Emergency Arbitration And Section 9: A Comparative Analysis Of Interim Relief Mechanisms In Indian Arbitration Post-2015 Amendments

Emergency arbitration has also gained significant attention, especially in recent years, as a viable means of obtaining interim measures in international arbitration. The 2015 amendments to the Arbitration Act aimed to minimize court interference with arbitration and align India's arbitration legislation with global standards, including the concept of emergency arbitrators.

This article aims to analyse Section 9 and emergency arbitration in the context of interim measures in Indian arbitration, focusing on the changes made in 2015.

Understanding Section 9:

Section 9 of the Act grants the court broad discretion to issue ancillary orders deemed 'just and convenient.' This includes the preservation of goods, interim custody of goods, sale of perishable goods, securing the amount in dispute, interim injunctions, and the appointment of receivers. The potency of Section 9 underscores its importance and provides parties with valuable means to protect their interests during arbitration.

The Delhi High Court case of Leighton India Contractors Pvt. Ltd. v. DLF Ltd. (2020) reaffirmed the expansive scope of Section 9, highlighting that the powers of the court under this section are unfettered, though subject to the discretion of the court based on established principles. For example, in Halliburton Offshore Services Inc. v. Vedanta Limited (2020), the Delhi High Court ruled that no injunction could be issued against the invocation of bank guarantees without proof of fraud, irreparable loss, or special circumstances, demonstrating the cautious approach courts take when issuing orders under Section 9.

The 2015 amendments significantly impacted the application of Section 9, particularly with the introduction of Section 9(3), which restricts court access for interim measures once the arbitral tribunal is constituted, except in circumstances where the tribunal's Section 17 relief is ineffective. The intention behind this amendment was to reduce dependence on courts and encourage parties to seek interim relief from the tribunal. However, courts have acknowledged that Section 9(3) does not entirely exclude the jurisdiction of the courts. In Bhubaneshwar Expressways Pvt. Ltd. v. NHAI, the Delhi High Court entertained a Section 9 application despite the presence of a tribunal, as the tribunal could not function due to an arbitrator's recusal. This illustrates the court's role when the tribunal's relief is insufficient.

Emergency Arbitration: An Emerging Concept

Emergency arbitration has emerged as a method for obtaining interim measures before the formation of the arbitral tribunal. This concept ensures that parties do not have to wait for a final award to receive interim relief, particularly in international arbitrations.

Currently, emergency arbitration is recognized under several institutional rules, including those of the Singapore International Arbitration Centre (SIAC) and the London Court of International Arbitration (LCIA). These institutions provide procedures for appointing emergency arbitrators who can issue prompt interim orders.

Although the Indian Arbitration Act does not currently contain a specific provision for emergency arbitration, the 2015 amendments clarified that such awards could be enforced if the arbitration clause included provisions for emergency arbitration. This was demonstrated in Raffles Design International India Pvt. Ltd. v. Educomp Professional Education Ltd., where the Delhi High Court upheld an emergency award from a Singapore-based emergency arbitrator under the SIAC rules, setting a precedent for enforcing emergency arbitration awards in India.

Comparative Analysis:

Although both Section 9 and emergency arbitration serve the function of providing interim relief, they differ procedurally and in their application. Section 9 involves judicial relief where Indian courts are compelled to grant interim reliefs that are enforceable. In contrast, emergency arbitration is a private, expedited process governed by the arbitration clause and does not require court intervention.

These mechanisms are interrelated in various ways. While Section 9 remains crucial, especially for relief against third parties and enforcement issues, the emergency arbitration process is more efficient and flexible, particularly in international cases. However, enforcement of emergency arbitration awards may be challenging, especially in cases involving foreign-seated arbitrations where Indian courts may lack proper jurisdiction.

The case of Ashwin Minda & Anr v. U-Shin Ltd. (2020) exemplifies the interaction between Section 9 and emergency arbitration. The Delhi High Court addressed the issue where a petitioner sought relief under Section 9 after an emergency arbitrator's relief was declined. The court observed that the Section 9 petition was a nullity since the parties had opted for emergency arbitration, illustrating that the two mechanisms cannot be invoked simultaneously.

Challenges and Opportunities:

There are significant challenges regarding the enforcement of emergency arbitration awards in India, particularly for foreign-seated arbitrations. Despite the 2015 amendments, the absence of a clear legal provision creates confusion. Additionally, courts must carefully navigate potential conflicts between emergency arbitrator orders and Section 9 relief.

Nonetheless, the development of Indian arbitration law through emergency arbitration presents opportunities. As the use of emergency arbitration clauses in contracts increases and Indian courts extend support for the enforcement of such awards, the relevance of Section 9 may diminish, contributing to a more arbitration-friendly culture in India.

In summary, while emergency arbitration and Section 9 offer distinct approaches to obtaining interim relief in Indian arbitration, they are interconnected. Section 9 provides a reliable and enforceable legal mechanism, while emergency arbitration offers a faster solution for international disputes. The 2015 reforms have enhanced both mechanisms, but challenges remain, particularly concerning implementation and their interaction. Moving forward, evolving interactions between Section 9 and emergency arbitration could drive further development and reform in India's arbitration system, enhancing its status as a preferred international arbitration centre.

Sources:

• Arbitration and Conciliation Act, 1996 – For primary legislative reference and provisions of Section 9 and Section 17.
• Leighton India Contractors Pvt. Ltd. v. DLF Ltd. – Delhi High Court, 2020.
• Halliburton Offshore Services Inc. v. Vedanta Limited – Delhi High Court, 2020.
• Goodwill Non-Woven (P) Limited v. XCoal Energy & Resources LLC – Delhi High Court, June 9, 2020.
• Bhubaneshwar Expressways Pvt. Ltd. v. NHAI – Delhi High Court.
• Hero Wind Energy Private Limited v. Inox Renewables Limited and Ors. – Delhi High Court.
• Raffles Design International India Pvt. Ltd. v. Educomp Professional Education Ltd. – Delhi High Court.
• HSBC PI Holdings (Mauritius) Ltd. v. Avitel Post Studioz Ltd & Ors. – Bombay High Court.
• Ashwin Minda & Anr v. U-Shin Ltd. – Delhi High Court, 2020.

Aman Kumar is a student at Faculty of Law, University of Delhi. Views are personal.