Interim Reliefs by Courts during Arbitration Proceedings

The guidelines and procedure that govern arbitral proceedings by Tribunals and Courts are noted in the Arbitration and Conciliation Act, 1996 (hereafter referred to as ‘Act’). Besides, certain provisions that safeguard the interests of parties involved during or after the proceedings as well as the Tribunal’s authority and the Court’s power to grant interim reliefs are listed in the Act.

Section 9 and Section 17 are involved in governing the Court or Tribunal power with regards to them granting interim reliefs during arbitration proceedings.

Considering the topic of discussion here is the interim relief granted by Courts during arbitral proceedings, we are mainly concerned with the provisions under Section 9 of the Act.

Legal Provisions

Courts are granted the power to grant interim relief to parties by Section 9 of the Arbitration and Conciliation Act, 1996.

• These reliefs may be granted prior to or during the arbitral proceedings and even after an arbitral award has been awarded but prior to it being enforced under the directions of Section 36 of the Act.
• It must be noted, however, that the Court’s power to grant such reliefs after the Tribunal has been formed is relatively restricted.
• As per Section 9(3) of the Act, the Courts must not accept any application for interim reliefs once an arbitral tribunal has been formed. They may only accept such applications if they believe that there are certain circumstances in play that might lead to the remedies defined under Section 17 to be ineffective.
• The arbitral tribunal’s power to grant interim reliefs during arbitral proceedings is granted to them by Section 17 of the Act.
• As such, what Section 9(3) actually provides is that in case a Court deems the circumstances to be such that the arbitral tribunal shall fail to provide an effective interim relief, the Court may consider an application to grant interim relief after the constitution of the Tribunal.
• The key reasons behind this restriction on power of Courts is to reduce the load on the already overburdened Courts and to also allow Tribunals to grant interim reliefs in an orderly, timely and effective manner.

A question that you may potentially come across is ‘what if a party obtains interim relief from the Court before arbitral proceedings begin and thereafter continues to delay such proceedings to enjoy the benefits of the relief for a much longer period?’ Well, this aspect is taken care of by Section 9(2) of the Act.

Section 9(2) of the Act states that if a Court grants an interim relief before the arbitral proceedings begin, then the arbitral proceedings in question must commence within 90 days from the date when the order was issued or as per the period defined by the Courts.

A key aspect behind Section 9(2) is that the party invoking it must be willing and prepared to go to arbitration.
Following factors must be taken into consideration by Courts when deciding to entertain an application under Section 9:

• The general principles - prima facie case, balance of convenience and irreparable injury or loss to any party.
• The Supreme Court clarified that when granting interim relief under Section 9, Courts shall not be bound by the provisions of the Code of Civil Procedure, 1908 and that interim reliefs shall not be denied simply due to some technicality. For example, if there is a case where the Court deems the fact that the Applicant has made a strong prima facie and the balance of convenience favors them too, but they have failed to make certain declarations vital for interim reliefs, the Court shall not deny the party interim relief simply based on this technicality.

Reliefs granted by Courts under Section 9

• Appointing a guardian for minors/individuals with unsound mind for the purpose of arbitration proceedings.
• Orders to preserve or to get the interim custody of any goods that may be somehow involved in the subject for the arbitral proceedings.
• Orders to secure the disputed amount – it may be in the form of furnishing of bank guarantee, etc.
• Interim injunction or appointing a ‘Receiver’.
• Directions to enter and orders to inspect any property that may be related to the subject matter of the arbitral proceedings.
• Other similar reliefs that Courts deem fit.

Another question that you may potentially come across is ‘whether Courts have the power to entertain an application under Section 9 once the Tribunal has been constituted and if yes, then what does the term ‘entertain’ occurring in Section 9(3) truly mean.’

• After the 2015 amendment, the Tribunal was basically given the same powers under Section 17 of the Act as those granted to Courts under Section 9 of the Act.
• As such, Courts may use their power, granted under Section 9, only when there is some hindrance in appearing before the Tribunal or the interim relief sought cannot be obtained swiftly.

Conclusion

It quite often happens that a party may file an application under Section 11 (to appoint an arbitrator) alongside an application under Section 9 (for interim reliefs from the Court). If the Court believes that the case is fit for appointment of an Arbitrator and has the opinion that the interim relief being sought can be effectively granted by an Arbitral Tribunal, the Court shall appoint an Arbitrator and convert the Section 9 application into a Section 17 application and direct the Arbitrator to consider the case in question. The Court may order some temporary arrangement between the disputing parties to help maintain some harmony while the Arbitrator is reviewing their conflict and disposes the Section 17 application.