Arbitral Tribunal’s Power to Re-examine Interim Reliefs decided by a Court

This guest-post is authored by Pareekshit Bishnoi. Pareekshit is an advocate practicing before courts and tribunals at Delhi. He graduated from the National Law University, Odisha.

Pareeskhit regularly appears before the Delhi High Court, Supreme Court, NCLT, NCLAT, and the NCDRC.  He specializes in the laws of arbitration, insolvency and bankruptcy, consumer protection, transfer of property, and negotiable instruments.

Arbitral Tribunal’s Power to Re-examine Interim Reliefs decided by a Court

The principle of kompetenz – kompetenz is enshrined in section 16 of the Arbitration and Conciliation Act, 1996 (the Act). Read with section 8 of the Act, this principle gives the arbitral tribunal exclusive power to determine a dispute referred vide the arbitration agreement between the parties. However, the Act does not provide the arbitral tribunal with exclusive power to grant interim reliefs to parties to the arbitration.

With the enactment of the Arbitration and Conciliation (Amendment) Act, 2015 (2015 Amendments), the arbitral tribunal has the same powers under Section 17 to grant interim relief as available to the court under Section 9 of the Act. Courts have been barred from entertaining interim relief applications once an arbitral tribunal is in existence, unless the prevailing circumstances would make it inefficacious to seek relief from the tribunal. Among other things, however, the amended mechanism leaves it open for parties to approach the tribunal under Section 17 upon its constitution after a court has rejected relief under Section 9.

In this post, the author has attempted to argue that, despite the absence of any express provision in the Arbitration Act, an arbitral tribunal does not have the power to re-hear request(s) for interim relief after the same is refused by a court. The author has further argued that this bar is not absolute and proposed two broad exceptions in this regard.

A bar on re-determination

In Kiritkumar Futarmal Jain v. Valencia Corporation[1] (2019) [Kiritkumar],  a party had approached the arbitral tribunal under section 17(2) after the Court had entertained and decided the application for similar relief under section 9. The tribunal refused to entertain the application.

In appeal, the Gujarat High Court held that once a court decides an application for interim relief, a similar interim measure cannot be prayed before the arbitral tribunal. It was observed that reopening such an issue would give rise to a situation where two orders on operate on the same cause of action. This could not have been the intention of the legislature; it will set the clock backwards. The High Court further observed as follows[2]:

[O]nce the Jurisdiction of the Court is invoked under Section 9 of the Arbitration Act for interim measures as contemplated therein, either before or during the pendency of Arbitral proceedings or at any time after the making of Arbitral award but before it is enforced in accordance with Section 36 of that Act and such remedy is exhausted, similar interim measures cannot be claimed before the arbitral tribunal under Sub-Section (2) of Section 17 of the Arbitration Act, inasmuch as, it would give rise to a situation where there would simultaneously be two orders in existence in respect of the same cause of action, one passed by the Court and the other passed by the arbitral tribunal, which order is also required to be treated as an order of the Court for all purposes, which could not have been the intention of the Legislature”.

Several High Courts have held that a Section 9 order does not operate merely till the constitution of the arbitral tribunal but may also continue till conclusion of the Arbitral proceedings.[3] In Velugubanti Hari Babu v. Parvathini Narasinmha Rao, for instance, the Andhra Pradesh High Court observed that the language of Section 9(2) does not imply that the operation of an interim order thereunder will be limited till the appointment of an arbitrator. The fact that a party can seek interim relief from Courts even during the pendency of arbitral proceedings shows the legislature’s intention to ensure that court-granted interim measures last until the conclusion of arbitral proceedings.

The fact that a court’s order under Section 9 is enforceable as a decree, and that the contempt proceedings can be initiated for non-compliance, also reinforces the finality of an order passed under Section 9. Such finality is, of course, subject to a right of appeal under section 37(1)(b).

Borrowing from Section 11(6)

When a court upholds the existence of an arbitration agreement, there is a bar on the arbitral tribunal to re-examine this issue in an application under Section 16 of the Act. In  SBP & Co. v. Patel Engineering (2005) [Patel Engineering], the Supreme Court observed as follows.

“Prima facie, it would be difficult to say that despite the finality conferred by sub-section (7) of Section 11 of the Act, to such a decision of the Chief Justice, the arbitral tribunal can still go behind that decision and rule on its jurisdiction or the existence of an arbitration clause …We are inclined to the view that the decision of the Chief Justice on the issue of jurisdiction and the existence of a valid arbitration agreement would be binding on the parties when the matter goes to the arbitral tribunal and at subsequent stages of the proceeding”

The rationale in Patel Engineering suggests that an arbitral tribunal is not empowered to determine any issue which has been previously dealt with by a competent court – even where the court’s decision taken on a prima facie basis. By extension, it is argued that a request for interim relief can also not be redetermined by the tribunal if such request has been previously considered by a Court under Section 9.

