INTRODUCTION
SECTION 9
Section 9 (1) of the Arbitration Act provides power
to the Court to grant interim relief or interim measures to the parties “before
or during arbitral proceedings or at any time after the making of the arbitral
award but before it is enforced.” However, S. 9 (3) stipulates that once
the arbitral tribunal has been constituted, “the court shall not entertain
an application seeking interim measures, unless the court finds that
circumstances exist which may not render” the interim remedy to be
efficaciously granted by the Arbitral Tribunal.
FACTS IN BRIEF
The brief facts of the case are that there was an
Arbitration Agreement between the parties to the instant case. Now, before
constitution of the Arbitral Tribunal, the parties preferred Applications under
Section 9 seeking interim relief before the Commercial Court. Such Applications
were heard and considered by the Commercial Court, but the orders were reserved.
Thereafter the Arbitral Tribunal got constituted and, in such light, the
parties prayed by moving an application before the Commercial Court to refer
their interim applications under Section 9 before the Arbitral Tribunal.
However, the Commercial Court declined such relief by dismissing their application.
Such dismissal was challenged before the High Court that declined any relief
holding that the Commercial Court has the power to consider whether the remedy
sought could be efficaciously granted by the Arbitral Tribunal or not and if
required, it may “pass necessary orders under Section 9.” This
Order of the High Court was challenged before the Supreme Court. The moot
question to be answered by the Supreme Court was: -
LEGAL QUESTION
Whether a Court has the power to entertain an
application under Section 9(1) of the Arbitration and Conciliation Act, 1996, once
an Arbitral Tribunal has been constituted and if so, what is the true meaning
and purport of the expression “entertain” in Section 9(3) of the
Arbitration Act?
Thus, let us understand the pertinent observations
by the Supreme Court.
OBSERVATIONS BY THE COURT
Firstly, the Court observed that “applications
for interim relief are inherently applications which are required to be
disposed of urgently. Interim relief is granted in aid of final relief. The
object is to ensure protection of the property being the subject matter of
Arbitration and/or otherwise ensure that the arbitration proceedings do not
become infructuous and the Arbitral Award does not become an award on paper, of
no real value.”
Secondly, the Court discussed the basic principles
for grant of interim relief that are: -
a. Good prima facie case.
b. Balance of convenience in favour of grant of
interim relief.
c. Irreparable injury or loss to the applicant for
interim relief. Such irreparable injury may occur on account of delay in
disposal of an application seeking interim relief.
Thirdly, the Court discussed the Doctrine of Kompetenz-Kompetenz
“which requires that the Arbitral Tribunal must exercise jurisdiction
over the dispute under the arbitration agreement. Thus, challenge to the
existence or validity of the arbitration agreement would not prevent the
Arbitral Tribunal from proceeding with the hearing and ruling upon its
jurisdiction. If it retains jurisdiction, it may make an award on the substance
of the dispute, without waiting for the outcome of any court action aimed at
deciding the issue of jurisdiction.”
Fourthly, the Court also explained that “the
object of introducing Section 9(3) was to avoid Courts being flooded with
applications under Section 9 of the Arbitration Act.” In this light,
the Court also discussed the Doctrine of Negative Kompetenz-Kompetenz
that is an exception to the rule of priority in favour of the Arbitrators. This
doctrine permits the courts to decide interim disputes or issues only on need
basis where a prima facie case is made out, but any grant of such
interim relief is subject to complete review by an Arbitral Tribunal.
Fifthly, the Court noted that it could “never
have been the legislative intent that even after an application under Section 9
is finally heard relief would have to be declined” and the parties
would have to be relegated to the Arbitral Tribunal for consideration of such
interim relief. According to the Court, once an application for interim relief is
being considered or has been considered by a Court, then there is no point in
relegating the parties to the Arbitral Tribunal.
Sixthly, the Court observed that “the Courts
do not decide on merits except when permitted by legislation either expressly
or by necessary implication.” Thus, “Section 9(1) enables the parties
to an arbitration agreement to approach the appropriate Court for interim
measures before the commencement of arbitral proceedings, during arbitral
proceedings or at any time after the making of an arbitral award but before it
is enforced” and “the bar of Section 9(3) operates where the
application under Section 9(1) had not been entertained till the constitution
of the Arbitral Tribunal.”
And lastly, the Court noted that “even if an
application under Section 9 had been entertained before the constitution of the
Tribunal, the Court always has the discretion to direct the parties to approach
the Arbitral Tribunal, if necessary, by passing a limited order of interim
protection.”
Thus, the Supreme Court partially allowed the
Appeal before it, holding that “the High Court has rightly directed the
Commercial Court to proceed to complete the adjudication” and it shall
not be necessary for the Commercial Court to consider whether the remedy sought
could be efficaciously granted by the Arbitral Tribunal or not, “since
the application under Section 9 has already been entertained and considered by
the Commercial Court.”
That was all about the case. So, what are my
concluding remarks?
CONCLUDING REMARKS
I feel that the initial purpose of having an
Arbitration Law to have a clear, straightforward and speedy remedy for the
parties is getting defeated. Though the Courts including the Hon’ble Supreme
Court have made painstaking efforts to bring clarity to the provisions of the
Arbitration Act, yet it is being seen that except for the parties who can afford
costly litigations, Arbitration as a mode of alternate dispute resolution has
not been able to inspire confidence in the general public. The Courts will
continue to interpret the Arbitration Act since it is a routine matter for them,
but the legislature must think on the how to make Arbitration more accessible
for the general public because without it, Arbitration Law shall remain a valid
option only for the elites and not for the common man.
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