What are the Interim Measures by the court under Arbitration & Conciliation?
Parties involved in litigation proceedings usually have the right to seek for and obtain interim orders from the Court. The Court has the mechanism to enforce the interim orders issued by it.
However, since an arbitral tribunal is a not a regular court, and cannot enforce its order, can a party to an arbitration proceeding apply to a regular court for an interim order?
In this article, we will be examining whether Arbitration and Conciliation Act, 1996, recognizes this situation, and if it does, whether it has made any provision to cater for a party who wishes to obtain an interim order.
Our discourse shall flow in the following order
In cases of extreme urgency, especially for the protection of a res (subject matter of a dispute), a party can apply to the court for an interim measure. The Court, after considering the application, can make an interim order to protect the res or any other interest, pending the determination of the suit.
Thus, interim measures/orders, are temporary measures/orders passed by the Court in the course of, or during the pendency of litigation proceedings. Order XXXVIII (38) and XXXIX (39), and XL (40) of the Civil Procedure Code, 1908, make ample provisions on interim measures.
In N V Choudhary v. Hindustan Steel Works Construction Ltd., the High Court in Andhra Pradesh, laid down the principles to be considered by a Court when granting interim injunctions. According to the Court, it must be considered whether a prima facie case has been established by the person who seeks an interim (temporary) injunction. Secondly, it must be considered whether the balance of convenience is in the applicant’s favour.
Flowing from these principles, it is now general law that an applicant who seeks an interim order will usually make his application and swear to affidavit, which must contain facts which establish the following:
- A prima facie case
- Balance of convenient tilts in the applicant’s favour
- Refusal of an interim order will cause an irreparable loss to the applicant.
Because a court has the mechanism to enforce its interim orders, an applicant is protected where the respondent defaults. However, in the case of arbitration proceedings, the arbitral tribunal does not have the mechanisms to enforce any interim orders, because it is not a court of law. In such an instance, how can the res or urgent interest of an applicant be protected, pending the conclusion of the arbitral process?
The Arbitration and Conciliation Act, 1996 recognizes these urgent situations and makes provision which an applicant can latch unto to obtain an interim order.
2.0 Provision of the Arbitration and Conciliation Act, 1996, on Interim Measure
Section 9 of the Arbitration and Conciliation Act makes provision on interim measures. By virtue of this section, a party to an arbitration proceeding is entitled to make an application to the Civil Court for an interim measure. If the Court considers that the granting of the interim measure is in the interest of justice and will protect the interest of the applicant, the Court is empowered to grant the interim measure and issue an interim order.
According to the section, a party may, 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, apply to a court, for the interim measures mentioned under the section.
From the provisions of the section, it can be gleaned that an applicant can make an interim application
- Before the arbitral proceedings begin; or
- During the arbitral proceedings; or
- After the arbitral award has been delivered by the arbitral tribunal, but before it is enforced under section 36 of the Arbitration and Conciliation Act.
In Sundaram Finance Ltd. v. NEPC India Ltd., AIR 1999 SC 565, the Court restated the provisions of section 9 – “the party may 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, apply to a Court for interim measures’ – the Court went on to observe that in order to give full effect to the words, ‘before or during arbitral proceeding’ occurring in section 9, an applicant can file the application even where a notice invoking the arbitration clause has not been issued to the opposite party. A court will not be debarred from considering the application merely because no notice has been issued under section 21 of the Arbitration and Conciliation Act.
Furthermore, the section specifies the interim measures that a party can apply for. Thus, under section 9:
- An applicant can apply to the Court for the appointment of a guardian for a minor or a person of unsound mind, for the purposes of the arbitral proceedings.
- An applicant can make an application for interim preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement.
- An applicant can apply for interim measure securing the amount in dispute in the arbitration.
- An applicant can apply for interim 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 authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may by necessary or expedient for the purpose of obtaining full information or evidence.
- An applicant can apply for interim injunction.
- An applicant can apply for the interim appointment of a receiver.
- An applicant can apply for any other interim measure of protection, which the Court thinks is just and convenient.
Where the applicant makes an application for any of these interim measures, the Court is vested with the power to make such order as if it was making for the purpose of, and in relation to any civil proceedings before it.
Whether or not a party who seeks to make an application pursuant to section 9 needs to notify the other party about the application, is an issue that has been considered by the Court. In Ion Exchange (India) Ltd. Mumbai v. Paramount Limited, Baroda 2006 (4) AIR Bom. R 553, the applicant filed an application under section 9 without informing the other party, involved in the arbitration process, about it. The Court was of the view that an application filed under section 9 without informing opposite party, with a view of denying opposite party legal remedy, would not be a bona fide application.
Because an arbitral tribunal lacks the mechanism to enforce its orders, a party, who wishes to obtain an interim order, is afforded the opportunity to make an application to a Civil Court by virtue of section 9 of the Arbitration and Conciliation Act, 1996.
The section provides a list of the interim measures a party to an arbitration can obtain from a Civil Court, in respect of the subject matter of the arbitration proceedings.
The list is detailed, and it also contains an omnibus provision that the applicant and court can rely on for the grant of any other interim measures not specifically listed under the section.