Deepesh Tapariya is a 3rd year B.B.A., LL.B. (Hons.) student at Maharashtra National Law University, Nagpur.
“Interim measures: the linchpin of arbitration’s efficacy, empowering parties to enforce foreign awards with precision.”
– Gary Born[1]
Keywords: Interim Measures, Jurisdiction, Implied Exclusion
Introduction
A well-known personality in international arbitration put it succinctly: To achieve the noted goals arbitration protects the parties’ sovereignty and ensures that the decision is binding. Interim measures must therefore be recognized as an important procedural safety measure that would ensure parties’ interests while considering the enforcement of the final award and increase efficiency in the process. This autonomy applies to these measures to the extent that the schools, colleges, and universities are private ones. However, it is worth stating that to avoid the arbitral process to be frustrating, modified interim remedies are crucial in preventing parties that do not want an award to be made, to dissipate their assets or delay enforcement of the final award.[2] Thus, the significance of interim measures cannot be overstated, as they are deemed to be as vital as, if not more than, the final award itself.
Picture this: A legal landscape where interim measures transcend geographical boundaries, empowering parties to navigate disputes with confidence.
Enter India’s Act of Arbitration and Conciliation, 1996 [“ACA”], revamped around 2015 to extend the arm of justice to foreign-seated arbitrations. With India’s commitment to conventions like the New York and Geneva Conventions, the stage is set for foreign arbitral awards to take centre stage.[3] But it was the 2015 amendment that truly stole the show, extending the reach of Section 9 provisions to foreign-seated arbitrations. This move was no mere legislative whim; it was a strategic step to prevent parties from playing a game of jurisdictional hopscotch, evading their obligations by shuffling assets across borders.[4] Yet, amidst the legal labyrinth, a question lingers: can parties sidestep Section 9 through cleverly crafted arbitration clauses? The answer remains unclear because courts often resort to the amorphous feeling of implied exclusion.
Yet, it is not an academic discourse; rather, it is a call for action. This is a call for the purposeful reading of the amendment so that the legal system may work fine amidst tough jurisdictional puzzles also. We want to steer arbitration in India toward a more optimistic future by closely analysing current cases and global legal norms.[5] The nuances of legal doctrine must be continued to negotiate so that interim relief finds its proper position in the canon of arbitration law.
Charting a Course: Addressing implied exclusion in India’s Arbitration landscape
The doctrine of implied exclusion, born out of the infamous judgment of Bhatia International v. Bulk Trading SA (‘Bhatia’)[6], undoubtedly made its mark on India’s arbitration landscape. Be that as it may, it was arguably the ruling of Bhatia that gave temporary remedial measures in extra-territorially seated arbitrations under ICC Rules. However, this led to confusion as to whether or not Part I of the ACA was to be applied. In fact, the 2015 Amendment attempted to clarify this very confusion, but courts continue to wrestle with implied exclusion and all its inconsistencies of interpretation, resulting in legal quarrels.[7]
Uncertainty has emerged in the application of implied exclusion within arbitrations carried out on the hallowed turf of a third country, as a result of differing court approaches in this regard, emanating not only from the lack of clear guidelines[8] but also from recent cases such as those in Raffles Design International India v. Educomp Professional Education Ltd.[9] and Ashwani Minda v. U-Shin Ltd.[10] that reveal the issues and ambiguities in properly understanding this principle. Implied exclusion, as has been discussed in Raffles, formed the backdrop of a DHC judgment on the need for absolute clarity in arbitration provisions. In Ashwani Minda[11], the import of implied exclusion in arbitration agreements was discussed giving due emphasis to the critical requirement of actual clear and precise wording without there being any ambiguity. This doctrine severely curtails enforcement vis-à-vis arbitrations seated outside India.[12] In a recent case, the petitioner filed the petition under Section 9 for interim protection that has been invoked in the Ashwani judgment.[13] Similarly to Raffles, the applicant also sought relief from an Emergency Arbitrator (EA), but the EA did not grant the requested relief. Upon scrutiny of the arbitration clauses, the Court noted a deliberate exclusion of Section 9 due to the selection of Japan and the Japan Commercial Arbitration Association [“JCAA”] as the seat of arbitration and governing rules, respectively,[14] indicating intent to bypass Part I of the “ACA”. Despite this, a division bench postponed the decision for future proceedings.
