RELIEF UNDER SECTION 9 OF THE ARBITRATION ACT: IS IT APPLICABLE POST AWARD TO THE UNSUCCESSFUL PARTY
Updated: Apr 3
[Divyansh is a third-year and Ozasvi Amol is a fourth-year law student, from Amity Law School Patna]
Interim relief plays a pivotal role in ensuring potency in the arbitration proceeding because it aims to protect the rights and interests of the parties from the commencement of the dispute until the final award is executed. It can be said that interim relief is an integral part of the arbitral proceeding, which ensures justice and prevents the other party from acting unjustifiably. Parties in an arbitral proceeding are entitled to procure an interim remedy from the court under Section 9 of the Arbitration and Conciliation Act, 1996, and Article 9 of UNCITRAL. As per Article 9 of the UNCITRAL Model Law, parties are entitled to get interim relief from the courts before the initiation of arbitral proceedings and during the course of those proceedings. But Section 9 of the Arbitration and Conciliation Act, 1996, accords the parties the right to procure relief from the courts after the arbitral decision (award) is passed but before its enforcement. This signifies that the act does not preclude any party from moving to the courts for interim relief.
Though the recent judgements have constantly proved that after the award is passed, only the successful party (the winning party) has the right to procure interim relief, and the unsuccessful party (the losing party) does not get any relief from the courts. This particular issue has become a debatable topic that is presently awaiting the deliberations of the Hon’ble Supreme Court to be conclusively adjudicated. Various petitions regarding this are pending in the Supreme Court. The High Courts of Karnataka and Bombay held that interim relief under Section 9 could be procured by the losing party, but the High Courts of Gujarat and Telangana have given positive views on this matter, saying that the losing party can get interim relief from the court. The paper attempts to scrutinise the judgements delivered by different courts regarding this matter and succinctly examine whether a losing party can claim remedy under Section 9.
Post-award interim relief to the losing party
In Dirk India Pvt. Ltd. v. Maharahtra State Power Generation Company Ltd. (“Dirk India”), the court promulgated a significant ruling on the matter by making the observation that after an award has been passed, interim relief can be made to protect the results of proceedings until the award is enforced. The main reason for granting interim relief after an arbitral award is rendered but before its enforcement is to preserve its value for the party seeking enforcement. After the award is rendered, the relief under Section 9 can only be procured as the first step in the enforcement of the award. This clearly means that the losing party in the arbitral proceedings cannot get a remedy under Section 9 of the act. The court came to the conclusion that a post-award interim remedy cannot be procured by the losing party (unsuccessful party) because the interim remedy would not benefit the losing party’s final relief even after benevolent disposition under Section 34 of the Arbitration and Conciliation Act.
Thus, the Bombay High Court's decision in Dirk India clearly signifies that the losing party in the arbitration proceedings will be left without any ad hoc interim protection. Now the question arises: whether a party whose claims are partly accepted or rejected in the arbitral award is qualified to request interim relief from the court? The Delhi High Court attempted to focus on this issue in the case of Nussli Switzerland Ltd. v. Organising Committee Commonwealth, where the court determined that a party whose claims are partly accepted or rejected cannot seek the remedy under Section 9 if the amount of the claims merges into a huge amount awarded in favour of the opposite party. The judgement obliquely signifies that after an award is made, only the winning party would be entitled to get remedy under Section 9 of the act.
It appears that the courts have abundantly concurred on the obtainability of interim relief after passing an arbitral award, but there are some issues that have not been considered in these judgements. Because as per Section 9, a party is entitled to get interim relief before the commencement of arbitral proceedings, during the course of the proceedings, and after the award is passed but before its enforcement. This means that both the winning and the losing party can get interim relief because Section 9 makes no difference between unsuccessful and successful parties. Hence, after the arbitral award has been rendered, the courts may provide the unsuccessful party with interim relief. The courts should not avoid granting interim relief to the losing party if the requested relief does not deleteriously affect the rights of the winning party with respect to the dispute. In Wind World (supra), the unsuccessful party requested interim relief under Section 9 by stating that few documents remained confidential. The court rejected the application. In this case, the court did not notice that the aforementioned relief did not affect the rights of the successful party. In such circumstances, there is no reason to avoid granting relief to the unsuccessful party.
Where the court orders a stay on the enforcement of an arbitral award while hearing an application to set an award, the losing party may obtain interim relief from the court. Thus, proper analysis must be given to the provisions of the Code of Civil Procedure, 1908. As a result, before granting any interim relief, the court must be convinced that there is a prima facie case, irreparable injury, and a balance of power in the petitioner’s favour. If the court is satisfied, relief under Section 9 of the act can be available to the unsuccessful party. If the unsuccessful party has made a prima facie case of fraud, this serves as an illustration for the above-mentioned statement. It is essential to safeguard the rights and interests of the losing party by providing them interim relief under Section 9 after an arbitral award is rendered for the subject of dispute while the Section 34 petition is pending.
The provisions of Section 9 have been a crucial and notable remedy in the arbitration proceedings. The courts should have the authority to grant interim relief under Section 9 to unsuccessful as well as successful parties. However, the power of the court to avoid granting interim relief only to the winning party does not adhere to viable precedent. In my opinion, the courts must not refrain themselves from granting interim relief to the losing party, but they should be cautious and act judiciously and fairly.
Although the parties and the Indian legislature are trying to lower the propensity to resort to Section 9, once the arbitral tribunal has been embodied, it might take time to become fully effective. The discretion under Section 9 has been handled delicately, and this approach of the courts in granting interim relief will attempt to make India arbitration friendly in the future. Many apparent international institutional rules have approved seeking interim relief from the national courts. Hence, the provision of Section 9 can be used as a tool to prevent the abuse of the law. This can be made more prominent and efficacious by using the correct set of facts backed by strong evidence.