Supreme Court judgment in Bharat Aluminium
4
Company v Kaiser Aluminium the Court of the seat of Arbitration will be the one having
jurisdiction under the “Act.”

To draw a comparison between the respective powers of Courts u/s. 9 and Tribunals u/s. 17, it
is vital to take note of Clause (3) of Section 9. Courts have been somewhat reluctant to grant
interim reliefs once the Arbitral Tribunal has been constituted however the Court still possesses
the authority to grant said reliefs in the circumstances that have been listed below;

1) Before the Tribunal is constituted.

2) After the award has been made. As the High Court of Kerala observed that once the award
has been made, the Tribunal ceases to function, and when an application is made to the
Court u/s 9 of the Act, in these circumstances, the Court must adopt a liberal approach5.
3) Where the interim measure granted by the Tribunal is not efficacious, in such cases, the
Court delves into the facts, circumstances, and the behaviour of the arbitrators before it
grants any reliefs6. Some Courts seem to be of the view that a stricter approach is needed
when it comes to accepting applications u/s 9 during the pendency of the arbitral
proceedings.7
4) In case an application is pending before the Court, and a tribunal is constituted, does the
Court need to relegate the application to the arbitral Tribunal the moment it is constituted?
The simple answer to the question will be – No. As explained by the Delhi High Court in
Benara Bearings & Pistons Ltd. v. Mahle Engine Components India Pvt. Ltd;

3
Indus Mobile Distribution Private Ltd. v. Datawind Innovations Private & Ors (2017) 7 SCC 678
4
(2012) 9 SCC 552
5
M Ashraf v. Kasim VK 2018 SCC Online Ker 4913
6
SREI Equipment Finance Limited (Sefl) v. Ray Infra Services Private Limited & Anr., 2016 SCC OnLine Cal 6765
7
M Ashraf (supra)

5
 “Section 9(3) itself provides that the Court can entertain an application under Section
9(1) if it finds that circumstances exist which may not render the remedy provided under
Section 17 efficacious….there is no provision under the said Act which, even as a
transitory measure, requires the Court to relegate or transfer a pending Section 9(1)
application to the Arbitral Tribunal, the moment an Arbitral Tribunal has been
constituted.” 8

Another aspect that needs consideration is the time limit of 90 days to institute arbitration
proceedings that have been prescribed by the 2015 Amendment. Section 9 (2) introduces a
time-bound procedure that functions in a way to regulate the granting of interim reliefs by
Courts and the parties abusing the system to delay the arbitration proceedings after managing
to secure the relief as an advantage. Now the onus is on the parties to commence Arbitration
as per the directions of the Court, and this ensures that no bias or prejudice is caused to either
of the two parties. After all, the Tribunal, once constituted, is the most appropriate and
convenient forum under the law to hear all the applications for interim measures9 , and the
Court may intervene only in some instances and circumstances.

Applications seeking protection of assets from alienation or dissipation in India, even if the
seat of Arbitration is outside India, may be filed under Section 9. In such a case, the appropriate
Court would be the one having jurisdiction over the assets of one party that are the subject
matter of the reliefs being sought by the other10.

The reliefs (see Annexure 1) usually claimed by parties are centred around securing the amount
in dispute or to prevent the other party from alienating individual assets/property. This may be
done in several ways; financial interest may be protected having the opposing party furnish
guarantees as in Delta Constructions v Narmada Cement11 under Section 9(ii)(b). Courts may
also permit parties to have symbolic possession of properties under Section 9(ii)(c) as well as
appoint receivers for properties that are separate from the subject matter of the proceedings 12.
Injunctions and Stays are also commonly prayed for by parties where parties may face
apprehension regarding the subject matter of the dispute. Further exercising its powers, the

8
2017 SCC OnLine Del 7226 (para 27)
9
[online] Available at: <http://lawcommissionofindia.nic.in/reports/report246.pdf> [Accessed 26 April 2020].
10
Trammo DMCC v. Nagarjuna Fertilizers and Chemicals Ltd. (2018) 1 AIR Bom R
11
(2002) 1 Mah LJ 684
12
Tata Capital Financial Service v Deccan Chronicle Holdings

6
Court can also order parties to disclose their assets13, attachment orders may be passed even
against third part respondents and directions not to dispose of said properties can be issued.
Section 37(1)14 provides for an appeal against an order that either accepts or rejects an
application for interim measures.

Standards to be followed by the Court while granting interim reliefs.

