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Tine Abraham
Partner, Trilegal, India
tine.abraham@trilegal.com

Varuna Bhanrale
Counsel,Trilegal, India
varuna.bhanrale@trilegal.com

Dispute resolution in the eyes of many parties is a race to the finish line – relentless work to achieve a favourable final judgment or arbitral award. However, even a favourable final decision would be of little practical use if the subject matter of the arbitration and assets of the counterparty are not preserved pending the outcome of proceedings. Interim protective measures play a crucial role in enabling a successful party to enforce an arbitral award.

Depending on the jurisdiction, both courts and arbitral tribunals can have the power to grant interim relief. Under Indian law, parties to an India-seated arbitration have always had the option of applying to the Indian courts for interim relief. However, previous cases have created uncertainty when it comes to interim orders from Indian courts in relation to foreign-seated arbitrations and the enforceability in India of interim orders from foreign courts and arbitral tribunals.

Under the Indian Arbitration and Conciliation Act 1996 (the ‘Arbitration Act’), Indian courts are empowered to issue protective orders.¹ Previously, the Arbitration Act was silent on whether Indian courts could grant interim relief in support of foreign-seated arbitrations leading to conflicting judgments on this question. In 2002, the Supreme Court in the Bhatia International case² held that court-ordered interim relief is available to parties to foreign-seated arbitrations, unless the jurisdiction of Indian courts was impliedly or expressly excluded. In 2012, the Supreme Court overturned this position in the BALCO case³ holding that interim relief applications cannot be filed before Indian courts in support of foreign-seated arbitrations. It was only when the Arbitration Act was amended in 2015 that the position was settled thus – parties to foreign-seated arbitrations can also obtain interim relief from Indian courts, unless there is an agreement excluding such remedy.

In recent decisions of a single judge bench (the ‘Single Judge’) and an appellate bench (the ‘Appellate Bench’) of the High Court of Delhi (the ‘Delhi Court’) in Ashwani Minda and Another v U-Shin Limited and Another⁴(the ‘Ashwani case’), the court was approached for interim relief despite an adverse order from the emergency arbitrator on the same issue. Crucially, while deciding the case, the Single Judge of the Delhi Court followed the view that exclusion of the jurisdiction of Indian courts for granting interim relief need not be explicit but can be implied as well; and the choice of institutional rules governing the arbitration can be a tool in determining if the jurisdiction of courts to award interim relief has been excluded. In appeal, the Appellate Bench upheld the decision of the Single Judge but left the question of implied exclusion of Indian courts’ jurisdiction to award interim relief open.

Ashwani case: background, issues and the Delhi Court’s decisions

In 2019–2020, disputes arose under a joint venture agreement (JVA) which provided for an arbitration seated in Japan and administered under the Rules of the Japan Commercial Arbitration Association (the ‘JCAA Rules’) as the dispute resolution mechanism.

Arbitration was commenced. The claimants also sought interim relief under the emergency arbitration provisions of the JCAA Rules. The emergency arbitrator refused to issue any protective orders. Thereafter, the claimants filed an application before the Single Judge, Delhi Court seeking interim relief similar to that requested from the emergency arbitrator.

While deciding the application, the Single Judge followed the view that while the Indian courts had the jurisdiction to grant protective orders, even in cases where the curial law of the arbitration is not Indian law, this power is subject to requirement for parties to agree to the jurisdiction of the Indian courts. Their agreement need not be explicit.⁵

Thus, the Single Judge considered if there was any implied exclusion in this case since there was no express bar on the powers of Indian courts to grant protective orders. It looked into the following facts:

• The parties had agreed to arbitration under the JCAA Rules seated in Japan.
• The JCAA Rules make it clear that the emergency measures will bind the parties and are deemed to be interim measures granted by the arbitral tribunal after its constitution.
• Unlike the arbitration rules such as that of the International Chamber of Commerce (ICC) and the Singapore International Arbitration Centre (SIAC), JCAA Rules do not expressly contemplate the possibility of interim measures from courts.