Exceptions to the bar

It is a cardinal principle of justice that no person should be left without a remedy. Thus, the above bar to the power of the arbitral tribunal of re-hearing the application for similar relief is not an absolute bar. In the following circumstances, a party should be able to re-apply before the tribunal.

First, the initial order for interim relief [under Section 9] should have been passed by a court having jurisdiction. Among other things, it must be a court having supervisory jurisdiction over the seat of arbitration.

Sometimes, a court recuses to intervene and direct the parties to approach the tribunal when constituted. The applicant should not be barred from approaching the arbitral tribunal in such circumstances

Second, a tribunal may re-hear an application for grant of similar interim relief if the party avers material change in circumstances or occurrence of undue hardship. This will give rise afresh cause of action for grant of interim relief which was previously rejected by the Court. This is analogous to Order XXXIX Rule 4 of the Code of Civil Procedure, 1908 (CPC) pursuant to which a second and further application can be filed by a party for a grant of a temporary injunction if a party proves a material change in circumstances or undue hardship to it.

Though the CPC is not binding on an arbitral tribunal, courts have previously held that the principles of CPC apply to arbitration as well.[4] Therefore, if there is a material change of circumstance after the Court’s order under Section 9 and the tribunal has been constituted, parties should be permitted to approach the tribunal for further orders for re-hearing the application for interim reliefs previously decided by the court.

This exception will also find support from Kiritkumar, where the Gujarat High Court had appositely limited the operation of bar on an application for similar relief in respect of the same cause of action.

Conclusion

Subject to the discussed pre-requisites, an arbitral tribunal should not be empowered to decide, reexamine, or vary an order passed by a court under Section 9 of the Arbitration Act. An order under Section 9 must be considered as “chose jugee” (res judicata) insofar as the decision is on merits. Any conclusion to the contrary, except in circumstances discussed above, may dilute the force of and intent behind Section 9.

It would allow parties to rehash the same issues before the arbitral tribunal, thereby leading to an increase in arbitration costs, protraction of proceedings, and create anomalies between decisions of the court and arbitral tribunal. The principle of kompetenz – kompetenz should not be interpreted as being so sacrosanct that the final determination by a court be vacated by an arbitral tribunal upon its constitution.

That said, this issue has only been dealt by some High Courts in India. It would be interesting, therefore, to see how this matter is analysed and decided by the Supreme Court of India.

[1] Special Civil Application 15145 of 2019, decided on 13.09.2019

[2] See, Kiritkumar at paragraph 21.6

[3] See, Kiritkumar at paragraph 21.3

[4] See, Nimbus Communications Ltd vs Board of Control for Cricket in India, 2012 (5) Bom. C.R. 114 (DB).

2 thoughts on “Arbitral Tribunal’s Power to Re-examine Interim Reliefs decided by a Court

  1. Great piece on an intriguing issue. Personally, I have always considered interim measures by Courts as a ‘second alternative’ to the tribunal. It is unfortunate that interim measures by the Tribunals could only be empowered in 2015. Tribunals should have the first say on providing interim measures and it is now reflected in the Act through the ‘efficacious’ condition prescribed under Section 9. The res judicata argument does make sense. However, should not Tribunal be allowed to review the Court’s order as it happens to be the primary forum of the parties regarding any question under the dispute? I would like to hear your view on this.

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    • Hi. Thank you for your comment. The issue has its base on the question of till what time/stage does an interim order by court under section 9 operate. Several High Courts have settled that the issue stating that the order operates until the conclusion of the arbitral award. The reasons cited are: (1) section 9 does not restrict operation (2) it is also a decree of the Court (3) the Court has power to grant interim relief at any stage. Thus, as the interim order operates till conclusion of the arbitral proceedings, the res judicata operates.
      The purpose of the competence-competence (which is basis of your suggestion for the tribunal to re-hear) is to avoid intervention of the Court. However, once a Court has already intervened before the constitution of arbitral tribunal, the idea of it being re-heard by the court in view loses much of force. It as I have said will be unnecessary extension of principle of competence-competence, keeping cost and time consumed aside. On lighted note, the application before the Court will merely be reduced to the status of practice ground.
      I hope my answer responds to your question. Do post any further query.
      Thank you.

      Like

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