These standards are not prescribed anywhere in the Act, and this action/omission of the
legislature has created a divide among the various Courts in India. The Supreme Court even
acknowledges the fact that there are divergent views taken by the High Courts on the matter in
Arvind Constructions v. Kalinga Mining Corporation and Others15 , however, leaves the
question open to be decided in a more appropriate case. There seem to be two approaches that
can be identified from several Judgements by Courts regarding the matter, for the purposes of
this paper we will refer to them as:

1) Exclusive Approach: This line of thought suggests that standards for granting reliefs under
Section 9 cannot be such that they need to be put through the rigors of each and every
provision of the CPC.

Order XXXIX of the CPC details temporary injunctions, which are very similar to the reliefs
under Section 9(ii) (d) and (e) of the Act. The standards to be shown by an applicant under
Order XXXIX in order to secure an injunction successfully are as follows:
i) Any property in dispute is in danger of being wasted, damaged or alienated by the
respondent, or wrongfully sold in execution of a decree, or
ii) The respondent threatens or intends, to remove or dispose of its property with a view
of defrauding its creditors, or
iii) The defendant threatens to dispossess the applicant or otherwise cause injury to the
applicant in relation to any property in dispute in the suit16.

13
ibid
14
“(1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear
appeals from original decrees of the Court passing the order, namely:
a. refusing to refer the parties to arbitration under section 8;
b. granting or refusing to grant any measure under section 9;
c. setting aside or refusing to set aside an arbitral award under section 34”
15
(2007) 6 SCC 798
16
Order 39 Rule 1 – CPC

7
Many High Courts have taken the stance that the above-mentioned standards are not the gospel
truth to be followed while considering an application for the grant of interim measures if it
were so strictly adhered to, the very purpose of having this alternate mechanism would be
defeated. Bombay High Court in Delta Construction Systems Ltd., Hyderabad v. M/S Narmada
Cement Company Ltd, Mumbai17 clearly held that the Court would not be bound by the
provisions of Order XXXVIII Rule 5 while granting a relief under Section 9 of the Act.

In Adhunik Steels Ltd. v. Orissa Manganese and Minerals Pvt. Ltd18 , the Supreme Court,
formed the opinion that “well-known rules’ of CPC i.e.

(i) Prima facie case

(ii) Balance of convenience
(iii) Irreparable injury

must be applied and kept in mind while granting interim reliefs. However, the Court never
stated that the specific standards laid out in Order XXXVIII Rule 5 and Order XXXIX Rule 1
and 2 would be strictly applicable.

The Delhi High Court also followed a similar approach in various cases, holding that the
powers granted under Section 9 are wide, the same seems to be the intent of the legislature,
however, at the same time, there must be certain guidelines that need to be kept in mind (i.e.
The provisions mentioned above of the CPC). In NKG Infrastructure v. Granco Industries19,
the J&K High Court stated that vast powers are enjoyed by the Court in the grant of interim
reliefs/measures and “such power entrusted to the Court is not limited, controlled or
circumscribed by the provisions of Order 39 Rule 5, Order 39 Rule 1 and 2 of the Code of
Civil Procedure.”20

2) Inclusive Approach: Under this approach proceedings initiated under Section 9 of the Act
are considered to be one and the same as under Order XXXVIII Rule 5 and Order XXXIX
Rule 1 and 2 of the CPC. Therefore, the standards/principles that can be found in the
aforementioned provisions of the CPC would also be equally applicable to cases regarding
interim reliefs under Section 9.

17
(2002) 2 BomLR 225
18
AIR 2007 SC 2563
19
2018 SCC OnLine J&K 335
20
Ibid

8
In the case of ITI v Siemens Public Communication,21 the Apex Court of India held that even
though the Act itself contains no mention of the applicability of the provisions found in the
CPC with regards to arbitration proceedings, the Court in the exercise of its powers can read in
those provisions whenever proceedings arise out of the Act. Several High Courts, such as in
22
Goel Associates v. Jivan Bima Rashtriya Avas Samiti & Om Sakthi Renergies Limited v
23
Megatech Control Limited ; while applying the rationale of ITI(supra) have held that
principles of Order XXXVIII Rule 5 and Order XXXIX Rules 1 and 2 of the CPC would have
to be read in when the Court grants interim reliefs in the exercise of its powers under the Act.

In Star Track Agency Pvt. Ltd. v Efcalon Tie Up Pvt. Ltd. 24 the Calcutta High Court observed
that it was well established that in proceedings pertaining to grant of interim reliefs (u/s. 9) the
same principles would be applied as in the case of granting an interim order.

