Indian Supreme Court clarifies the interplay between court-ordered and tribunal-ordered interim measures

The Supreme Court of India in Arcelor Mittal Nippon Steel India Ltd. v. Essar Bulk Terminal Limited¹ clarified the scope of the court’s power to grant interim relief in relation to arbitration proceedings.

Section 9(1) of the Indian Arbitration Act, enables a party to an arbitration agreement to apply to a court for interim relief before or during the arbitral proceedings, or at any time after an award is made and published, but before the award is enforced. Section 9(3) of the Arbitration Act provides that once the tribunal has been constituted, the court shall not entertain an application under Section 9(1), unless the court finds that the tribunal cannot grant efficacious relief under Section 17 of the Arbitration Act. Under Section 17, a tribunal has the same power to grant interim relief as the court.

Disputes having arisen between the parties under a cargo handling agreement, the Appellant commenced arbitration against the Respondent. Prior to the constitution of the tribunal, the parties sought interim relief from the court under Section 9(1). The court heard the parties’ interim relief applications and reserved the orders.

Meanwhile, the tribunal was constituted. The Appellant, relying on Section 9(3), challenged the court’s jurisdiction to proceed further with the applications and sought reference of the applications to the now-constituted tribunal.

The Supreme Court held that the bar of Section 9(3) would not operate, if the interim relief applications have been ‘entertained and taken up for consideration’ by the court, prior to the tribunal constitution. The Court determined that the relevant test is whether the ‘process of consideration [by the Court] has commenced, and/or whether the Court has applied its mind to some extent before the constitution of the Arbitral Tribunal’. In the instant case, where the hearing was concluded and orders reserved by the court, the interim relief application was held to have been entertained before the constitution of the tribunal and not subject to the bar under Section 9(3).

Key takeaways:

• the decision to approach the courts for interim relief requires careful consideration. It may be challenging to pivot to the tribunal for interim relief if the court has ‘applied its mind to some extent’ before the tribunal constitution;
• for India-seated institutional arbitrations, obtaining interim relief from an emergency arbitrator may be a time-efficient alternative to approaching courts; and
• court-ordered interim relief remains better suited to circumstances where ex-parte relief is sought or where the interim relief is intended to bind third parties.

Our team²  here in Singapore focusses on India-related disputes. We can help you explore the availability of court-ordered interim measures and how it interacts with interim measures available within the arbitration process.

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¹ Civil Appeal No. 5700 of 2021 (Judgment dated 14 September 2021).
² India Arbitration Team.