The Arbitration and Conciliation Act, 1996 (the Act) is a significant piece of legislation in India that governs the law of arbitration. The Act has been amended several times since its inception. One of the most important changes brought about by the amendment was the substitution of Section 17 of the Act, which deals with interim measures.
Very recently, the High Court, Delhi has dealt with the issue in ASAD MUEED & ANR Vs. HAMMAD AHMED & ORS in O.M.P.(I) 1/2023 & I.A. 2265/2023 dated 14.02.2023 vide Neutral Citation Number : 2023/DHC/001008 affirming the powers of Arbitral Tribunal holding that the amended Section 17 grants the Arbitral Tribunal the same powers for making orders as a court has in relation to any proceedings before it. The provision now enables the Tribunal to frame injunctions and orders of protection that are identical to those conferred upon a court exercising powers under Section 9.
The amendment to Section 17 has been enacted with the legislative intent of arming the Tribunal with powers similar and akin to those conferred upon a court. This aspect has been highlighted in the decision of the Supreme Court in Arcelormittal Nippon Steel (India) Ltd. vs. Essar Bulk Terminal Ltd and in other cases. The provision as it stands now enables the Tribunal to frame injunctions and orders of protection in terms identical to those conferred upon a court under Section 9.
However, Section 9 empowers a court to grant an injunction but Section 9(3) bids courts to exercise restraint and caution in this regard and to step in only in situations where it finds that the Section 17 remedy is inefficacious. While Section 9 may not be an ouster clause, it still bids the court to consider whether its intervention is warranted, notwithstanding the Tribunal having been constituted and being in seisin of the entire dispute.
The mere existence of the power invested in a court by Section 9 would not be sufficient to justify a petition under the said provision being entertained. The court would also have to be convinced that its emergent intervention is warranted since the remedy provided by Section 17 would not be efficacious. Where such questions are raised, the Court would have to come to the definitive conclusion that the Tribunal would not be an effective remedy and that it would be unjust to relegate parties to follow that route.
In the same the Malaysian High Court has made a significant ruling regarding the priority of interim relief sought by arbitral tribunals and courts in the case of Malaysia Resources Corporation Bhd v Desaru Peace Holdings Club Sdn Bhd [2022] MLJU 3355. The decision confirms that parties should always first apply to the arbitral tribunal for interim relief when the same relief can be granted by both courts and the tribunal. Failure to approach the tribunal in the first instance may result in the Malaysian courts being reluctant to grant interim relief, resulting in wasted costs. The decision also supports Malaysia’s pro-arbitration stance and is in line with other jurisdictions such as Singapore. The Court’s decision centred on Sections 11(1) and 19(1) of the Arbitration Act 2005, which granted the Court and the tribunal concurrent jurisdiction to grant interim measures, including security for costs. The decision underlines the principle of party autonomy and minimal judicial intervention that underpins the Arbitration Act 2005.In conclusion, the amended Section 17 is a significant development that has conferred upon the Tribunal powers similar and akin to those conferred upon a court. The Tribunal, by virtue of the powers conferred upon it under the Act, has the requisite authority and jurisdiction to formulate such interim measures as may be warranted to preserve and protect the subject matter and corpus of the arbitration. The mere existence of the power invested in a court by Section 9 would not be sufficient to justify a petition under the said provision being entertained. The court would have to be convinced that its emergent intervention is warranted, and that the remedy provided by Section 17 would not be efficacious. The amendment has strengthened the position of the Arbitral Tribunal as an effective forum for the resolution of disputes.