Adhunik Steels Ltd(supra) & Arvind Constructions(supra) were addressed by Delhi High Court
(Division Bench) in Anantji Gas Service v. Indian Oil Corporation where it held that the three
cardinal principles (prima facie case, irreparable loss, and balance of convenience) are
mandatorily to be established by the petitioner. The Court has to satisfy itself of the same where
protection by way of interim reliefs under Section 9 is to be extended. The Delhi High Court
used a subsequent judgment in the matter of V.K. Sood Engineers and Contractors v. Northern
Railways to reiterate its view.

The inclusive approach, however, does not seem to be in line with the intent of the legislature,
applying such a formalistic and hyper-technical approach to arbitral proceedings seems to be
unwarranted. To determine the intent of the legislature, it is crucial to trace the history
associated with the provisions in question. As per the Arbitration Act, 1940 interim measures
were to be granted only at the post-award stage and was limited to the cases in which steps
were being taken by either party to defeat, hamper, delay or obstruct the award. This is very
similar to the standards set out in the CPC. By means of subsequent amendments and finally
the introduction of the new Act, Section 9 no longer included wordings as found in the 1940
Act that would limit the application only to a select handful of cases.

The 1940 Act also explicitly stated that the provisions contained in the CPC would be
applicable to all proceedings before a Court, this was subsequently removed in the new Act,

21
(2002) 5 SCC 510
22
114 (2004) DLT 478
23
(2006) 2 Arb LR 186
24
AIR 2016 Cal 3267

9
and Section 19 of the Act now excludes the applicability of CPC provisions. This points further
to the fact that the legislature might have never intended to make the standards of Order
XXXVIII and Order XXXIX applicable to Section 9 proceedings.

Therefore, it appears that the intent of the legislature was to, in fact, depart from the strict
standards (similar to those in Order XXXVIII and Order XXXIX) that were applied earlier and
move towards a more relaxed and accommodating approach. The exclusive approach works in
consonance with this intent of expanding the applicability of the Section (and interim reliefs)
as opposed to restricting it to a certain degree by the use of the inclusive approach.

While granting injunctions under Section 9, the Court must, however, keep in mind Section 41
of the Specific Relief Act, 1963 (“injunctions when refused”). Injunctions that cannot be
granted under Section 41 can also not be granted under Section 9 of the Act as was held by the
Delhi High Court in the case of Parsoli Motor Works (P) Ltd. v. BMW India P Ltd. 25

25
2018 SCC Online Del 6556

10
Part III – Interim Measures by Tribunals
Section 17 of the Act deals with the power of arbitral tribunals to grant interim reliefs. Before
the enactment of the 2015 Amendment, even though tribunals were permitted to grant any kind
of interim measures to protects the interests of the parties, both tribunals and Courts subscribed
to the view that the scope of Section 9 was much broader as compared to Section 17.26 The
consequence of such views was that tribunals sometimes refrained from granting certain kinds
of reliefs. However, after the much-needed clarity that was provided by the Amendment Act
2015, both Courts and Tribunals are now at par when it comes to the power to grant interim
measures.

Some of the reliefs Tribunals may grant include securing the amount in dispute, preservation,
detention or inspection of property/other that is the subject matter in Arbitration, 27 appoint a
receiver and order injunctions as well as use its discretion to grant any other just or convenient
measure.

One difference between the powers of the Court and Tribunal that can be found relates to
passing interim orders against third parties. An arbitral tribunal does not possess jurisdiction to
pass an order of interim measure against a third party, this was settled by the Supreme Court
28
in MD Army Welfare Housing Organisation v. Sumangal Services (P) Ltd and the Court
while following the same in Wind World (India) Limited and Ors. v. Enercon 29 illustrates that
the stance remains the same, even after the 2015 Amendment.

Appeals against an order of interim measures by the Tribunals can be made under Section 37(2)
of the Act.30 Such an appeal is to be filed before an appropriate Court.

Standards to be followed by the Arbitral Tribunal while granting interim reliefs.

