by Deborshi Sarkar & Tapojit Sarker
The author is a 4th-year student at Symbiosis Law School NOIDA (Symbiosis International Deemed University)
Introduction
Effective interim relief was first postulated by the International Chamber of Commerce (ICC) through the Pre-Arbitral Referee procedure. Pursuant to this, the International Centre for Dispute Resolution introduced the provisions of emergency arbitration in 2006. In India, interim reliefs before, during, and after arbitral procedures are recognized under Sections 9 and Section 17 of the Arbitration and Conciliation Act, 1996. Arbitration institutions such as the Delhi International Arbitration Centre (DIAC) and the Court of Arbitration of the International Chambers of Commerce-India developed concurrent procedures in an attempt to include “Emergency Arbitration” within the framework. The DIAC specifies the appointment, process, duration, and jurisdiction of an Emergency Arbitrator under Article 2 of its 2022 rules. Similarly, the Emergency provisions akin to Emergency Arbitrator are listed by ICC India in Article 29 of the “Arbitration and ADR Rules.” Acknowledging these shifts in the arbitration paradigm, the Apex Court in Amazon.com NV Investment Holdings Inc. v. Future Retail Ltd. legitimized the parties’ agreement to submit disputes to specific institutional rules and thereby obtain Emergency Relief. The Apex Court read Section 2(1)(d) of the be inclusive of an emergency arbitrator thereby enabling enforcement of interim reliefs passed by an Emergency Arbitrator, under Section 17(2) of the Arbitration and Conciliation Act, 1996. However, the ruling revolved around enforcement of an emergency award passed under Singapore International Arbitration Centre (SIAC) rules with its seat in India. Hence, the question of enforceability of emergency/interim awards in a foreign seated arbitration remains unanswered. Against this backdrop, the authors aim at elucidating expeditious methods at the disposal of parties in order to enforce an emergency relief passed by a foreign-seated emergency arbitral tribunal.
Examining Expedetious Mechanisms for Enforcement
As above-mentioned, the main issue surrounding the enforcement of a foreign seated interim/emergency arbitral award is the absence of an express provision similar to the Arbitration and Conciliation Act, 1996. This results in parties filing a new application under section 9 of the Arbitration and Conciliation Act, 1996 in order to obtain enforceable orders which are considerably time-consuming, rendering the court order substantially futile. This backdrop calls for a critical analysis of the present expeditious alternatives for such enforcement.
i. Contempt Jurisdiction
Contempt in arbitration proceedings is regulated under Section 27(5) of the Arbitration and Conciliation Act. The Hon’ble Bombay High Court in Anuptech Equipments Private Ltd. v. M/s. Ganpati Cooperative Housing Society Ltd. & Ors. has defined the scope of “guilty of any contempt” under the provision as inclusive of any form of contempt committed by a party during the arbitral proceedings. Prior to the 2015 amendment, filing an application under Section 9 of the Arbitration and Conciliation Act, 1996 for obtaining an enforceable order was an accepted practice due to the lack of an enforcement mechanism under section 17 of the Arbitration and Conciliation Act. Against this backdrop, the Hon’ble Delhi High Court in Sri Krishnan v. Anand noted that the legislative intent behind section 17 (final resolution of interim disputes) would remain otiose if a fresh application under section 9 of the Arbitration and Conciliation Act, 1996 was a prerequisite for obtaining an enforceable order. Thereby, the Court clarified the remedy for a party to apply before the arbitral tribunal under Section 27(5) in case of a default of the interim arbitral award. The decision received the assent of the Apex Court in Alka Chandwar v. Shamshul Ishrar Khan where the contempt jurisdiction under Section 27(5) was yet again upheld. However, the pertinent question that needs to be addressed here is the application of the contempt provision to arbitrations seated outside India.
The 2015 amendment brought by the 246th Law Commission Report was majorly to enable the application of inter alia Section 27 to arbitrations seated outside India. This results in a fortiori assumption that the contours of Section 27(5) could be expanded to when contempt is caused against an interim/emergency arbitral award passed by a foreign seated arbitral tribunal. However, the same argument was rejected without proper examination by the Hon’ble High Court of Delhi in Raffles Design International India Private Limited & Anr. v. Educomp Professional Education Limited & Ors. where the High Court clarified that “a person guilty of not following the interim orders of the arbitral tribunal in Singapore cannot be proceeded for the contempt under Section 27 of the Act”. The Hon’ble High Court rationalized that the Arbitration and Conciliation Act, 1996 legislation is devoid of a provision pari materia to Article 17H of the UNCITRAL Model Law which facilitates enforcement of an interim arbitral award notwithstanding the seat of the arbitration, thereby rendering the application of Section 27 of the Arbitration and Conciliation Act, 1996 to foreign seated arbitrations otiose. The Court inferred that was the legislators intended to prevent the enforcement of a foreign interim arbitral award except by filing a fresh suit. At this stage, it is not requisite to delve into the judgment of the Hon’ble Delhi High Court in Mr. Ashwani Minda & Anr v. U-Shin Ltd & Anr as the judgment does not add to the already established jurisprudence in the Raffles Design case but rather substantially revolves around the implied exclusion of Section 9 of the Arbitration and Conciliation Act, 1996 under the Japan Commercial Arbitration Association (JCAA) Rules.
