Section 9 of the Arbitration and Conciliation Act, 1996, allows parties to apply for interim relief from courts, which becomes necessary for protection of the subject matter of arbitration and also for securing amounts in dispute. This provision becomes crucial to arbitration proceedings since arbitral awards are rendered effective while parties cannot bypass the consequences through dilatory tactics.
Detailed Analysis of Section 9
This provision ensures that the arbitration process is effective and that parties adhere to the final resolution. Here is a detailed breakdown:
Section 9(1): Power to Grant Interim Measures
This sub-section allows a party to apply to a court for interim measures before, during, or after arbitral proceedings but before the enforcement of the arbitral award. Interim measures can include:
9(1)(i)—Appointment of a Guardian: For a minor or person of unsound mind involved in arbitral proceedings.
9(1)(ii)- Preservation Measures: Including the preservation, interim custody, or sale of goods subject to the arbitration agreement.
Specific Measures under Section 9(1)(ii)
Subsection (a): Courts can order the preservation, interim custody, or sale of goods that are the subject of the arbitration.
Subsection (b): Allows for securing the amount in dispute to prevent harm that could make the arbitration award ineffectual.
Subsection (c): Pertains to the detention, preservation, or inspection of property that is the subject of the dispute, ensuring evidence is maintained intact during the arbitration.
Subsection (d): Enables courts to issue interim injunctions or appoint receivers if necessary to protect the disputed property.
Subsection (e): Provides courts the flexibility to issue any other interim measure they deem just and convenient.
Section 9(2): Commencement of Arbitral Proceedings
This subsection was added in the 2015 amendment to stress the urgency of initiating arbitration after court-ordered interim measures. It mandates that arbitration proceedings should commence within 90 days from the order or as extended by the court. This encourages parties to progress swiftly from interim measures to the arbitration process itself.
Section 9(3): Limitations on Court's Intervention Post-Tribunal Constitution
Post-2015 amendment, once the arbitral tribunal is constituted, the court’s role in providing interim measures is significantly limited. The courts will only entertain an application under Section 9 if the measures available through the arbitral tribunal under Section 17 prove inefficacious. This change aims to minimize court intervention in arbitration processes and encourage parties to utilize the arbitration panel’s authority.
Are you interested in pursuing a career in Law? The Legal School in collaboration with IndusLaw has created unique programs for a Certification in Mergers & Acquisitions, Private Equity and Venture Capital Laws & Certification in Mergers & Acquisitions for fresh law graduates as well as professionals looking to advance in their careers! Enquire now for details!
Relationship Between Section 9 & Section 17 of the Arbitration Act
Section 9 of the Arbitration and Conciliation Act, 1996, allows courts to grant interim relief before or during arbitration proceedings or before the enforcement of an arbitral award. On the other hand, Section 17 enables the arbitral tribunal to grant similar interim measures. Both sections have similar wording, leading to some confusion about their application.
In a landmark decision ArcelorMittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd., 2021, the Supreme Court differentiated the two. Under Section 17, the tribunal can issue orders that the court cannot enforce directly. Thus, Section 9 empowers courts to issue enforceable interim orders during arbitration proceedings.
Following the 2015 amendment, both sections were expanded to provide equal powers to the arbitral tribunal and the courts for issuing interim orders.
The amendment also made orders under Section 17 enforceable in the same manner as court orders under the Civil Procedure Code.
Courts can intervene under Section 9 only when the arbitral tribunal cannot provide an effective remedy, as seen in a case where the tribunal could not function due to the recusal of an arbitrator.
This maintains the balance between court intervention and the autonomy of the arbitral process.
A recent Supreme Court ruling in the case of ArcelorMittal Nippon Steel India Ltd. (2021) highlighted that once a tribunal is constituted, the courts should refrain from entertaining applications under Section 9 unless it is evident that the tribunal cannot offer an effective remedy under Section 17.
Get to Know What is an Arbitration Agreement?
Interplay Between Sections 9, 36, and 37 of the Arbitration Act
Section 36 of the Arbitration and Conciliation Act, 1996, deals with enforcing an arbitration award. This means once an arbitration decision is final and ready to be enforced, parties generally can't ask for any temporary orders under Section 9. It lets parties seek these temporary orders from the court before the award is enforced.