In another, in Archer Power Systems (P) Ltd v Kohli Ventures Ltd Co [15], again elucidated the fact that the arbitration agreement within the ACA, read as a whole, was inapplicable. The ICC arbitration, to which effect was called for, closed with the Court rejecting interim relief under Section 9 – relegating the matter to arbitration, by invoking the implied exclusion of the proviso to Section 2(2). A later clause of the agreement, however, allowed the final award to be enforced in India under Part II of the ACA. Hence this twin provision called attention to the fact that interim measures before and after the award had been treated differently, unnecessarily complicating the matters. Disparity of pre- and post-award interim measures surfaced in the judgment in Archer Power Systems, where the Court hinted that applicable law dynamics might change after the award had been made.[16] This observation implied that the grant of interim relief could have different outcomes depending on the stage of arbitration, complicating the process and potentially prejudicing the claimant’s rights and subject matter.
These cases illuminate the challenges in interpreting arbitration clauses and determining the applicability of ACA provisions, particularly regarding interim relief. They emphasize that in order to expedite the execution of interim remedies in arbitrations with foreign seats and safeguard the interests of all parties, there is a need for legislative clarity and judicial uniformity.
Progress amidst Inconsistencies: a Judicial Overview
Breaking away from conventional practices, the Bombay High Court shattered the mould by refusing to mechanically imply the exclusion of Section 9 in foreign-seated arbitrations without a clear contractual agreement.[17] This landmark decision, triggered by the presence of substantial assets within its jurisdiction, underscored the imperative of safeguarding against asset dissipation, heralding a new era of judicial activism.[18] Echoing this proactive stance, the Himachal Pradesh High Court, in Actis Consumer Grooming Products Ltd v Tigaksha Metallics (P) Ltd[19], flexed its jurisdictional muscle by asserting its authority to grant interim relief for arbitrations conducted in Geneva. With the subject matter squarely within its purview, the court took a bold step in line with the overarching aim of the 2015 Amendment: ensuring parties are not left adrift without recourse.
Yet, the most daring move came from the DHC in Goodwill Non-Woven (P) Ltd v X Coal Energy & Resources LLC[20]. Here, the court expanded the boundaries of Section 9, ruling in favour of interim relief even when the counterparty held no assets within India. Brushing aside arguments that Section 2(2) was strictly asset-based, the court championed access to justice, setting a precedent for equitable relief regardless of asset location.[21]
However, amidst these rays of progress, clouds of inconsistency loom. Cases like Heligo and Actis exemplify the judiciary’s alignment with the spirit of legislative reform, while others, such as Ashwani Minda[22] and Archer[23], cling to outdated notions of implied exclusion, reminiscent of a bygone era. This discord underscores the pressing need for the Supreme Court to wield its gavel and provide a clarion call for unity. With the legislative intent of the 2015 Amendment as their guiding beacon, the apex court must forge a path toward uniformity, ensuring justice is not a fleeting mirage but a steadfast pillar of the legal landscape.
The Court-Subsidiarity Model: Adaptation in Arbitration at International level
In the realm of IA, the UNCITRAL Model Law’s 2006 revisions ushered in a new era of choice and autonomy.[24] Parties gained the power to choose between Courts and arbitral tribunals for interim relief—an embodiment of the “free-choice model.”[25] However, evolving landscapes prompted the emergence of the “Court-subsidiarity model” and its adaptable variant, the “flexible Court-subsidiarity model.”[26] With its 2015 ACA Amendment, India simply followed the same track: Transition from rigidity to flexibility. In all its correspondence with the concerns of UNCITRAL, the insertion of Section 9-A (3) accepted a court-subsidiarity pose. The section tackles enforceability concerns and limits court action after tribunal creation, as well as upholding India’s independence in arbitration.[27]
International lessons are given and taken in the efficient conflict resolution arena in the international legal environment. One such leader in the jurisdiction of arbitration is Singapore. Such harmony can be seen in section 12A of the International Arbitration Act (IAA) of Singapore,[28] which gives curial support to courts but not at the cost of the arbitral autonomy. This is a testimony to the advanced system of law in Singapore.[29] However, problems remain, mainly with the “improper” test under Section 12A, much backlash levelled at it for vagueness.[30] Nevertheless, in wielding jurisdictional entanglements, the situational approach of Singapore strongly integrates empowering effectual legislative intent and purpose and the principle of comity.[31]
Cases like Five Ocean Corpn v Cingler Ship Pte Ltd[32] demonstrate the practical application of Section 12A, Section 12A illustrates Singapore’s backing for foreign-seated arbitrations, echoing its ambition as an arbitration hub. India’s Section 9(3) aims for enforceability in such arbitrations. The judiciary must overcome historical interpretations, notably implied exclusion, aligning with the 2015 Amendment. England and Singapore lead in adapting legal frameworks to modern arbitration challenges.[33] India, while making significant strides with the 2015 Amendment, stands at a crucial juncture, poised to unlock the full potential of arbitration through cohesive judicial guidance and progressive legal reforms.
