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Alternative Dispute

Resolution

Arbitration: Interim Measures by


Courts and Tribunals
Supervised by:
Compiled by:
Dr. Sanjeev Sharma
Dattana

Rittika

[1]

Session: 2012-13
(Hons.)

B.com LL.B
5 th

Semester
Roll
no.-145/11

Acknowledgement

This project has been made for the purpose of covering a


part of the syllabus of the Alternative Dispute Resolution as
prescribed by Panjab University.
I hereby, acknowledge my mentor, Dr. Sanjeev Sharma, for
his expert guidance and views in each and every aspect. Without
his help, making of this project would never have been possible.

[2]

Compiled by:
Rittika Dattana
B.com LL.B (hons.)
Roll no-145/11

[3]

Contents
S.No.

Particulars

Pages

1.
2.
3.
4.
5.
6.
7.
8.

Table of Cases
Introduction
Arbitration: Meaning
Interim Measures
Scope of Article 9
Scope of Article 17
Comparison
Bibliography

4
5
6-8
9-11
12-16
17-18
19-21
22

[4]

Table of Cases

Maharashtra State Electricity Board Vs Datar Switchgear Ltd


Girish Mulchand Mehta v. Mahesh S. Mehta
Kanta Vashist v. Shri Ashwani Khurana
National Highways Authority of India v. China Coal Construction Group

Corporation
Shoney Sanil v. Coastal Foundation
Mikuni Corporation v. UCAL Fuel Systems Ltd
Arun Kapoor v. Vikram Kapoor
Firm Madan Lal Roshan Lal Mahajan v. Hukam Chand Mills Ltd., Indore
Ashok Traders vs. G.D Saluja
Channel Tunnel group Ltd. vs. Balfour Beatty construction Limited
Anil Construction vs. Vidharbha Irrigation Dev. Corpn.
Navbharat Ferro Alloys Ltd. vs. Continental Glass Ltd
Nimbus Television & Sports Vs D G Doordarshan
Bhatia International v. Bulk Trading Co.
Marriott International Inc. vs. Ansal Hotels Limited
Max India Ltd v General Binding Corp
Dominant Offset (P) Ltd vs. Adamovske Strojirny

[5]

Intoduction
Gandhiji said: "I had learnt the true practice of law. I had learnt to find
out the better side of human nature, and to enter men's hearts. I realized
that the true function of a lawyer was to unite parties given as under. The
lesson was so indelibly burnt unto me that the large part of my time, during
the twenty years of my practice as a lawyer, was occupied in bringing about
private compromises of hundreds of cases. I lost nothing, thereby not even
money, certainly not my soul." 1
Conflict is a fact of life. It is not good or bad. However, what is
important is how we manage or handle it. Negotiation techniques are often
central to resolving conflict and as a basic technique these have been around
for many thousands of years. Alternative Dispute Resolution (ADR) refers to a
variety of streamlined resolution techniques designed to resolve issues in
controversy more efficiently when the normal negotiation process fails.
Alternative Dispute Resolution (ADR) is an alternative to the Formal
Legal System. It is an alternative to litigation. It was being thought of in view
of the fact that the Courts are over burdened with cases. The said system
emanates from dissatisfaction of many people with the way in which disputes
are traditionally resolved resulting in criticism of the Courts, the legal
profession and sometimes lead to a sense of alienation from the whole legal
system- thus, the need for Alternative Dispute Resolution. 2
The various types of ADR techniques are:

Mediation
Arbitration
Conciliation

http://www.ebc-india.com/lawyer/articles/2002v1a3.htm, 30th Oct, 2013, 5.20 PM

http://www.fdrindia.org/publications/AlternativeDisputeResolution_PR.pdf, 30th
Oct, 2013, 5.30 PM

[6]

Judicial Settlement
Lok Adalat
Negotiation

Here, in this project some aspects of Arbitration technique will be


discussed, i.e. meaning of arbitration and the interim measures of arbitration
in Courts and Tribunals.

[7]

Arbitration: Meaning

Arbitration, a form of alternative dispute resolution (ADR), is a


technique for the resolution of disputes outside the courts,

where the parties to a dispute refer it to one or more persons


(the "arbitrators", "arbiters" or "arbitral tribunal"),
by whose decision (the "award") they agree to be bound.

