The article presumes knowledge on the part of the reader about what is international commercial arbitration within the meaning of the Indian Arbitration and Conciliation Act, 1996 (“The Act”) and seeks to analyse the aspect of interim relief from the Indian Courts in such a matter. In case the reader is interested in knowing about International Commercial Arbitration first, we will request the reader to go to our website for a separate article on the same.
Obtaining interim relief from the Indian courts.
The provisions pertaining to interim measures by the court are contained in Section 9 of the Act which provides that the parties to an arbitration agreement can approach the court before, during or after the making of the arbitral award but before it is enforced. A party could apply to the court for various reliefs as provided Under Section 9 of the Act including for an interim measure of protection in respect of (a) preservation, interim custody or sale of any goods that are the subject matter of arbitration agreement, (b) securing the amount in dispute, (c) the detention, preservation or inspection of any property or thing which is the subject-matter of dispute in arbitration, for appointment of a receiver etc.
Availing Interim relief when the place of arbitration is in India
If the place of arbitration is India in an international commercial arbitration, any party, whether Indian or foreign, willing to have interim relief could approach the court. Court for section 9 of the Act is defined to be “High Court in its exercises of its Ordinary Original Civil Jurisdiction”, having jurisdiction to decide the question forming the subject matter of the arbitration if the same had been the subject matter of the suit or “a High Court’s having jurisdiction to hear the appeals from the decrees of the court subordinate to that High Court”.
Availing Interim Relief from Indian Court against an Indian Party when the place of Arbitration is outside India
The answer to the question of whether the Indian or foreign party could make an application under section 9 of the Act if the place of arbitration is in the matter of International Commercial Arbitration outside India is not that simple in terms of section 2(2), the entire part one of the Act applies only to the arbitration when place thereof is India. This section however contains a proviso that in the absence of an agreement to the contrary, the provisions of sections 9, 27 and clause a of Section 37(1) & 37(3) shall apply to International Commercial Arbitration even if the place of arbitration is outside India when arbitral award made or to be made in such place is enforceable and recognized under the provisions of part two of this act. This necessarily means that in the absence of an agreement to the contrary, the party could approach under section 9 before an Indian court for availing an interim relief. Courts have recognized that whether or not there is an agreement to the contrary for exclusion of the applicability of application of the provisions of section 9 to an International Commercial Arbitration being conducted outside India could be determined not always through an express agreement to that effect and the behaviour and conduct of the parties including the choice of particular Institutional Arbitration Rules may impliedly exclude the applicability of the provisions of section 9 of the Act.
However, once it is clear that there is no agreement to the contrary, apparently relief against an Indian party could be claimed in a foreign seated arbitration.
Whether the Indian Court can grant relief against a foreign party from the Indian Court when the place of arbitration is outside India
It can be debatable as to whether such remedy is always available against the foreign party in a foreign-seated International Commercial Arbitration or whether the jurisdiction of the Indian court in terms of Section 2(2)of the Arbitration Act is an asset-based jurisdiction only. Looking at the provisions of section 9(1)(ii), the remedy is available for preservation, interim custody or sale of any goods that are the subject matter of the arbitration agreement or for detention, preservation or inspection of any property or that is the subject matter of the Arbitration or for interim injunction or appointment of a receiver or for securing the amount in dispute in the Arbitration.
While Delhi High Court, in the case of Goodwill Non-woven (P)Ltd. V Xcoal Energy & Resources, LLC held that the enforceability of the direction under Section 9 and jurisdiction to issue such directions is not related to assets in India only and the orders can be issued against the foreign party not having any assets in India as section 9 does not presuppose the existence of assets in India and the bank guarantee which is furnished/amount which is deposited pursuant to an order passed by a court in India under Section 9 can be invoked/withdrawn by an Indian party in the eventuality it succeeds in a foreign seated arbitration in satisfaction of the award even though the foreign entity may not have any assets in India, the author respectfully begs to differ on the same for apparently the directions under Section 9(1)(ii)(a), (c), &(d) relating to preservation, interim custody or sale of any goods or detention and preservation of any property or the interim injunction or appointment of a receiver are asset centric only. As regards the provisions of section 9(1)(ii)(b) for measures to secure the amount in dispute in the arbitration is concerned, it could be argued that such an amount could be secured in favour of the Indian party by the issuance of directions to a foreign party to deposit the amount in the India or to furnish a bank guarantee which is encased for the satisfaction of the award in a foreign seated arbitration but that may not be a correct position as the order of securing the amount in dispute in arbitration can be passed only on satisfaction of the conditions of Order 38 Rule 5 of the Code of Civil Procedure. These provisions are a remedy that could be availed when the party to the proceeding is about to dispose of the whole or any part of its property or is about to remove the whole or part of its property from the local limits of the jurisdiction of the court. Considering that, in the author’s opinion, the remedy of s.9(1)(ii)(b) is for the benefit of a foreign party in a foreign seated Arbitration against the Indian party and not vice versa if the foreign party is not having any assets within the jurisdiction of the court. The author will additionally, argue that such an order that may be passed by an Indian court against a foreign party having no assets in India runs the risk of being in conflict with any order to the contrary that may be passed by a foreign court of the actual seat of arbitration, in term of the applicable curial law.
That having stated, it will be apposite to mention that as of date and to the author’s knowledge, there is no judgment of any other High Court expressing a conflicting view to that of the Delhi High Court.
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Author: Ravish Bhatt, Managing Partner, R & D Law Chambers LLP
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