Commercial Arbitration

Interim measures

Mr. S.K.Sinha
Faculty of Law, HNLU

Interim Measures

Interim measures mean the interim relief as required under the circumstances of a
case while the main case is pending adjudication.
As for example, in a suit seeking perpetual injunction against demolition of a
building, the main relief is perpetual injunction whereas the interim relief is
temporary injunction. That is, a direction from the Court that the opposite parties
shall not demolish any part/portion of the building during the pendency of the
said suit. Otherwise, the opposite parties may demolish the building and the very
purpose of the suit will be defeated.
Thus, to prevent such a catastrophe, depending upon the circumstances of each
case, the Court or Arbitral Tribunal can order interim measures in the interest of
justice.
The Arbitration and Conciliation Act, 1996 provides for granting of interim
measures by Court under Section 9 and by Arbitral Tribunal under Section 17.
The court has no power to issue interim orders in a matter where the arbitration
is held under the New York or Geneva Convention at a place outside India.

Interim Measures by Court

Under Section 9 of the Arbitration and Conciliation Act, 1996 a court is

empowered to grant any interim measure of protection as may appear to the
Court to be just and convenient.
These interim measures can be granted by a Court before or during arbitral
proceedings or at any time after the making of the arbitral award but before it is
enforced in accordance with Section 36 of the Act.
The significance of this provision is that even before the arbitral proceedings
commence a party may approach the Court seeking interim measures of
protection or, he may approach while the arbitral proceedings are pending or,
even after making of the arbitral award but it is enforced.
In M/s Sundaram Finance Ltd. v. M/s. NEPC India Ltd., AIR 1999
Supreme Court 565, the Supreme Court held on this point that a party to an
arbitration agreement can approach the Court for interim relief not only during
the arbitral proceedings but even before the arbitral proceedings. Reading the
Section as a whole it is clear that the Court has jurisdiction to entertain an
application under Section 9 for interim measures either before arbitral
proceedings or during arbitral proceedings or after the making of the arbitral
award but before it is enforced in accordance with Section 36 of the Act.

Contd.
However, the Supreme Court pointed out that when an application under Section 9 is
filed before the commencement of the arbitral proceedings, there has to be manifest
intention on the part of the applicant to take recourse to the arbitral proceedings, if, at
the time when the application under Section 9 is filed, the proceedings have not
commenced under Section 21 of the 1996 Act. The Court is not debarred from dealing
with an application under Section 9 merely because no notice has been issued under
Section 21 of the 1996 Act. Thus, even though no notice is given to commence arbitral
proceedings as required as required under Section 21 of the Act, the Court can grant
interim relief but there should be an intention on the part of the applicant to take
recourse to arbitral proceedings and obviously there should be a written agreement
between the parties to refer their present or future dispute/s to arbitration.
However, Section 9 of the Act is not specific as to whether the provisions under Section
9 apply to domestic arbitration only or both to domestic and international commercial
arbitration. In Bhatia International v. Bulk Trading S.A. and another, AIR 2002,
Supreme Court 1432, the Supreme Court of India held that these provisions under
Section9 would apply in cases of international commercial arbitration also held out of
India unless the parties by agreement express or implied, exclude all or any of the
provisions of Part I of the Arbitration and Conciliation Act, 1996. If the parties
exclude so, the laws or rules chosen by the parties would prevail. Any provision in Part
I of the Act, which is contrary to or excluded by that law or rules will not apply.

Issues for which Interim Measures can be granted

Under Section 9 of the Act, for the following issues, a party may apply to a Court
for granting of interim measures:
For the appointment of a guardian for a minor or a person of unsound mind for the
purposes of arbitral proceedings; or
For an interim measure of protection in respect of any of the following matters,
namely:a. the preservation, interim custody or sale of any goods which are the subjectmatter of the arbitration agreement;
b. securing the amount in dispute in the arbitration;
c. the detention, preservation or inspection of any property or thing which is the
subject-matter of the dispute in arbitration, or as to which any question may arise
therein and authorising for any of the aforesaid purposes any person to enter upon
any land or building in the possession of any party, or authorising any samples to
be taken or any observation to be made, or experiment to be tried, which may be
necessary or expedient for the purpose of obtaining full information or evidence;
d. interim injunction or the appointment of a receiver;
e. such other interim measure of protection as may appear to the Court to be just and
convenient;

Power of the Court and Procedure

The Court shall have the same power for making orders as it has for the
purpose of, and in relation to, any proceedings before it. That means the Code
of Civil Procedure, 1908, will apply to Court once an application is filled
before it by a party. It is pertinent to note that only the Arbitral Tribunal shall
not be bound by Code of Civil Procedure, 1908 and the Indian Evidence Act,
1872 and any procedure before a Court shall be bound by the Code of Civil
Procedure and the Evidence Act.

The word Court under Section 9 means the Court as defined under Section 2(e)
of the Act. That is the Principal Civil Court of original jurisdiction in a district
and the High Court in exercise of its ordinary original civil jurisdiction in the
four cities of Bombay, Delhi, Calcutta and Madras.

Interim Measures by Arbitral Tribunal

Section 17 of the Arbitration and Conciliation Act, 1996 provides for granting of
interim measures by arbitral tribunal.

Basically this power is subject to the agreement of the parties. This provision
aims at granting interim measures and also requiring a party to provide
appropriate security.

Under Section 17(1) of the Act, unless otherwise agreed by the parties, the
arbitral tribunal may, at the request of a party, order a party to take any interim
measure of protection as the arbitral tribunal may consider necessary in respect
of the subject-matter of the dispute. Under sub-section (2) to Section 17, the
arbitral tribunal may require a party to provide appropriate security in
connection with a measure ordered under sub-Section (1) to Section 17.

Difference between the Powers of the Court and

the Arbitral Tribunal to grant Interim Measures

Any order of the Court under Section 9 is binding on the parties and any
violation of that order attracts contempt proceedings and the erring party may
be punished for having committed an act of contempt of court. Whereas under
Section 17 of the Act, prima facie the power does not exist with the arbitral
tribunal, if the parties agree otherwise i.e. not to give such powers to the
arbitral tribunal. In the absence of such an agreement, at the request of a party,
the arbitral tribunal may grant interim measures but its disobedience will not
attract any penal provisions of law. The disobedience on the part of a party will
not attract contempt proceedings and such a party cannot be punished under
Contempt of Courts Act, 1971. Thus, the effective remedy appears to be under
Section 9 of the Act for the seeking any interim measures by a party.

Thank you for your time

soumyakanti.lws@gmail.com
www.hnlu.ac.in