It is a resolution technique in which a third party reviews the evidence


in the case and imposes a decision that is legally binding for both sides and
enforceable. Arbitration is often used for the resolution of commercial
disputes, particularly in the context of international commercial transactions.
The use of arbitration is also frequently employed in consumer and
employment matters, where arbitration may be mandated by the terms of
employment or commercial contracts.
Arbitration can be either voluntary or mandatory (although
mandatory arbitration can only come from a statute or from a contract that is
voluntarily entered into, where the parties agree to hold all existing or future
disputes to arbitration, without necessarily knowing, specifically, what
disputes will ever occur) and can be either binding or non-binding. Nonbinding arbitration is similar to mediation in that a decision cannot be
imposed on the parties. However, the principal distinction is that whereas a
mediator will try to help the parties find a middle ground on which to
compromise, the (non-binding) arbitrator remains totally removed from the
settlement process and will only give a determination of liability and, if
appropriate, an indication of the quantum of damages payable. By one
definition arbitration is binding and so non-binding arbitration is
technically not arbitration.
In simple words, Arbitration is a proceeding in which a dispute is
resolved by an impartial adjudicator whose decision the parties to the

[8]

dispute have agreed, or legislation has decreed, will be final and binding.
There are limited rights of review and appeal of arbitration awards.3
Arbitral Award:
Arbitral Award means an award given by the Arbitrator in an arbitral
proceeding and Section 2(1)(c) mentions that Arbitral Award includes an
interim award. Since the arbitrators are empowered to give an interim award,
all the provisions which are applicable to arbitral award will be equally
applicable to an interim award also. An award is nothing but a decision of the
arbitrators in writing duly signed by them.
Disputes which cannot be referred to arbitration:
If a matter is governed by any other law which excludes reference to
Arbitration, this Act will not apply. Since in those cases, the law has given
precise jurisdiction to specified courts or tribunals only, those cases cannot
be decided through the mechanism of Arbitration. The following matters in
general practice, are not arbitral:
1. Insolvency matters;
2. Matrimonial causes (except matters pertaining to settlement of terms
of separation or divorce)
3. Testamentary matters; e.g., validity of a Will
4. Suit under section 92 of the Code of Civil Procedure, 1908
5. Proceedings for appointment of guardian of a minor or lunatic person
6. Industrial disputes
7. Criminal proceedings [excepting matters relating to compoundable
offences]

http://en.wikipedia.org/wiki/Arbitration, 30th Oct, 2013, 5.48 PM

[9]

8. Relating to charities
9. Pertaining to dissolution or winding up of a company incorporated and
registered under the provisions of the Companies Act, 1956 (Haryana
Telecom Ltd. vs. Sterlite Ind. Ltd.) 1999 (4) L.J. (S.C.) 389.
10.

Relating to claim for recovery of octroi duty

11.

Pertaining to title to immovable property in a foreign country.

12.
Relating to possession of leased premises governed by the
provisions of the Bombay Rent, Hotel and Lodging House Rates Control
Act, 1947.4

http://www.indiainfoline.com/Markets/News/Overview-of-ADR-Alternate-DisputeResolution-Mechanisms-in-India/5514204080, 30th Oct, 2013, 6.37 PM

[10]

Arbitration Process:

The process can start only if there exists a valid Arbitration Agreement
between the parties prior to the emergence of the dispute.
As per Section 7, such an agreement must be in writing.
The contract regarding which the dispute exists, must either
contain an arbitration clause or must refer to a separate
document signed by the parties containing the arbitration
agreement.
The existence of an arbitration agreement can also be inferred
by written correspondence such as letters, talex, or telegrams
which provide a record of the agreement.
An exchange of statement of claim and defence in which
existence of an arbitration agreement is alleged by one party
and not denied by other is also considered as valid written
arbitration agreement.
Any party to the dispute can start the process of appointing arbitrator
and if the other party does not cooperate, the party can approach the
office of Chief Justice for appointment of an arbitrator.
There are only two grounds upon which a party can challenge the
appointment of an arbitrator
reasonable doubt in the impartiality of the arbitrator; and
the lack of proper qualification of the arbitrator as required by
the arbitration agreement.
A sole arbitrator or a panel of arbitrators so appointed constitutes the
Arbitration Tribunal.
Except for some interim measures, there is very little scope for judicial
intervention in the arbitration process.
The arbitration tribunal has jurisdiction over its own jurisdiction.
Thus, if a party wants to challenge the jurisdiction of the
arbitration tribunal, it can do so only before the tribunal itself.
If the tribunal rejects the request, there is little the party can do
except to approach a court after the tribunal makes an award.
Section 34 provides certain grounds upon which a party can
appeal to the principal civil court of original jurisdiction for
setting aside the award.

