Interim relief serves as a vital safeguard within the legal system, designed to protect the core assets or interests at the heart of a dispute and avert irreversible damage while awaiting a final resolution. Imagine a situation where a company fears its competitor is about to use its stolen trade secrets; interim relief could prevent the competitor from using that information until the arbitration is complete. Similarly, if a construction company abandons a project midway, leaving materials and equipment vulnerable to theft or damage, interim relief could secure the site and preserve those assets.

In the context of Indian arbitration, Section 9 of the Arbitration and Conciliation Act, 1996, provides the legal basis for these protective measures. This section essentially grants courts the authority to issue a diverse array of interim orders, ensuring that the status quo is maintained and potential harm mitigated throughout the arbitration process. This power extends beyond the active arbitration phase, even allowing for pre-emptive action before formal arbitration proceedings have begun.

For example, consider a scenario where a shipment of perishable goods is in dispute. Before arbitration even starts, a party could seek an interim order to sell the goods to prevent spoilage and financial loss. Or, if a party fears that the other party is about to transfer assets to avoid honouring a potential award, they could seek an injunction to prevent the transfer. Section 9, therefore, acts as a crucial mechanism for preserving the integrity of the arbitration process and ensuring that any eventual award remains meaningful and enforceable.

Statutory Framework - Section 9 of the Arbitration and Conciliation Act, 1996:

Section 9 of the Act authorizes courts to issue interim measures of protection at three stages:
Before the commencement of arbitration, during arbitration, or at any time after the award but before its enforcement.

The provision allows the court to grant various forms of interim relief such as:

• Temporary injunctions
• Preservation, interim custody or sale of goods
• Appointment of receivers
• Securing the amount in dispute in arbitration
• Detention, preservation, or inspection of any property or thing which is the subject matter of the arbitration
• This provision ensures that parties are not left remediless in urgent situations where waiting for the constitution of an arbitral tribunal could defeat the ends of justice.
   

Judicial Interpretation - Bhatia International v. Bulk Trading SA (2002):

One of the most significant judicial pronouncements regarding the scope of Section 9 was made in the case of Bhatia International v. Bulk Trading SA, [(2002) 4 SCC 105]. In this landmark decision, the Supreme Court of India held that Part I of the Arbitration and Conciliation Act, 1996 - including Section 9 - would apply to international commercial arbitrations held outside India, unless the parties had expressly or impliedly excluded its application.

The court's decision was based on the premise that the 1996 Arbitration and Conciliation Act, significantly influenced by the UNCITRAL Model Law, does not inherently limit the application of Part I of the Act to arbitrations taking place within India, unless parties explicitly agree to such a restriction. Consequently, the court concluded that, absent a clear agreement to the contrary between the parties involved, Indian courts possess the authority and jurisdiction to provide interim relief, even in arbitration proceedings with a designated seat outside of India. This interpretation broadens the scope of Indian courts' involvement in international commercial arbitrations.
 

Legal Implications of Bhatia International:

The Bhatia International ruling had a profound and expansive impact on the landscape of international arbitration involving Indian parties. This landmark decision effectively authorized Indian courts to exercise jurisdiction over arbitrations seated outside of India, significantly altering the dynamics of the process. Consequently, parties who had deliberately agreed to resolve disputes through foreign-seated arbitration found themselves able to seek interim relief and other interventions from Indian courts. This application of the principle, however, led to the unforeseen outcome of increased judicial oversight in a process that was intended to be more independent and self-regulating.
 

Reversal by BALCO Case (2012):

The principle laid down in Bhatia International was overruled by a Constitutional Bench of the Supreme Court in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., [(2012) 9 SCC 552] (commonly known as BALCO). In this judgment, the Court held that Part I of the Act applies only to arbitrations seated in India and not to foreign-seated arbitrations. This brought Indian arbitration jurisprudence in line with international norms and the principle of minimal judicial interference. However, the BALCO ruling was made prospective, meaning it would apply only to arbitration agreements entered into after September 6, 2012. Therefore, arbitrations under agreements entered into before that date could still invoke Section 9 based on the Bhatia International principle.

Post-BALCO Developments and Legislative Amendment:
To enhance understanding and harmonize Indian law with international norms, the Arbitration and Conciliation (Amendment) Act of 2015 introduced crucial revisions. A key modification involved amending Section 2(2) to incorporate a proviso. This proviso stipulated those specific sections within Part I, notably Section 9, would be applicable to international commercial arbitrations situated outside of India, provided there was no conflicting agreement. This adjustment effectively reinstated the core principles established in the Bhatia International case, but with the added benefit of statutory safeguards and a more explicit legal framework.

Conclusion:
Section 9 of the Arbitration and Conciliation Act, 1996, remains a powerful and essential mechanism for parties seeking urgent interim relief in arbitration proceedings. While judicial pronouncements like Bhatia International expanded the provision's reach, subsequent judgments and legislative amendments have refined and balanced its application. Parties involved in arbitration - especially international commercial arbitration - must pay careful attention to the wording of their arbitration agreements. Expressly excluding or including the applicability of Part I and Section 9 can have significant consequences in terms of the jurisdiction and remedies available in Indian courts.

Key Takeaways:

• Section 9 empowers courts to grant interim protection in aid of arbitration.
• Bhatia International extended this power to foreign-seated arbitrations unless expressly excluded.
• BALCO reversed this trend prospectively, limiting the application of Part I to India-seated arbitrations.
• The 2015 amendment codified a balanced approach, permitting interim relief in foreign-seated arbitrations under certain conditions.

Written By: Md.Imran Wahab, IPS, IGP, Provisioning, West Bengal
Email: imranwahab216@gmail.com, Ph no: 9836576565