INTERIM MEASURE OF PROTECTION UNDER SECTION 9 OF THE ARBITRATION ACT

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INTRODUCTION

An interim measure of protection (hereinafter 'interim relief') by the court plays a very vital role in safeguarding the rights of a party before or during or after the arbitral award but before enforcement application u/s. 36 of the Arbitration and Conciliation Act, 1996 (hereinafter 'Arbitration Act'). An interim relief shields the subject-matter of the dispute till application for enforcement of an award. Often it has been observed that the defaulting party also poses the risk of dissipating assets after the dispute arises between the parties. To secure the final relief, an interim relief becomes indispensable. Otherwise, it will defeat the whole purpose of an arbitral tribunal. Because, even if a party gets an award, there should be something left to satisfy the claims. Therefore, an aggrieved party should ensure the outcome of an arbitral tribunal by filing an interim relief in a timely manner. A comprehensive view of interim relief/protection has been enunciated by Hon'ble Delhi High Court as, "A party is entitled to a relief under Section 9 of the Act if there is a condition precedent to the relief and such a relief emanates from the terms of the agreement. Any dispute which is not a subject matter of the terms of an agreement is beyond the purview of arbitration. A party or a person is entitled to interim protection if action of the other party is either in breach of the terms of the agreement or militates against equity, fair play or principles of natural justice, otherwise not [Baby Arya v. Delhi Vidyut Board, AIR 2002 Del 50]."

INTERIM MEASURE OF PROTECTION - SECTION 9(1)(ii) OF THE ARBITRATION ACT

A party has two ways of obtaining interim relief under the Arbitration Act. One way is to get an interim relief by a court and the other is to get interim relief by an arbitral tribunal. In this blog, I would be dealing with the former relief only. The Section 9(1)(ii) of the Arbitration Act deals with interim measure of protection by a Court. As already stated above, Section 9 provides interim relief not just before or during the arbitral proceedings but also after the awards has been delivered (but before the enforcement application of an award). The Arbitration Act u/s, 9(1)(ii) has broadly enumerated the interim relief a party may seek before the Court. And, the interim relief granted by a Court may be enforced like any other order delivered by the Court. These five interim reliefs u/s. 9 are:

[Note: (i) A court can grant interim relief u/s.9 even beyond the subject-matter of dispute in arbitration.

(ii) O38 R5 CPC and O39 R1&2 may be the guiding light for determining an application u/ s. 9.] 

WHO MAY MAKE AN APPLICATION U/S. 9 OF THE ARBITRATION ACT  

Only a party to an arbitration agreement may make an application for seeking an interim relief u/s. 9 of the Arbitration Act. This scenario is applicable for before and during the arbitral proceedings. After the arbitral proceeding is over, only the successful party to the arbitration can make an application for interim relief, but the application u/s. 9 should be before application u/s. 36 (enforcement of an award). In case of alternative remedy u/s. 17 of the Arbitration Act, the party cannot approach u/s. 9 of the Arbitration Act. [See Alternative Remedy Point]

[Note: Party is defined u/s. 2(h) as, " 'party' means a party to an arbitration agreement.]

APPLICABILITY OF SECTION 9 OF THE ARBITRATION ACT


Domestic Arbitration - Yes
International Commercial Arbitration - Yes

PROCEDURE OF FILING SECTION 9 APPLICATION

Section 9 of the Arbitration Act does not provide territorial jurisdiction for entertaining an application for interim relief. A party may invoke this jurisdiction by filing an application in a Court as provided u/s. 2(1)(e). A party has to file an application for an interim measure of protection because granting interim relief is not an ex-offcio power. So, where to file an application u/s. 9? For that we may have to address two situations (i) When seat of arbitration is specified then the jurisdiction will be conferred exclusively with the seat read with section (2)(1)(e) and supervisory jurisdiction will rest with the seat even if no cause of action/subject-matter is at that place and, (ii) When no seat is specified then the jurisdiction will be determined by cause of action/subject matter.

GROUNDS U/S. 9 OF THE ARBITRATION ACT

S. 9 (ii) for an interim measure of protection in respect of any of the following matters, namely:

(a) The preservation, interim custody or sale of any goods, which are subject matter of the arbitration agreement;
(b) Securing the amount in dispute in the arbitration
(c) The detention, preservation or inspection of any property or thing, which is:
- Subject-matter of the dispute in arbitration, or
- As to which, any question may arise therein and
- Authorizing for any of the aforesaid purposes to 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 be necessary or expedient for the purpose of obtaining full information or evidence;
(d) Interim injunction or the appointment of a receiver;
(e) Such other interim measure of protection as may appear to the court to be just and convenient.  

SOME TYPES OF INJUNCTION

1. Status Quo: Whatever current position is existing on the date of order passed should be maintained as it is.

2. Anton Pillar Order: An Anton Piller order is a court order that enables the applicant to inspect and secure the premises of the defendant, without prior notice. It helps the applicant to secure the documents from getting destroyed or concealed.

3. Manerva Injunction or Attachment Order: Is a court order temporarily freezing the assets awaiting enforcement of an award.

ALTERNATIVE REMEDY

Sec. 9(3) Once the arbitral tribunal has been constituted, the Court shall not entertain an application under sub-section (1), unless the Court finds that cirsumstances exist which, may not render the remedy provided under section 17 efficacious.

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