Voila! Let’s Arbitration! Blog Post-6: How to get interim relief in International Commercial Arbitration?

Voila! Let’s Arbitration! Blog Post-6: How to get interim relief in International Commercial Arbitration?

In practice, the parties to a dispute often feel the need for interim measures in connection with an international commercial arbitration. Interim relief or measures, which are also known as conservatory and provisional remedies, provide a decision on the merits by the Arbitral Tribunal or Court to a party with an immediate and temporary protection of rights for property. Several kinds of interim measures such as attachment, injunctions or orders safeguarding and preserving perishable property, requesting payment of part of a claim, or imposing the posting of security for costs may be granted by arbitrators or by Courts.

Such measures are particularly varied and innovative as international trade practices continue to generate new kinds of remedies according to the needs of the parties to the dispute and to the increasing complexity of cases. In the cases of ICA with seat in India, parties can take interim relief from Courts or Arbitral Tribunals under Section 9 and Section 17 of Arbitration and Conciliation act, 1996.

According to Section 9 of the Act, any party to an arbitration agreement can seek relief by the way of an interim application from the court. This Section permits granting of interim measures by the court before the commencement of the arbitral proceedings or after the pronouncement of award but before its enforcement. After the interim protection has been granted under Section 9, the arbitral proceedings must commence within 90 days from the date of the interim protection order or within such time as determined by the Court.

However, if the Arbitral Tribunal has already been set up, the application for interim relief under Section 9 will not be entertained unless Court finds the circumstances which may render interim relief provided under Section 17 inefficacious. Apart from this, it has to be noted that Section 9 interim measures can also be granted against third parties too in certain cases.

Now coming to Section 17 of the Arbitration and Conciliation act, 1996. It provides the Arbitral Tribunal with same powers as a Civil Court in relation to the grant of interim measures. Later, it had been amended by 2015 Amendment Act wherein the Arbitral Tribunal can give interim measures post award but before its execution. It has to be noted that the order passed by the Tribunal for the interim measures would be equivalent to the order passed by the court and will be enforceable under the Code of Civil Procedure 1908. This power was given with the intention to give significant power to Tribunal and reduce the burden and backlog before the courts.

However, there are various cases and situations where the party is still required to obtain order of interim relief from the Court only. For example, interim relief against encashment of a bank guarantee. So according to 2015 Amendment Act, the Tribunal has power to grant interim relief during arbitral proceedings or at any time after making of the arbitral award. However there was a huge confusion lying in these words. An arbitral Tribunal becomes functus officio once the final award has been rendered that is it loses its official authority and its legal effect. Therefore the words “at any time after making of arbitral award” creates ambiguity on the status of the arbitral Tribunal. Therefore, the 2019 amendment Act omitted this statement to extinguish that ambiguity.

What are the qualifications to provide an interim relief?

So if a party can show that it has a good case on merits, it would likely succeed in obtaining interim relief. There are no specific standards prescribed under the act for grant of interim relief. However, arbitral tribunals have normally required reasons like Irreparable form, urgency and no free judgement of the merits of the case to give the interim relief.

Other than this various courts or tribunals usually apply the standard given in CPC.

In the recent case of Avantha holdings Limited v. Vistra ITCL India Limited, there were some extra pre-requisites given by the court for providing interim relief under Section 9. These were, existence of prima facie case, balance of convenience, possibility of irreparable loss or prejudice if interim relief not granted, consideration of public interest, emergent necessity of ordering interim measures, and lastly when the applicant manifestly intense to initiate arbitral proceedings.

Question of the Week:

Can an Arbitral Tribunal review its award?

It is a very clever question since we have read that the Tribunal becomes functus officio once it gives its award i.e. it loses its authority. So, the answer to this question is that an arbitral tribunal cannot review an award on merits. The tribunal, thus cannot reopen the case even if fresh and extremely important evidence comes to light after pronouncement of award since their authority to re-examine the case ceases to exist.

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Charul Mishra

Charul Mishra

I am a News Analyst at LexForti Legal News

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Charul Mishra

Charul Mishra

I am a News Analyst at LexForti Legal News

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