31
International authors such as Ali Yesilirmak and Gary B. Born , to name a few, have long
held the belief that tribunals should follow arbitration case laws, opinions of scholars, and
analysis of rules of Arbitration while entertaining applications for interim reliefs. Arbitral
tribunals as a trend have followed specific requirements such as irreparable harm, absence of

26
Managing Director of Army Welfare Housing Organisation v. Sumangala Services Pvt. Ltd (2004) 9 SCC 619
27
Intertole ICS (Cecons) O & M Company v. NHAI (2013) ILR DL 1018
28
(2004) 9 SCC 619
29
2016 SCC OnLine Bom 1404
30
“An appeal shall also lie to a Court from an order granting of the arbitral tribunal —
a. accepting the plea referred in sub-section (2) or sub-section (3) of section 16; or
b. granting or refusing to grant an interim measure under section 17.”
31
International Commercial Arbitration (2nd Edition, Kluwer Law International 2014) Pg. 2430 - 2550

11
prejudgement on merits, and urgency. Balance of convenience weighing in favour of the party
and the establishment of a prima facie case by the applicant are some other conditions that have
also been considered by some tribunals.

As has already been mentioned, Courts in India have, in some cases, have explicitly chosen not
to import the principles and standards contained in Order XXXVII Rule 5 and Order XXXIX
Rules 1 and 2 (CPC) while considering an application under Section 9. Since it is clear that
these are not mandatory standards to be followed even in Court, it would be quite absurd to
hold that the same would be applicable in a flexible and relatively less rigid avenue of dispute
resolution, such as an Arbitration proceeding in front of a Tribunal.32 In Intertole ICS (Cecons)
O &M Company v. NHAI 33 , the Court held that an Arbitral Tribunal must consider whether a
case has been made as per Order XXXVIII Rule 5 before granting an order of interim relief.
However, the impugned orders (granting reliefs) of the Tribunal were not set aside solely due
to the failure on the part of the applicant to establish a prima facie case but instead had more to
do with the specific facts and the conduct of the Tribunal itself while adjudicating the dispute.

34
In Yusuf Khan v. Prajita Developers Pvt. Ltd. and Ors. It was held that while deciding an
application under Section 17, the principles of CPC should function as a guide for the grant of
intermediate or interlocutory reliefs.

Considering that powers of Courts and Tribunals are virtually on the same level post the 2015
Amendment, it is essential to mention that there was no enforcement mechanism except to hold
a non-complying party in contempt of Court prior to the said amendment. The amended
Section 17 now clarifies that an order of an arbitral tribunal concerning interim measures
granted would be enforceable in the same manner as an order of the Court. Besides being
recognized in the statute, the Supreme Court also held that non-compliance with a tribunals
order would be triable under the Contempt of Courts Act, 1971 (in Alka Chandewar v.
Shamshul Ishrar Khan)35

32
Shabnam Dhillon v. Zee Entertainment Enterprises Ltd. and Ors. (2019) 176 DRJ 429
33
(2013) ILR 2 Delhi 1018
34
Arbitration Petition No. 1012 of 2018, (25 March 2019) Bom HC
35
2017 SCC OnLine SC 758

12
Conclusion:
It can be gathered from the legislative changes made to the Arbitration Act that the intent of
the same was to bring powers of Tribunals under Section 17 to a level playing field with those
enjoyed by Courts under Section 9. This is a welcome change as Tribunals are a more specific
forum for Arbitration, adjudication by Courts is a lengthy and cumbersome process, in cases
where parties wish to seek reliefs urgently Courts may not be the best avenue to approach.
Before the Amendment of 2015 parties were forced to approach the Court to apply for certain
reliefs as there were next to no precedents of such interlocutory relief being granted by
Tribunals. Thankfully and hopefully, this trend of Courts holding more extensive powers has
changed in practicality and not merely in ink.

The question of whether every application under Section 9 must first visit the rigours of CPC
is yet to be decided and, as of today, remains inconclusive. Import of these rigours to Section
17 is even more concerning as Arbitration is supposed to ensure a certain level of flexibility
and is usually tailored to ensure the needs of the parties are met. Tribunals(even to a higher
degree than Courts) should be free of strict interpretations when it comes to granting interim
reliefs. Small inconsistencies and mere technicalities should not hinder the ability of Tribunals
(or Courts) from granting just and convenient measures for safeguarding the interests of parties.

The arbitral process needs a delicate balance between flexibility and predictability.
International standards such as those under Article 17 A of the Model Law 36 seem more
pragmatic than the approach adopted by Indian Courts. Following similar standards would
guarantee that the Tribunal can determine when and where interim/interlocutory relief is
necessary without technical encumbrances (and grant the same) as well as ensure that there is
uniformity in International Arbitrations while allowing for interim measures.

36
“I) it would suffer irreparable harm if the interim measure sought for was not granted; and
ii) there was a reasonable possibility that it would succeed on merits.”

13