[11]

The period for filing an appeal for setting aside an award is over, or if
such an appeal is rejected, the award is binding on the parties and is
considered as a decree of the court.5

Interim Measures under the Indian Arbitration and


Conciliation Act, 1996
In arbitral proceedings, the need often arises for provisional remedies
or other interim measures of reliefs because, in reality, arbitral proceedings
are no less adversarial than litigation in public courts. When a dispute arises,
aggrieved party is always concerned with protecting his interest either in
movable or immovable properties. Party is always interested in taking timely
action against another party or parties so that his or her interest in the
properties is protected. This prompt and timely action makes other party or
parties unable to play any sort of mischief by way of tampering with
properties. Thus Arbitration and Conciliation Act, 1996, under Section 9 gives
parties power to approach Courts for seeking interim measures. Often it
sounds against the basic philosophy of Arbitration for allowing Courts
intervention, but for many reasons such judicial interventions are inevitable.

Concept:
Interim Measures are granted during the pendency of adjudication of a
dispute and are usually in the form of injunctions, specific performance, preaward attachments etc. By definition, interim reliefs are temporary or
interim in nature and are granted in advance of the final adjudication
of the dispute by the arbitral tribunal.

INTERIM MEASURES: THE MODEL LAW APPROACH

http://en.wikipedia.org/wiki/Alternative_dispute_resolution, 30th Oct, 2013, 5.59


PM

[12]

Why interim measures are needed


An observation by Lord Mustill in Coppee Lavalin N.V. v. Ken-Ren
Chemicals and Fertilizers Ltd. (In Liquidation in Kenya) 6 succinctly
describes the rationale behind a interim measure, through the mechanism of
a municipal court, that facilitates the conduct of arbitration:
On the one hand the concept of arbitration as a consensual process,
reinforced by the ideal of transnationalism, leans always against the
involvement of the mechanisms of state through the medium of a
municipal court. On the other side there is the plain fact, palatable or
not, that it is only a court possessing coercive powers which can
rescue the arbitration if it is in danger of foundering, and that the only
court which possesses these powers is the municipal court of an
individual state. Whatever extreme positions may have been taken in
the past there is, I believe, a broad consensus acknowledging that the
local court can have a proper and beneficial part to play in the grant of
supportive measures.
Delays in resolution are the inevitable consequences of contemporary
arbitration and its procedural safeguards. This delay can greatly
disadvantage one party, sometimes irreparably. 7 Dissipation of assets,
destruction of evidence and loss of market value of property are common
examples of such damage.
Responding to the foregoing challenges, national legislatures, including
ours have developed means for granting immediate interim measures
designed to safeguard parties from serious injury caused by delays in the
arbitral process. Gary B Born defines interim measures as awards or orders
issued for the purpose of protecting one or both parties to a dispute from
damage during the course of arbitration. These measures are intended to

[1995] 1 AC 38 HL

Gary B Born, International Commercial Arbitration, (Vol II Kluwer Law International 2009)
1943, Electronic copy available at: http://ssrn.com/abstract=2141718

[13]

preserve a factual or legal situation so as to safeguard rights the recognition


of which is otherwise sought from the court having jurisdiction as to the
substance of the case.

