Interim Measures by the Arbitral Tribunal: Section 17

Section 17 gives the arbitral tribunal the same power to grant interim protection that the court has under Section 9, and since the amendment of 2015 it makes the tribunal's order enforceable as an order of the court. The change is the most consequential of the procedural reforms of that year. Before it, a tribunal could grant relief but could not compel obedience, so a party seeking protection went to the court whatever the Act said. After it, Section 9(3) closes the court's door once the tribunal is constituted, and the tribunal becomes the ordinary forum for interim relief.

1. The Provision

The heads of relief in sub-section (1) are the same as those in Section 9(1), and the closing words confer on the tribunal the same power for making orders as the court has. The section corresponds to Article 17 of the UNCITRAL Model Law as it stood in 1985; India has not adopted the detailed regime for interim measures and preliminary orders introduced into the Model Law in 2006.

2. The Powers of the Tribunal

• Preservation, interim custody or sale of goods which are the subject matter of the agreement, used where the goods are perishable or their condition is itself in issue.
• Securing the amount in dispute, by a direction to furnish a bank guarantee, to deposit a sum, to maintain a minimum balance or to refrain from dealing with identified assets.
• Detention, preservation or inspection of property, including directions for samples to be taken, observations to be made and experiments to be tried, which is the ordinary machinery for preserving technical evidence in a construction or supply dispute.
• Interim injunction, restraining a party from acting in a manner that would frustrate the eventual award, on the ordinary principles of prima facie case, balance of convenience and irreparable injury.
• Appointment of a receiver, where property in dispute is at risk of waste or misapplication.
• Appointment of a guardian for a minor or person of unsound mind for the purposes of the proceedings.
• Any other measure just and convenient, the residuary head, which supports orders such as disclosure of assets or security for costs.

The standard applied is the same as that applied by a court under Section 9. The tribunal is not administering the Code of Civil Procedure, 1908, and Section 19 frees it from that Code, but the principles which govern the grant of an injunction or of attachment before judgment inform the exercise of the power, as they do under Section 9 on the authority of Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd., (2007) 7 SCC 125.

3. The Position before 2015 and the Reform

The enforcement gap that existed, how it was closed, and the limits that remain

As originally enacted, Section 17 empowered the tribunal to order a party to take an interim measure, but the Act supplied no means of enforcing that order. The Supreme Court held that the section conferred no power to enforce, and no power over persons who were not parties to the reference, in Managing Director, Army Welfare Housing Organisation v. Sumangal Services (P) Ltd., (2004) 9 SCC 619. A party faced with disobedience had three unsatisfactory options: to invite the tribunal to draw an adverse inference, to apply to the court under Section 9 for the same relief, or to ask the court to treat the default as contempt by routing the matter through Section 27(5), a device developed by the High Courts but never wholly secure.

The Law Commission recommended in its 246th Report that the order of the tribunal be made enforceable in the same manner as an order of the court. Sub-section (2) gives effect to that recommendation by a deeming provision: the order is deemed to be an order of the court for all purposes and is enforceable under the Code of Civil Procedure, 1908 as if it were one. The deeming extends to the consequences of disobedience, so the ordinary machinery of execution and the law of contempt become available.

4. Enforcement in Practice

1. Application to the court having jurisdiction. The party in whose favour the order was made applies to the court as defined in Section 2(1)(e), which by Section 42 is the court before which an application under Part I has already been made.
2. Execution as an order of the court. The court does not re-examine the merits of the tribunal's order. Its function is to enforce, and the modes are those available under the Code for the enforcement of an order of the same kind, including attachment, appointment of a receiver, and, for a direction to do or abstain from an act, the machinery of Order XXXIX Rule 2A.
3. Contempt. Wilful disobedience of an order deemed to be an order of the court may be dealt with as contempt, which is the sanction that gives the section its practical force.
4. Appeal. An appeal against the order itself lies under Section 37(2)(b) to the court authorised by law to hear appeals from original decrees of the court passing the order. No second appeal lies; recourse beyond that is only by special leave under Article 136 of the Constitution.

5. The Limits of Section 17

• Only against parties. The tribunal's authority comes from the arbitration agreement, so it cannot bind a bank, a depository, a custodian or any other stranger. Where the order must operate against such a person, only the court can make it, and that is one of the circumstances in which the remedy under Section 17 is not efficacious within the meaning of Section 9(3).
• Only while the tribunal has seisin. The power is exercisable during the arbitral proceedings. The mandate of the tribunal terminates with the final award under Section 32, subject to the limited powers of correction and interpretation under Section 33, so in practice the post-award window belongs to Section 9.
• Not before constitution. Nothing can be sought under Section 17 until the tribunal exists, which is why Section 9 remains the only route in the period between the dispute arising and the appointment.
• Ordinarily no ex parte relief. Section 18 requires the parties to be treated with equality and each to be given a full opportunity to present his case, so the tribunal does not ordinarily grant relief without notice; a party needing immediate protection without notice goes to the court.
• No power to enforce its own order. The tribunal makes the order; enforcement is through the court under Section 17(2).

6. Emergency Arbitration and Section 17

7. Section 9 Compared with Section 17

The comparison is usually put as a question of convenience, but the difference of principle is worth stating. The court's power is an aspect of its general jurisdiction and extends to everyone within it; the tribunal's power is an incident of the reference and extends only to those who agreed. The deeming provision in Section 17(2) equalises the enforcement of the two orders without equalising their reach.

8. Practical Points

• Apply to the tribunal first once it is constituted, and if the court is approached instead, state in the application the reason why the remedy under Section 17 would not be efficacious.
• Where the relief needed is a direction to a bank or another third party, apply under Section 9 and say so, since the tribunal cannot grant it.
• Frame the prayer in terms the court can execute, because an order deemed to be an order of the court must be capable of enforcement in one of the modes the Code provides.
• Where the tribunal's mandate is about to end, secure the position under Section 9 before the award, since after it Section 17 is spent.
• Remember the appellate route: Section 37(2)(b) for a Section 17 order, and Section 37(1)(b) for a Section 9 order.

9. Related Topics and Provisions