Arbitration Court Reckoner :August-October 2021 (Part 1)

By way of the present column, an attempt is made to briefly review the salutary judgments pronounced by the Courts in the months of August & October 2021 under the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the 'Act'). While as many judgments as possible are sought to be reviewed, owing to the limited column space, some judgments would invariably be left out. Further, while an attempt is made to include and review some judgments of various other High Courts, the emphasis is essentially on the judgments of the High Court of Delhi and Supreme Court of India. The judgments have been compiled for review with reference to the Section of the Act that they are primarily dealing with and a detailed analysis has been forgone in favour of succinctness. Section 2(2) (i) Choosing a foreign governing law would not amount to an agreement to exclude the applicability of S. 9 of the Act S. 9 is applicable post award in foreign seated arbitrations. In Medima LLC v Balasore Alloys Limited[1], the Petitioner who had obtained an Award in its favour, in an ICC arbitration proceedings seated in London, filed an application for interim reliefs before the High Court at Calcutta. The said application was opposed by raising an issue of maintainability in view of a 'Governing Law' clause contained in the contract, by which the contract was to be governed by and construed in accordance with laws of United Kingdom. It was contended by Respondent that such clause fell within the exception carved out in the proviso to S. 2(2) of the Act, i.e., as parties had chosen a foreign governing law, applicability of S. 9 had been excluded by agreement. The Court after discussing the legislative history and intent behind the proviso to S 2(2) of the Act, held that merely choosing a foreign governing law would not amount to an agreement to exclude the applicability of S. 9 of the Act and that the agreement must indicate in clear and express terms that the parties to intend exclude the operation of S. 9. It further held that S. 9 is applicable post award in foreign seated arbitrations. (ii) Intent of introducing proviso to S. 2(2) is to ensure remedy of S. 9 continues to be available in foreign seated arbitrations In Hindustan Cleanenergy Ltd. v Maif Investments India 2 PTE Ltd & Ors.[2] High Court of Delhi held that the fact that the arbitration is to take place at Singapore and, therefore, any award which may be passed therein may be enforceable before the Singapore Courts, cannot, therefore, be cited as a ground to divest the petitioner of its right to seek interim protection under S. 9 of the Act. Taking note of the fact that the Respondent Nos. 1 and 2 are located in Singapore and have no Indian presence and are likely to dissipate their assets, the Court granted a restraint on sale and creation of third party rights in respect of the agreement securities. Section 9 (iii) Post Award Section 9 does not contemplate enforcement of the award In Tulika Devidayal v Pradipkumar Laxmanbhai Patel and Ors.[3], High Court of Bombay held that the dominant purpose of S. 9 is to provide an interim measure of protection before and during arbitral proceedings such that the subject matter of the arbitration is protected. Further held that, however, such relief can be granted only before the award is enforced and S. 9 operates upto the stage of enforcement. Thus, Section 9 does not contemplate active enforcement after the passing of an award. It thus, refused to entertain the reliefs of appointment of court receiver and restraint on assets. (iv) Whether the Court has the power to entertain an application under S. 9(1) of the Act, once an Arbitral Tribunal has been constituted? In Arcelor Mittal Nippon Steel India Ltd. v Essar Bulk Terminal Ltd.[4], Supreme Court was dealing with a case where the application u/s 9 had been reserved for orders by the commercial court before appointment of arbitrator but no order had been pronounced. It had been argued by the Petitioner that the Commercial Court could not pronounce orders in view of the bar contained in S. 9(3) of the Act. The Court held that on a combined reading of S. 9 with S. 17 of the Act, once an Arbitral Tribunal is constituted, the Court would not entertain and/or in other words take up for consideration and apply its mind to an application for interim measure, unless the remedy under S. 17 is inefficacious, even though the application may have been filed before the constitution of the Arbitral Tribunal. It, however, clarified that the bar of S. 9(3) would not operate, once an application has been entertained and taken up for consideration, as in the instant case, where hearing has been concluded and judgment has been reserved. When an application has already been taken up for consideration and is in the process of consideration or has already been considered, the...

Arbitration Court Reckoner :August-October 2021 (Part 1)

Kanika Singh

Tags