[14]

Types of Interim Measures:


Provisional remedies and interim relief come in many forms, depending
on the parties involved and context of the dispute. Interim reliefs may be
broadly classified into the following categories:8
a. Reliefs which are procedural in nature e.g., inspection of
property in possession with third parties or compelling the
attendance of a witness.
b. Reliefs which are evidentiary in nature and are required to
protect any document or property as evidence for the arbitration;
and
c. Reliefs which are interim or conservatory in nature and
are required to preserve the subject matter of the dispute or the
rights of a party thereto or to maintain the status quo and to
prevent one party from doing a particular act or from bringing
about a change in circumstance pending final determination of
the dispute by the arbitrators.
These reliefs can be provided by :

granting an interim injunction,


appointing a receiver,
making of an attachment order or any other interim order

for securing the amount in dispute or for the preservation, custody or sale of
the property in dispute. During the pendency of a proceeding in a court, a
party may make an application for grant of an interim measure(s) and the
court may grant such measure(s) as permitted under the procedural rules
governing the powers of the court or those that it may derive through its
inherent powers.

, Lira Goswami, Interim Relief under the Arbitration Act, 1996.(Goswami) Speech
at New Delhi: 2000, available at www.arbitrationicca.org/media/0/12119958380600/2000.pd, 30th Oct, 2013, 7.01 PM

[15]

The principle governing the grant of interim measures is the use of


judicial discretion by a Court while taking into consideration questions
pertaining to balance of convenience, the applicants ability to make out a
prima facie case and most importantly the irreparable harm that would be
caused in the event the measure is not granted.
Under Indian Law, courts have both the express power of granting
interim measures under Order 39 Rule1 and Rule 2 of the Civil Procedure
Code as well as their inherent power under section 151 to grant an interim
measure other than that specified under Order 39, Rule 1 and 2.9
SCOPE OF INTERIM MEASURES UNDER SECTION 9 OF THE
ARBITRATION AND
CONCILIATION ACT, 1996
Section 9 of the Arbitration & Conciliation Act 1996 provides for interim
measures that may be passed by the Court relating to the subject-matter
of arbitration or arbitration proceedings. It reads as follows:
Interim measures etc. by Court. A party may, before, or during arbitral
proceedings or at any time after the making of the arbitral award but before
it is enforced in accordance with section 36, apply to a courti.
ii.

for the appointment of a guardian for a minor or person of unsound


mind for the purposes of arbitral proceedings; or
for an interim measure of protection in respect of any of die following
matters, namely:a. the preservation, interim custody or sale of any goods which are
the subject- matter of the arbitration agreement;
b. securing the amount in dispute in the arbitration;

Under Indian Law there was a conflict of judicial opinion on the question whether Courts
could issue a temporary injunction through the use its inherent power u/s 151 of the
Code of Civil Procedure when the case did not fall with the purview of Order 39 Rules 1
and 2. The matter was settled in Manohar Lal v. Seth Hira Lal, (1) SCR 450, wherein the
Supreme Court of India held that a Court had power u/s 151 to issue injunctions for
matters not falling in Order 39, Rules 1 and 2

[16]

c.

the detention, preservation or inspection of any property or


thing which is die subject- matter of the dispute in arbitration, or
as to which any question may arise therein and authorizing for
any of the aforesaid purposes any person to enter upon any land
or building in the possession of any part 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, and the Court shall have the
same power for making orders as it has for the purpose of, and
in relation to, any proceedings before it.
For purposes of and in relation to arbitration proceedings, the court has
wide powers to pass interim orders for detention, preservation, interim
custody and sale of any property, for granting an interim injunction and
appointing a receiver or for appointing a guardian of a minor or a person of
unsound mind.10 Article 9 of the UNCITRAL Model Law is a corresponding
provision.
The Court before the grant of interim measures must broadly satisfy itself
that:
a. the person seeking interim measures has made out a prima facie case
b. the balance of convenience is in his favour and
c. the person in absence of interim measures would suffer irreparable
loss or injury.11
Under Section 9,the existence of the arbitration clause and the
necessity of providing interim measures of protection alone have to be

10 Justice R.S. Bachawat, Justice Bachawats Arbitration & Conciliation Act, 1996
(4th ed Wadhwa 2005) 405,

11 PT Tirtamas Comexindo v Delta International Ltd ( 2001) 4 RAJ 12 (Cal)

[17]

considered by the court for issuing necessary directions. The court has no
power under the section to decide the merits of the case or rights of the
parties.12