Towards Clarity and Consistency: Reforming India’s Terrain Arbitration
In the realm of international arbitration, securing interim reliefs can be daunting, especially when assets are dispersed across borders. India’s legal landscape, evolving with the 2015 Amendment to the ACA, allows parties under Section 2(2), to file petition at Indian courts for provisional remedies in arbitrations with foreign seats. But because the term “express” was not used in the proviso of Section 2(2), the notion of inferred exclusion—which is similar to the implicit exclusion of Part I of the ACA in the Bhatia judgment—was created. To navigate this ambiguity, Indian Courts must adopt a forward-looking approach, aligning with the ACA’s objectives and the essence of interim reliefs. Drawing inspiration from jurisdictions like Singapore, where Courts recognize arbitrators’ limitations in enforcing foreign tribunal orders, India can implement a nuanced approach. Section 9(3) of the ACA, mirroring Singapore’s framework, empowers Indian Courts to intervene post-tribunal constitution when arbitral remedies prove ineffective. While international collaboration through the creation of a convention analogous to the New York Convention can unify the treatment of interim measures internationally, the proviso to Section 2(2) can benefit from the term “express” being added again. At this critical point, India, poised to refine its arbitration landscape and contribute to a seamless international arbitration framework.
Reference
[1] Gary B Born, International Commercial Arbitration (2nd edn, Kluwer Law International 2014).
[2] SM Ferguson, ‘Interim Measures of Protection in International Commercial Arbitration: Problems, Proposed Solutions, and Anticipated Results’ (2003) Int’l Trade LJ 55.
[3] M LJD, L A Mistelis and S Kröll, Comparative International Commercial Arbitration (Kluwer Law International 2003).
[4] Ibid.
[5] Supra at 2.
[6] Bhatia International v Bulk Trading [2002] 4 SCC 105).
[7] Arbitration and Conciliation Act 1996, ss 27(1)(a), 37(3).
[8] Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc [2012] 9 SCC 552).
[9] Raffles Design International India (P) Ltd v Educomp Professional Education Ltd [2016] SCC OnLine Del 5521.
[10] Ashwani Minda v U-Shin Ltd [2020] SCC OnLine Del 1648.
[11] Ibid.
[12] Harishankar K, ‘Supervisory Jurisdiction of Indian Courts in Foreign Seated Arbitration: The Beginning of a New Era or the End of Bhatia Doctrine?’ (2013) 3 The Arb Brief 56.
[13]Aitreya Limited v Dans Energy Pvt Ltd & Ors [2011] SCC OnLine Del 5585.
[14] Commercial Arbitration Rules (Japan Commercial Arbitration Association), Art 77.5.
[15] Archer Power Systems (P) Ltd v Kohli Ventures Ltd Co [2017] SCC OnLine Mad 36458.
[16] Ibid.
[17] Aircon Beibars FZE v Heligo Charters (P) Ltd [2018] SCC OnLine Bom 1388.
[18] Ibid.
[19] Actis Consumer Grooming Products Ltd v Tigaksha Metallics (P) Ltd [2020] SCC OnLine HP 2234.
[20] Goodwill Non-Woven (P) Ltd v Xcoal Energy & Resources LLC [2020] SCC OnLine Del 631.
[21] Ibid.
[22] Supra at 10.
[23] Supra at 15.
[24] UNCITRAL Model Law (n 7), Art 17J.
[25] United Nations Commission on International Trade Law, UNCITRAL Model Law on International Commercial Arbitration 1985 (2006).
[26] Wang W, ‘International Arbitration: The Need for Uniform Interim Measures of Relief’ (2003) Brook J Int’l L.
[27] Rachael Kent and Amanda Hollis, ‘Concurrent Jurisdiction of Arbitral Tribunals and National Courts to Issue Interim Measures in International Arbitration’ in Diora Ziyaeva (ed), Interim and Emergency Relief in International Arbitration (Juris Publishing 2015).
[28] International Arbitration Act 1994, s 12A (4)– (6).
[29] Jan K Schaefer, ‘New Solutions for Interim Measures of Protection in International Commercial Arbitration: English, German and Hong Kong Law Compared’ (1998) EJCL.
[30] Mahdev Mohan, ‘The New International Arbitration (Amendment) Bill – A Broader Framework for Interim Relief or Just a Tune-Up?’ (2010) 22 Sing Ac LJ 299, 303.
[31] Guy Pendell, ‘England and Wales’ in Lawrence W. Newman and Colin Ong (eds), Interim Measures in International Arbitration (Juris Publishing 2014).
[32] Five Ocean Corpn v Cingler Ship Pte Ltd (SGHC 311, 2015).
[33] K Shanmugam, Law Minister, ‘Second Reading Speech on the International Arbitration (Amendment) Bill’ (19 October 2009).