If parties are not happy with how a court handled these temporary orders under Section 9, Section 37(1)(a) allows them to challenge that decision. This section gives the right to appeal if the court either refuses to give the temporary relief asked for or if the relief granted isn't what the parties think is appropriate. This way, parties have a chance to address any issues with the temporary orders before they affect the final outcome of the arbitration or its enforcement.
Jurisdiction for Section 9 Applications in Domestic and International Arbitrations
Section 2(1)(e) of the Arbitration and Conciliation Act, 1996 outlines which courts can handle applications under Section 9. For domestic cases that are not international commercial arbitrations, either the principal Civil Court of a district or the High Court with original civil jurisdiction can hear these cases. For international commercial arbitrations, only High Courts with original civil jurisdiction can handle these applications. Smaller courts, like Courts of Small Causes, do not have the authority to deal with applications under Section 9.
Recent Amendments and Case Laws
The 2015 amendment to the Act has enhanced the efficacy of Section 9 by mandating that arbitral proceedings commence within a stipulated time after a court has granted interim measures, ensuring that arbitration is not merely a theoretical option but a practical route to dispute resolution.
1. M/S. Satyen Construction v. the State of West Bengal & Others (2022)
The Calcutta High Court in M/S. Satyen Construction v. the State of West Bengal & Others (2022), decided against extending the provisions of Section 9 to the enforcement of arbitral awards, denying a request to withdraw based on this premise.
2. Hero Wind Energy Private Limited v. Inox Renewables Limited (2020)
The Delhi High Court in Hero Wind Energy Private Limited v. Inox Renewables Limited (2020) deliberated on the applicability of Section 9 to non-signatories of arbitration agreements, establishing that relief under this section can be complex and dependent on the specifics of the arbitration agreement and the nature of the parties involved.
3. Mitsumi Incorporated (2020)
In Mitsumi Incorporated (2020), the Delhi High Court ruled that once an arbitral tribunal is constituted in a foreign-seated arbitration, Section 9 applications are not maintainable if the tribunal can provide an effective remedy.
4. New Morning Star Travels v. Volkswagen Finance (2020)
In another case, New Morning Star Travels v. Volkswagen Finance (2020), the Delhi High Court determined that orders on a Section 9 application should not be made without the other party's participation (not ex-parte).
5. Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd. and Afcons Infrastructure Ltd. v. Board of Trustees of Port of Mumbai (2007)
In Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd. and Afcons Infrastructure Ltd. v. Board of Trustees of Port of Mumbai (2007) have further defined the scope and application of this section. Courts have generally agreed on the application of principles like the prima facie test, balance of convenience, and irreparable harm when granting interim reliefs under this section.
In Summary,
Section 9 of the Arbitration Act is pivotal for securing interim relief before, during, and after arbitration proceedings but before the enforcement of the arbitral award. At the heart of arbitration law is the necessity for an arbitration agreement. Section 9 underscores that parties should resort to court for interim relief post the formation of an arbitral tribunal only if the remedies under Section 17 prove ineffective. Despite these specifics, Section 9 broadly empowers courts to grant interim relief at various stages of the arbitration process, ensuring robust legal support when needed.
FAQs
Q1. What is the role of Section 9 in arbitration?
It allows courts to grant interim measures to protect the subject matter of arbitration and ensure enforcement of the arbitral award.
Q2. Can interim relief be granted after the arbitral award is made?
Yes, interim relief can be sought until the award is enforced, to prevent actions that might defeat the purpose of the award.
Q3. What happens if the arbitration does not start within the time specified by the court?
The interim measure granted may lapse if arbitral proceedings do not commence within the specified timeframe.
Q4. Are the principles of the Civil Procedure Code applicable to Section 9?
While not strictly applicable, principles from the CPC can guide the grant of interim measures under this section.
Q5. Can a non-signatory to an arbitration agreement seek relief under Section 9?
Typically, non-signatories cannot seek relief; however, complex legal interpretations may allow it under certain circumstances.