Jurisdiction of Courts
The powers of the court under this provision are available only when
the place of arbitration is in India. Sub section (2) of section 2 provides
in a clear and unambiguous language that Part I shall apply where the place
of Arbitration is in India. However, the Delhi High Court, in Dominant Offset
(P) Ltd vs. Adamovske Strojirny13 where the arbitration took place at
London, held that Part I also applies to International Commercial Arbitration
conducted outside India.
However, the Division Bench of Delhi High Court in Marriott
International Inc. vs. Ansal Hotels Limited14, where arbitration
proceedings were held at Kuala Lumpur in Malaysia, held that Part I of the
Act shall apply to all arbitrations where the place of arbitration is in India.
Moreover, in Max India Ltd v General Binding Corp.15, the Division
Bench of the Delhi High Court upheld the decision of the Single Bench of the
High Court regarding the jurisdiction of Indian courts to grant interim relief in
international commercial arbitrations.
The division bench uphold the judgment of single judge and came to
the conclusion that as per the decision in Bhatia International v. Bulk

12 Nepo Ltd v Manoj Kumar AIR 1999 MP 57

13 1997 (2) ALR 335, Similar view was again taken by Delhi High Court in the case
of Olex Focas Private Limited vs. Skoda export co. Ltd., (AIR 2000 Delhi 161)

14 AIR 2000 Delhi 377

[18]

Trading Co.16 it was settled law that Part 1 of the Arbitration and
Conciliation Act would apply to all arbitrations, including international
commercial arbitrations held outside India, unless the parties by express or
implied agreement excluded all or any of its provisions .
As far as the position of the Indian Law is concerned, this decision
seeks to clarify the scope of the powers of an Indian court to grant interim
relief in international commercial arbitration. The rule that seems to emerge
is that when the parties have specifically intended that:
(a) the law governing the contract;
(b) the rules governing the arbitration; and
(c) the courts jurisdiction and the place of arbitration are outside India,
then it would signify that the Indian courts jurisdiction and applicability of
Part 1 of the Act (which contains the power of the Indian courts to provide
interim measures) are excluded.

Section 9 is an exception to Section 5


Section 5 of the Act no doubt forbids any intervention by any judicial
authority, but any such exclusion of jurisdiction is only in matters, which are

15 FAO (OS) 193/2009 Delhi High Court. Max India Ltd had filed a petition under s.9
seeking to restrain GeneralBinding Corp (GBC) from implementing the terms of
an agreement that it had entered into directly or through its holding company
with Cosmo Films regarding the sale of its commercial prints finishing business.
The agreement specifically provided that the Singapore courts had jurisdiction to
resolve any disputes between the parties subject to Arbitration under the
Singapore International Arbitration Center Rules. Max India had invoked the
arbitration clause and duly served notice on GBC. Pending the arbitration Max
India argued that it had the right to file S.9 application in India itself.

16 (2002) 4 S.C.C. 105

[19]

not otherwise specifically provided for. Section 9 of the Act is, however, an
exception to the general rule contained in Section 5 in as much as the former
specifically empowers the Civil Court concerned to pass suitable orders on
the subject and in relation to matters stipulated therein. There is, therefore,
no merit in the contention that Section 5 would exclude the jurisdiction of the
Civil Court otherwise competent to entertain applications and pass orders in
regard to the stipulated matters under Section 9 of the Act.17

Circumstances preventing court from granting interim


relief
The opening words of the section a party may before or during arbitral
proceedings or at any time after making of the arbitral award but before it is
enforced in accordance with s 36 indicate that an interim measure may be
granted only from the date of the arbitration agreement up to the date of
enforcement of the award under s 36.18 No interim relief may be granted de
hors these limits. Even during these limits, relief must be related to the
arbitral proceedings.19
The Bombay High Court in Nimbus Television & Sports Vs D G
Doordarshan20 opined that if the interim relief prayed for u/s 9 would
amount to granting final relief frustrating the arbitration proceedings such a
relief cannot be granted by the court.