The Single Judge decided that parties had implicitly agreed that Indian courts would not have jurisdiction to award interim relief. Thus, though not expressly stated, the Single Judge indicated that by choice of a foreign seat and specific institutional rules which did not specifically refer to obtaining interim orders from courts, the parties had impliedly excluded the Delhi Court’s jurisdiction.

Additionally, the Single Judge held that since the applicants had invoked the emergency arbitration provisions and a detailed and reasoned order had been issued, they could not be allowed to reapply for the same relief from the courts.

In appeal against this decision, since the arbitral tribunal was constituted, the Appellate Bench followed the principle that once a tribunal is constituted, an Indian court should refrain from granting any freezing orders, unless it is demonstrated that the tribunal cannot issue any efficacious orders.

The Appellate Bench, however, refrained from considering the Single Judge’s finding that provision of seat and choice of arbitral rules evinces implied exclusion of the Indian courts’ power to issue interim relief. The Appellate Bench expressly left this issue open and held that the Single Judge’s decision will not be treated as having decided the issue finally even inter se the parties involved.

The apex court of India, the Supreme Court, refused to interfere with the Appellate Bench’s decision.

Issues unaddressed: analysis

It is likely that an increasing number of parties will apply to Indian courts under the Arbitration Act to enforce orders for interim relief from tribunals or in circumstances where a tribunal has already rejected an application. If interim orders by foreign-seated arbitral tribunals or emergency arbitrators are made enforceable under the Arbitration Act, these applications would not be needed. Thus, the long-term solution could be a legislative amendment to the Arbitration Act in this respect. Notably, the legislature missed its opportunity to make such amendments while amending the Arbitration Act in 2015 and 2019.

At its core, the decisions in the Ashwani case reflect the Indian judiciary’s eagerness to limit judicial intervention and is welcome to that extent. The Appellate Bench’s view will limit court intervention in foreign-seated arbitrations where there is a validly constituted tribunal. The courts’ role can be limited to circumstances where the tribunals cannot grant efficacious protective orders or if these orders cannot be effectively implemented.

That said, the Single Judge’s interpretation of the Arbitration Act, which would still be of persuasive value, and the Appellate Bench’s silence on its correctness could set a worrying trend. The question of Indian courts’ jurisdiction to grant freezing orders in foreign-seated arbitrations where the arbitration rules do not specifically allow court intervention is still open for further adjudication. It could have unintended consequences, especially in cases where arbitral tribunals have not been constituted. In this regard, it would be interesting to see how, in the following scenarios, parties plead or courts apply, if at all, the Single Judge’s test:

• where the institutional rules do not specifically allow court intervention, but the Indian court finds that the arbitrator or emergency arbitrator cannot grant efficacious interim relief or that the application for interim relief is otherwise meritorious;
• where parties have agreed to ad hoc arbitrations – will all arbitration clauses with ad hoc tribunals be considered to impliedly exclude the jurisdiction of Indian courts for freezing orders?
• where the curial law specifically allows protective orders from courts at the seat of arbitration and elsewhere.

Thus, the decisions of the Delhi Court in the Ashwani case is a mixed bag. The Appellate Bench commendably reinforces the supremacy of a constituted arbitral tribunal to pass interim relief and gives Indian courts only a peripheral role. However, the new test introduced by the Single Judge to determine Indian courts’ power to grant interim relief based on chosen arbitration rules and the Appellate Bench’s silence on it could create confusion in future cases. To ensure that parties retain the right to approach Indian courts for interim relief in foreign-seated arbitrations notwithstanding the arbitration rules chosen, parties should specifically include the jurisdiction of Indian courts in their arbitration agreements, if so intended, even though it is not a requirement under the Arbitration Act.

Notes

1. Section 9 of the Arbitration Act.
2. Bhatia International v Bulk Trading SA and Another (2002) 4 SCC 105.
3. Bharat Aluminium and Co v Kaiser Aluminium and Co (2012) 9 SCC 552.
4. OMP (I) (COMM) 90/2020 before Single Judge and FAO(OS)(COMM) 65/2020 before Division Bench.
5. Raffles India International Private Limited v Educomp Professional Education Limited OMP(I) (Comm) 23/2015, CCP(O) 59/2016.

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