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Understanding the Power of Courts in Providing Interim Measures under Section 9 of The Arbitration and Conciliation Act

The importance of arbitration as a mechanism for dispute resolution cannot be overstated. It offers parties a swift and cost-effective approach to resolving their disputes, away from the conventional court system. One of the significant aspects of arbitration is the power of courts to provide interim relief under section 9 of the Arbitration and Conciliation Act, 1996.

Section 9 – Interim Measures: A Brief Overview

Under Section 9 of the Arbitration and Conciliation Act, parties are allowed to apply to a court for interim measures before or during arbitral proceedings, or at any time after the making of the arbitral award but before it is enforced. This provision ensures that the arbitral award doesn’t become infructuous and allows the court to issue measures necessary to protect and preserve the subject matter of the dispute. These measures can range from securing the amount in dispute, to temporary injunctions preventing any party from acting in a certain way.

Dissecting the Power of the Courts

The power of the court under Section 9 is not absolute. It is exercisable only if circumstances exist which may not render the remedy provided by the final award effective. Legal experts at SimranLaw draw from their years of experience in dealing with arbitration matters to discuss some significant case laws that have guided the interpretation and application of Section 9.

M.D. Frozen Foods Exports Pvt. Ltd. Vs Hero Fincorp Limited

In this landmark case, the Supreme Court of India emphasized that courts should exercise restraint while dealing with an application under Section 9. The court provides interim relief only in cases where it is essential to protect the interest of parties till the final dispute resolution. It further held that the court under Section 9 has the power to grant relief, including the appointment of receivers or passing orders of injunctions, but it should not interfere with the arbitral process beyond the extent necessary.

HSBC PI Holdings (Mauritius) Limited vs Avitel Post Studioz Limited & Ors

This case emphasized the importance of ‘prima facie case’ while granting interim relief. The Supreme Court noted that to successfully request interim relief under Section 9, the party should satisfy the court that there is a genuine, serious and reasonable question to be tried in arbitration, and it is not frivolous or vexatious.

Shakti Bhog Foods Limited vs The Central Bank of India

In this case, the Supreme Court highlighted that while considering an application under Section 9, courts should not delve deep into the merits of the case but rather decide whether a triable suit exists. This underscores that Section 9 is an enabling provision empowering the court to secure the ends of justice.

Conclusion

Section 9 of the Arbitration and Conciliation Act serves as a critical tool for parties seeking interim relief in arbitral proceedings. However, it’s imperative for courts to exercise their powers judiciously. As SimranLaw’s experts remind us, through interpreting and applying this provision correctly, the courts balance the need for protective measures and respect for the arbitration process. This delicate ability is a testament to the robustness of the Indian judicial system.