17 Yenepoya Minerals And Granites Limited, Mangalore And Anr. Vs Maharashtra


Apex Corporation Limited, Bangalore[2004(2) Arb. LR 47 (Karnataka) (DB)
(Karnataka High Court) decided on 05-01- 2004]

18 OP Malhotra, Indu Malhotra, The Law and Practice of Arbitration & Conciliation,
(2nd ed, LexisNexis,2006) 382

19 Archcon v Sewda Construction 2005(2) Arb LR 156 (Gau)

[20]

In Navbharat Ferro Alloys Ltd. vs. Continental Glass Ltd.21, the


Delhi High Court held that when the claim is for money, the sale of materials
cannot be ordered as an interim relief. However, it is submitted that an order
of interim measure of protection can be passed by a competent court for sale
of property where such property forming the subject matter of the dispute is
perishable in nature.
The Bombay High Court, in Anil Construction vs. Vidharbha
Irrigation Dev. Corpn.22 , held that the benefit of section 9 cannot be
availed of by a party, which has no intention to appoint the Arbitral Tribunal.
The provision cannot be availed by a party for restraining the other party
from approaching the Arbitral Tribunal.
The Delhi High Court, in Arun Kapur v. Vikram Kapoor and
others23, after considering the decision of an English court in Channel
Tunnel group Ltd. vs. Balfour Beatty construction Limited24 observed
as follows:
It is cardinal rule that if the party invokes preliminary alternative
remedy before the Arbitral Tribunal, it is debarred from invoking the
jurisdiction of the court under Section 9 of the Act. Ordinarily if the

20 All Mah. L R 1998(2) page 6

21 1998, 1 ALR 492

22 2000 (1) M L J 38

23 2002 (1) ARB. L R 256

24 1993 (1) ALL E R 664

[21]

arbitrator is seized of the matter the interim relief should not be


entertained and the parties should be advised to approach the
arbitrator for interim relief unless and until the nature of relief
intended to be sought falls outside the jurisdiction of the arbitrator or
beyond terms of the agreement or reference of disputes. Otherwise,
the very object of adjudication of disputes by arbitration would stand
frustrated. A party should always be discouraged to knock the door of
the Court particularly when the arbitrator is seized of all the relevant
or even ancillary disputes.
A two-member bench of the Supreme Court, in the case of Firm Ashok
Traders vs. G.D Saluja25 held that:
a. An application under Section 9 is neither a suit nor an application for
enforcing a right arising from a contract Prima facie the bar enacted
by Section 69 of the Partnership Act, 1932 is not attracted to an
application under Section 9 of the Act.
b. Only a party to an arbitration agreement is qualified to make an
application under Section 9. A person not a party to an arbitration
agreement cannot make an application under Section 9.
c. When application under Section 9 is filed before the commencement of
arbitral proceedings, the applicant must be able to satisfy the Court
that arbitral proceedings are positively going to commence within a
reasonable time. There should be proximity between the application
and the arbitral proceedings.

25 9th January, 2004(AWLJ 175)

[22]

SCOPE OF INTERIM MEASURES UNDER SECTION 17 OF THE


ARBITRATION AND
CONCILIATION ACT, 1996
Arbitration is a forum for adjudication that is a departure away from
courts and in fact, court interference has been considered a bane to its
development.26 However, under arbitration procedural statutes and rules,
courts not only have the power to grant interim measures but this power, in
most cases, is wider than that of a Tribunal.
Though, it has been realized that a total curtailment of the courts
power to grant interim measures during the pendency of arbitration cannot
be envisaged and it is necessary to allow the court to grant interim
measures, courts have, keeping in mind the new changes in legislative
thinking, reduced their interference in arbitration proceedings. However it is
not possible to completely do away with the role of the court as the nature of
interim injunctions make it necessary to go to a court of law and it is possible
that the very purpose of seeking an interim measure may be defeated.
Under the new Act of 1996, S.17 states that the arbitral tribunal has
inherent power to order a party to take interim measures of protection,
unless the power is excluded by agreement between the parties. Thus, under
the new Act, arbitrator has been given the power to order the parties to take
recourse to the interim measure. The opening words of Section 17(1) indicate
that the parties may by agreement exclude the exercise of such a power by
the Arbitral Tribunal.
The power given to the arbitrator under this is very narrow.
This is because he has been given the power to order the parties to take
interim measures in matters only related to the subject matter of the dispute
and not otherwise. In other words, the power is restricted only to the extent
of agreement between the parties and not beyond that. As per S.16 of the

