Section 17 of the Arbitration and Conciliation Act, 1996, empowers an arbitral tribunal to grant interim measures of protection during the course of arbitration proceedings. This is an important provision as it allows parties to arbitration to obtain interim relief, for example, the freezing of assets, protection of claims, or even interim injunctions, pending the final determination of the dispute. The section makes sure that the arbitration process is effective and that the rights of parties are safeguarded pending the determination of the arbitration.
Sub-Section 1: Application for Interim Measures
The first subsection of Section 17 allows a party to apply to the arbitral tribunal for interim measures. It outlines the specific types of interim relief that can be sought and granted by the tribunal.
(i) Appointment of Guardian for Minor or Person of Unsound Mind
This clause allows a party to apply for the appointment of a guardian on behalf of a minor or person of unsound mind, if such a party is a party to the arbitration proceedings. This ensures that vulnerable parties are given representation in the arbitration process.
(ii) Interim Measures of Protection
(a) Preservation, Interim Custody, or Sale of Goods: This refers to situations where the subject-matter of the arbitration involves goods, and an interim order may be necessary to preserve, temporarily take custody of, or sell these goods to prevent them from being lost or damaged during the arbitration process.
(b) Securing the Amount in Dispute: If there is a risk that the party against whom an award is likely to be made will not be able to satisfy the final award, an interim measure can be ordered to secure the amount in dispute. This ensures that even if the party is later found to owe the amount, the money is available to satisfy the award.
(c) Detention, Preservation, or Inspection of Property: In cases where property or physical evidence forms part of the dispute, the tribunal may order the detention, preservation, or inspection of such property. This can include granting permission for a person to enter the land or building in possession of a party to take samples, make observations, or conduct necessary experiments. This provision ensures that all relevant evidence is preserved and accessible during arbitration.
(d) Interim Injunction or Appointment of Receiver: The tribunal has the power to issue an interim injunction to restrain a party from performing certain actions that may affect the dispute or to appoint a receiver to manage the property or assets involved in the dispute until the arbitration is concluded.
(e) Other Interim Measures of Protection: This is a residuary provision which provides the tribunal with discretion to order any other interim measure as it considers just and convenient in the circumstances. This provides the tribunal with room to act where cases are not clearly covered by the other measures contained in this section.
Sub-Section 2: Enforceability of Orders
The second subsection of Section 17 establishes the enforceability of interim orders issued by the arbitral tribunal. It makes it clear that any interim order passed by the tribunal is deemed to be an order of the Court for all purposes and can be enforced under the Code of Civil Procedure, 1908 (CPC), in the same manner as an order issued by a court.
This is an important provision since it makes the interim orders of the arbitral tribunal as legally binding as a court order. Hence, the parties can seek the enforcement of the interim orders of the tribunal from the court in case the other party does not comply. The mention of the CPC ensures that there is a clear, standardized, and enforceable procedure for seeking compliance with such orders.
Key Features of Section 17
According to Section 17 of the Arbitration and Conciliation Act an arbitral tribunal gains authority to offer interim measures which enables the efficient implementation of its issued orders. The following are the salient features:
Arbitral Tribunal's Powers: Section 17 empowers arbitral tribunals with identical powers as those of courts to grant interim relief, ensuring arbitration as a workable and efficient mechanism for dispute resolution. The tribunal has great powers in ensuring that the status quo is preserved and that assets or evidence are not destroyed or concealed during the arbitral process.
Flexibility and Discretion: The provision is flexible in that it enables the tribunal to order interim measures that are convenient and just, suitable for a variety of circumstances. This is necessary since every arbitration case can have special circumstances necessitating varying interim measures.
Enforceability: The enforceability of the orders of the tribunal under the CPC is important to ensure that interim measures are not only awarded but also enforced. Through such steps arbitration parties can reduce the risk of members failing to follow tribunal directives thereby preventing disruption of the arbitration process.
Amendments to Section 17
Section 17 of the Arbitration and Conciliation Act has been significantly amended to make it more effective in granting interim relief in arbitration. The amendments are in line with the changing face of arbitration:
2015 Amendment (Act 3 of 2016): The 2015 amendment significantly enhanced the powers of the arbitral tribunal by allowing it to grant interim measures during arbitration proceedings. This was a major development that aligned India’s arbitration laws with global best practices.
2019 Amendment (Act 33 of 2019): The 2019 amendment further refined the application of Section 17 by excluding the possibility of seeking interim measures after the arbitral award has been made but before it is enforced. This change reflects the growing recognition of the need to ensure timely relief during the arbitration process.
Summing Up
The Section 17 of the Arbitration and Conciliation Act, 1996 serves as a defining provision by allowing arbitration parties to get interim relief which protects their rights during arbitration. By giving the arbitral tribunal the power to order a variety of measures, from the protection of goods to interim injunctions, and by making such orders executable as court orders, Section 17 enhances the arbitration process in India. The provision reflects the growing importance of arbitration as a preferred mode of dispute resolution and ensures that arbitration remains effective and efficient in resolving disputes.
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Amendments of the Arbitration and Conciliation Act
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Section 4 of the Arbitration & Conciliation Act 1996
Section 11 of The Arbitration & Conciliation Act, 1996
Section 34 of Arbitration & Conciliation Act 1996
Section 13 of Arbitration & Conciliation Act 1996
Section 33 of Arbitration & Conciliation Act 1996
Section 17 of Arbitration and Conciliation Act: FAQs
Q1. Do the arbitral tribunal carry out property inspections under arbitration?
Yes, Section 17 permits the tribunal to order the detention, preservation, or inspection of property that is subject to the dispute.
Q2. Is Section 17 flexible in granting interim measures to the tribunal?
Yes, Section 17(1)(e) enables the tribunal to grant any other interim measure as it sees fit, taking into account the situation in the case.
Q3. Is it possible for the arbitral tribunal to direct sale of goods throughout the arbitration proceeding?
Yes, by virtue of Section 17(1)(a), the tribunal may order the preservation, interim custody or sale of the goods forming the subject matter of the arbitration dispute.
Q4. Are orders by the tribunal binding on parties?
Yes, the orders passed by the arbitral tribunal under Section 17 are binding and may be enforced as court orders under the Code of Civil Procedure.
Q5. Is it possible for a party to seek interim relief prior to the commencement of the arbitral proceedings?
Yes, a party may seek interim relief from the tribunal during the arbitral proceedings, even prior to the hearing or award.
