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Arcelor Mittal Nippon Steel India Ltd Vs Essar Bulk Terminal Ltd: Bar U/S 9(3) Arbitration Act Not Applicable If Application Was Taken Up By Court Before Constitution Of Arbitration Tribunal

Ananya Gosain ,
  20 September 2021       Share Bookmark

Court :
Supreme Court of India
Brief :

Citation :
LL 2021 SC 454

DATE OF JUDGMENT:
14/09/2021

CORAM:

  • Hon’ble Justice Indira Banerjee
  • Hon’ble Justice JK Maheshwari

PARTIES:

  • Appellant: Arcelor Mittal Nippon Steel India Ltd
  • Respondent: Essar Bulk Terminal Ltd

SUBJECT

This judgment discusses the scope of Section 9 of the Arbitration and Conciliation Act, 1996 and the power of the court to entertain an application under it in different circumstances. Arcelor Mittal Nippon Steel India had sought transfer of its proceedings from a Commercial Court to Arbitration Tribunal constituted by the Gujarat High Court in connection with a dispute with Essar Bulk Terminal. While the respondent sought interim measures,the Supreme Court held that Section 9 enables any party to approach the appropriate court for interim measures before, during, or at any time of arbitral proceedings but before it is enforced.

OVERVIEW

  • On 21.2.2011, the parties entered into an agreement for cargo handling. The contract mentioned that disputes between the parties shall be settled through arbitration. The case pertains to the claim made by the Essar Bulk Terminal for the acquisition of the Hazira port, not being part of the resolution process.
  • The appellant in this case then issued a notice to the respondent to invoke arbitration in relation to the agreement made on 22.02.2011. AMNS had sought appointment of an Arbitral Tribunal under Section 11 of the Arbitration Act, 1996 from Commercial Court at Surat.
  • The Court, after hearing both the parties, dismissed the said application and granted the appellant 10 days' time to file their challenge. The petition was filed under Article 227 of the Constitution of India.
  • The High Court held that Section 9(3) of the Act does not take away the jurisdiction of the Court in dealing with the application under Section 9(1) of the Act once the Arbitral Tribunal is constituted, rather it provides that the Court can entertain such an application after the Arbitral Tribunal is constituted only if it finds that the alternative remedy as provided under Section 17 is not efficacious. The case was brought to the Supreme Court.

RELEVANT PROVISIONS

  • Section 9(1) of the Arbitration and Conciliation Act- It allows the parties to seek interim measures before an arbitral award is enforced. This means that the parties can approach the appropriate court before and during the arbitral proceedings.
  • Section 9(3) of the Arbitration and Conciliation Act-Once an Arbitral Tribunal has been set up, the Court may not entertain an application under Section 9(1) of the Act, unless it has been established that circumstances exist which would not allow the remedy provided under Section 17 efficacious.

ISSUE

  • Whether the Court has the power to entertain an application under Section 9(1) once an Arbitral Tribunal has been constituted?

ANALYSIS

  • As per law, it is known thatonce an Arbitral Tribunal has been set up, the Court may not entertain an application under Section 9(1) of the Act, unless it has been established that circumstances exist which would not allow the remedy provided under Section 17.
  • However, the Supreme Court held that the concept of entertaining a case refers to the process of considering the issues raised by the parties involved in a case. This process could continue until the judgment of the Court. Once an application is considered, the court has applied its mind and it can certainly proceed on adjudicating the matter.
  • The power to grant interim relief is same considering the Court and Arbitral Tribunal. The remedy under Section 9(1) is as efficacious as the relief under Section 17. Hence, there seems no reason why the Court would not continue to accept applications for interim relief once the Arbitral Tribunal has been constituted.
  • Even after an Arbitral Tribunal has been constituted, there may still be cases where one of the arbitrators could not be located due to illness or travel. This type of case would require the Court to consider an urgent interim relief under Section 9(1). The Supreme Court, making the aforementioned observations, directed the Commercial Court to proceed with the adjudication.

CONCLUSION

The objective is to ensure that the property being the subject of an arbitration proceeding is protected from becoming infructuous and that the award is not rendered worthless. If an application for interim measures is not decided expeditiously, it may cause irreparable injury to the party seeking the interim relief. Even if an application under Section 9 was not filed before its inception of Tribunal, the Court has the discretion to direct the respondents to approach the Arbitral Tribunal, if needed by passing a limited order of interim protection.

Click here to download the original copy of the judgement

Hope you enjoyed reading this judgement. Here are a few questions for you, let us know your answers in the comments sections-

  • Can a court entertain an application even after the Arbitral Tribunal is constituted?
  • Which Section allows parties to seek interim measures before an arbitral award is enforced?
 
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