26 Arthur Marriott, Q.C., Indian and International Arbitration, (Marriott), Address


delivered on 6th May. 2002 at NewDelhi,

[23]

new Act the arbitrator has the power to rule on its own jurisdiction. This
section corresponds to Article 16 of the UNCITRAL Model Law and Article 21
of the UNCITRAL Arbitration Rules.
Article 16 of the Model Law says that the Arbitral tribunal may rule on
its own jurisdiction whereas Article 21 of the Rules states that the Arbitral
tribunal shall have the power to rule. Such power given to the arbitral
tribunal is also referred to as Kompetenz. Thus, it has enacted the principle
of Kompetenz-Kompetenz which states that if there is a clause in the
agreement entered into between the parties that there dispute shall be
settled through the process of arbitration, then the arbitral tribunal had the
jurisdiction to rule over that case. It can then decided the validity of the
agreement also and in such a case the power of the courts are restricted.
The power of the arbitrator to grant interim measures under S.17 of
the new Act is a limited one to the extent of the agreement between the
parties to the dispute. The interim measures which are given by the tribunal
are temporary & provisional, and are operative till the dispute is resolved by
an award, to protect the interest of a party. The courts cannot sit in appeal
over the views of the arbitral tribunal by re-examining and re-assessing the
materials.
The Court cannot review the award and correct any mistake in his
adjudication unless objection to legality of award is apparent in the face
of it. Hence, it can be stated over here that the power has been given to the
Court to set aside the award given by the arbitral tribunal on the grounds of
legal misconduct in proceedings only. The word legal misconduct in
proceedings as defined by Atkin, J. means
such a mishandling of the arbitration as is likely to cause some
substantial miscarriage of justice and one instance of this is where the
arbitrator refuses to hear evidence upon a material issue.
The Honble Supreme Court of India has also observed in the case,
Firm Madan Lal Roshan Lal Mahajan v. Hukam Chand Mills Ltd.,

[24]

Indore27, that the award, both on fact and law is final and the court cannot
review the award and correct any mistakes in its adjudication unless there is
a legal misconduct on the face of record.
Under Section 17 of the Act, it is also stated that the power of the
arbitrator to grant interim award will come into picture only when there is a
specific clause in the agreement entered into between the parties that the
dispute shall be settled by the arbitrator. In the absence of such a clause in
the agreement, the arbitrator cannot pass interim order even with the
consent of the parties as it will be acting ultra vires.

27 AIR 1967 SC 1030; Also relied in Puri Construction Pvt. Ltd.v. Union of India: AIR
1989 SC 777; Food Corporation of India v. Joginderpal Mohinderpal: AIR 1989 SC
1263.

[25]

Comparison between Section 9 and Section 17


Several cases have appeared before various High Courts, involving
parties that were not signatories to the arbitration agreements, and against
whom interim measures were sought. In Arun Kapoor v. Vikram Kapoor 28
where Justice J.D. Kapoor observed, Section 9 is distinct from Section 17
inasmuch as that the petition under Section 17 is moved before the
Arbitrator for an order against a party to the proceedings whereas Section 9
vest remedy in a party to the arbitration proceedings to seek interim
measure of protection against a person who need not be either party to the
arbitration agreement or to the arbitration proceedings.
This dictum seems fairly straightforward, and is in keeping with the
text of the provision. However, its precedential value is limited, since it was
an observation made in passing, and one that finally led to the dismissal of
the section 9 application. Thus, even if Justice J.D. Kapoor sought to give
section 9 a wide ambit, the subsequent dismissal of the section 9 application
shows that the widening did not play a material role in the judge arriving at
his decision.
Contrarily, later, in Mikuni Corporation v. UCAL Fuel Systems Ltd29
it was held by the Delhi High Court that since no arbitration proceedings
could take place vis--vis the party against whom orders were sought,
application under Section 9 did not lie against such party.
The Honble Kerala High Court gave a similar decision in Shoney Sanil
v. Coastal Foundation30, on a plain reading of Section 9 of the Act and

28 Ibid.23

29 2008 (1) Arb. LR 503 (Delhi)

