POWERS OF TRIBUNAL TO ORDER INTERIM MEASURES

Under section 17, the arbitral tribunal has the power to order interim measures of protection unless the parties have excluded such power by agreement. Section 17 is an important provision, which is crucial to the working of the arbitration system, since it ensures that even for the purposes of interim measures, the parties can approach the arbitral tribunal rather than await orders from a Court.

The efficacy of section 17 is however, seriously compromised given the lack of any suitable statutory mechanism for the enforcement of such interim orders of the arbitral tribunal.

In Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479, the Supreme Court observed that though section 17 gives the arbitral tribunal the power to pass orders, the same cannot be enforced as orders of a court and it is for this reason only that section 9 gives the court power to pass interim orders during the arbitration proceedings. Subsequently, in M.D. Army Welfare Housing Organisation v. Sumangal Services Pvt. Ltd., (2004) 9 SCC 619 the Court had held that under section 17 of the Act no power is conferred on the arbitral tribunal to enforce its order nor does it provide for judicial enforcement thereof.

In the face of such categorical judicial opinion, the Delhi High Court attempted to find a suitable legislative basis for enforcing the orders of the arbitral tribunal under Section 17 in the case of Sri Krishan v. Anand, (2009) 3 Arb LR 447 (Del) (followed in Indiabulls Financial Services v. Jubilee Plots, OMP Nos.452- 453/2009 Order dated 18.08.2009). The Delhi High Court held that any person failing to comply with the order of the arbitral tribunal under section 17 would be deemed to be “making any other default” or “guilty” of any contempt to the arbitral tribunal during the conduct of the proceedings” under section 27(5) of Act. The remedy of the aggrieved party would then be to apply to the arbitral tribunal for making a representation to the Court to mete out appropriate punishment. Once such a representation is received by the Court from the arbitral tribunal, the Court would be competent to deal with such party in default as if it is in contempt of an order of the Court, i.e., either under the provisions of the Contempt of Courts Act or under the provisions of Order 39 Rule 2A Code of Civil Procedure, 1908.

The Commission believes that while it is important to provide teeth to the interim orders of the arbitral tribunal as well as to provide for their enforcement, the judgment of the Delhi High Court in Sri Krishan v. Anand is not a complete solution. The Commission has, therefore, recommended amendments to section 17 of the Act which would give teeth to the orders of the Arbitral Tribunal and the same would be statutorily enforceable in the same manner as the Orders of a Court. In this respect, the views of the Commission are consistent with (though do not go as far as) the 2006 amendments to Article 17 of the UNCITRAL Model Law.

In pursuant to the aforesaid report the legislature carried out amendment in Section 17 of the Act, and introduced Sub-Section (2) and now new Section gives more power to interim measures/orders passed by the Arbitral Tribunal. The newly incorporated Section put the interim order passed by the Arbitral Tribunal on the same pedestal as being the order of the Court for all purposes. The order passed by the Arbitral Tribunal is now deemed to be the order of the Court for all purpose and would be enforced under the Civil Procedure Code as if they were the orders of the Court. The Section 17 (2) of the Act was enacted for the purpose of providing a complete solution to the parties in getting the interim order enforced like the order passed by the Court.

Recently ,the Hon’ble Supreme Court in the case of Alka Chandewar Vs. Shamshul Ishrar Khan reported as (2017) 16 SCC 119 referred to law commission report and held that the cumbersome procedure of an Arbitral Tribunal having to apply to the High Court for contempt of its orders has now been effectively done away with the Amendment of 2015. The entire object of providing liberty to a party to approach the Tribunal for interim relief will become redundant if the same is not enforceable. With the aforesaid law laid down by the Hon’ble Supreme Court, it now clear that a contempt proceeding against defaulting part for violating the interim order passed by Arbitral Tribunal could be made directly under the provisions of Section 17(2) of the Act itself without having recourse to the Section 27(5) of the Act.