Further, the Court disregarded the fact that Indian courts have in personam jurisdiction over parties located within its territorial limits. Enforcement in India of an interim/emergency arbitral award passed by a foreign seated arbitral tribunal is largely owing to the fact that inter alia the defaulting party is an Indian national or the body corporate incorporated in India or has assets in India. Hence, the Indian courts have personal jurisdiction over the defaulting party. It is evident from the text of Section 27(5) read with Section 2(1)(e) of the Arbitration and Conciliation Act, 1996 that it enables Indian Courts to exercise in personam jurisdiction over a party located within the jurisdiction of the court notwithstanding the seat of arbitration. Furthermore, Indian courts have exercised exceptions to the principle of comity in the form of anti-suit and anti-arbitration injunctions. The Apex Court in Modi Entertainment Network v. W.S.G. Cricket Pte. Ltd. held that “It is a common ground that the Courts in India have power to issue anti-suit injunction to a party over whom it has personal jurisdiction, in an appropriate case. This is because courts of equity exercise jurisdiction in personam.” It is safe to assert that this principle would similarly govern the grant of an injunction by an Indian Court where the Indian party has infringed the emergency/interim arbitral award. Further, it has now become a common practice of equity courts (Indian Courts) to render decisions binding parties in its personal jurisdiction and affirmatively direct the performance of an order outside state limits. Thereby, the argument that the decision of the interim/emergency award has an effect outside the territorial jurisdiction is unconvincing. However, owing to the dearth of judicial development surrounding the same, a decision by the Apex Court governing the contempt jurisdiction under the Arbitration and Conciliation Act, 1996 over a foreign seated emergency/interim arbitral award is awaited. Nevertheless, it is pertinent at this stage to note that the 2015 amendment expanding the horizons of Section 27(5) was a steep deviation from the UNCITRAL Model Law. The Model Law never intended a provision like section 27 to have its application dehors the seat of arbitration.
ii. Enforcement as a foreign award?
Another resort in appropriate cases is the enforcement of a foreign seated interim/emergency award as a final award under section 49 of the Arbitration and Conciliation Act, 1996. In this regard, it is pertinent to note that some of the most prominent institutional arbitration rules contain an emergency award under the ambit of a final award. Rule 1.3 of the SIAC Rules 2016 and Rule 9.9 (read with Rule 26.8) of the DIFC-LCIA Arbitration Centre Arbitration Rules, 2021 are evidence of the same. Further, the New York Convention under Article 1.3 also has an expanded definition of an arbitral award broad enough to contain an emergency arbitral award. Thereby it would be safe to assert that in appropriate cases a final award under Section 44 of the Arbitration and Conciliation Act, 1996 would encompass an emergency/interim award under its ambit.
Inference of the jurisprudence of such appropriate cases can be drawn from the Apex Court’s decision in Satwant Singh Sodhi v. State of Punjab. In this case, the Apex Court inferred that “If the interim award is intended to have effect only so long as the final award is not delivered it will have the force of the interim award and it will cease to have effect after the final award is made. If, on the other hand, the interim award is intended to finally determine the rights of the parties it will have the force of a complete award and will have an effect even after the final award is delivered.” Thereby, the court has to examine the nature and effect of the award in order to determine its finality. An award that is intended to refrain irreparable harm from being caused to the applicant and has certain trappings of a final award may also be enforced like a final award. However, the enforcement of an interim/emergency award like a final award under Section 49 of the Arbitration and Conciliation Act, 1996 is yet to receive judicial imprimatur in India.
Conclusion
Although the above-mentioned arguments may aid the enforcement of a foreign seated emergency arbitral award, statutory recognition of the same has become a legislative need. Provisions akin to Article 17H (read with Article 17I) which ensures the enforcement of an interim arbitral award irrespective of the seat of arbitration shall be statutorily incorporated. For instance, Hong Kong has ensured enforcement of an emergency relief granted within or outside the territorial limits in the same manner as an order of the court. Similar steps have also been taken by Singapore. These legislative incorporations would further prove to be imperative in making India one of the favoured seats for International Commercial Arbitration in South-East Asia.