30 AIR 2006 Ker 206

[26]

going by the scheme of the said Act, there is no room to hold that by an
interim measure under Section 9, the rights of third party, holding possession
on the basis of a court sale could be interfered with, injuncted or subjected to
proceedings under Section 9 of the Act.
Section 9 of the Act contemplates issuance of interim measures by the
court only at the instance of a party to an arbitration agreement with regard
to the subject-matter of the arbitration agreement. This can be only as
against the party to an arbitration agreement, or, at best, against any person
claiming under him. The writ petitioner is a third party auction purchaser in
whose favour is a sale certificate, followed by delivery of possession. He
cannot therefore be subjected to proceedings under Section 9 of the Act,
initiated on the basis of an alleged arbitral agreement between the
respondents.
It was held similarly in National Highways Authority of India v.
China Coal Construction Group Corporation31 that an interim order could
be passed in respect of parties to arbitration and in connection with subject
matter thereof and no interim order could be passed in respect of a party
who had no privity of contract with the petitioner. Thus the petition seeking
interim measures against a non party to the arbitration was held to be not
maintainable.
In Smt. Kanta Vashist v. Shri Ashwani Khurana32 also it was held
that no injunction could be issued even against companies which though of
the family, members whereof were parties to the arbitration, were
independent legal entities and not parties to the arbitration agreement.
Finally, the most recent judicial consideration of this issue was by the
Bombay High Court in Girish Mulchand Mehta v. Mahesh S. Mehta33. In
2009, when it noted the prior observations of the Kerala and Delhi High
Courts to the effect that a section 9 application is maintainable only against

31 AIR 2006 Delhi 134

32 MANU/DE/0380/2008

[27]

a party to the arbitration, or someone claiming under him. The Bombay High
Court seemed to be uncomfortable with this interpretation. However, in the
spirit of judicial deference, the Court responded by placing the burden of
proof on the respondent to establish that he was not a party of claiming
under him. In the words of the Court,
Thus understood, Section 9 can be invoked even against a third party
who is not party to an arbitration agreement or arbitration
proceedings, if he were to be person claiming under the party to the
arbitration agreement and likely to be affected by the interim
measures. The Appellants herein will have to substantiate that they
were claiming independent right in respect of any portion of the
subject matter of the Arbitration Agreement on their own and not
claiming under the Respondent No. 2 Society who is party to the
Arbitration Agreement. In absence thereof, the Court would certainly
have jurisdiction to pass appropriate order by way of interim measures
even against the Appellants herein, irrespective of the fact that they
are not party to the Arbitration Agreement or the Arbitration
Proceedings.
In Maharashtra State Electricity Board Vs Datar Switchgear
Ltd , it was discussed the scope of power of the court u/s 9 vis a vis the
powers granted to the arbitrator u/s 17. The court held that if the power that
has been conferred upon the court u/s9 is compared with the power
conferred on the arbitral tribunal u/s17, it is immediately noticeable that the
court can exercise its power either before or during arbitral proceedings or
even thereafter upon making of the award but before it is enforced. The Act
does not contemplate interference of courts at the interim stage in matters
of jurisdiction of the Tribunal or n challenges to the existence or validity of
the arbitration agreement.
34

33 MANU/MH/1458/2009

34 2003(2) RAJ 163 (Bom)

[28]

Comparison:
Basis

Scope
Power
Order

Exercise

Section 9 (Courts)

Section 17 (Tribunals)

Wider
More power; not limited to
only subject-matter; supreme
Against anyone, i.e. any third
party
Even before the tribunal is
constituted.

Narrower
Limited to subject matter of
the dispute
Against any of the engaged
parties
Only after tribunal is
constituted

[29]

Bibliography
Books:

OP Malhotra, Indu Malhotra, The Law and Practice of Arbitration &


Conciliation, (2nd ed, LexisNexis,2006)
Justice R.S. Bachawat, Justice Bachawats Arbitration & Conciliation Act, 1996
(4th ed Wadhwa 2005
Gary B Born, International Commercial Arbitration, (Vol II Kluwer Law International
2009)

Weblinks:

http://www.ebc-india.com/lawyer/articles/2002v1a3.htm
http://www.fdrindia.org/publications/AlternativeDisputeResolution_PR.pdf
http://en.wikipedia.org/wiki/Arbitration,
http://www.indiainfoline.com/Markets/News/Overview-of-ADR-AlternateDispute-Resolution-Mechanisms-in-India/5514204080,
http://en.wikipedia.org/wiki/Alternative_dispute_resolution,
http://ssrn.com/abstract=2141718

http://www.arbitration-icca.org/media/0/12119958380600/2000.pdf

[30]

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