The primary concern of Section 9 and Section 11 can be narrowed down to alternate dispute resolution methods providing speedy decisions with effective binding of such decision, so that parties diligently follow the decision delivered by the decision maker or the authorized person. One of the most common alternate dispute method is arbitration. It is often sought by companies and private entities who do not want to indulge in the court proceedings in case of any breach of contract, so they either have an arbitration clause in their contract or they enter into a separate Arbitration Agreement.
The process of arbitration begins from the arbitration agreement or arbitration clause specified in the main agreement or contract and ends with the award passed by the arbitral tribunal. As mentioned above, disputes or breaches arising out of contracts and agreements are referred to arbitration due to its speedy and less complicated process. It has been one of the most preferred mode of dispute resolution since court proceedings are too time consuming, involve complex procedures, other expenses, overburdening of court system and much more.
Arbitration is whole and sole answer to these issues and hence the foundation of arbitration lies in independence of the party which is a major perk of arbitration. In the recent case of Centrotrade Minerals & Metals Inc. v. Hindustan Copper Ltd., the Apex Court was of the opinion that the importance of party autonomy is very important while evaluating the validity of the arbitration agreements and it should be noted that “party autonomy is virtually the backbone of arbitrations”. As per this judgment, the parties should have the liberty to choose not only whether the procedural law of their arbitral proceedings as well as the substantive laws. The entire decision-making should be in the hands of participating parties regarding their arbitration agreement.
The two most essential provisions of Arbitration and Conciliation Act 1996 are Section 9 and Section 11 of the Act. Under Section 9 it mentions where the Court can intervene in matters of arbitration and under section 11 of the Act focuses on the appointment of arbitrators for fair and impartial decision making. Let’s understand them further.
Section 9 (Power of Court to order interim measures)
It cannot be disputed that interim measures play an important role as remedy in the domestic as well as international arbitration majorly because of the time taken between the commencing of the dispute till passing of the arbitral award. While the arbitral tribunal is working on such issues, it might not be feasible for the parties to resort to arbitral tribunal for interim measures as well, as it may not be so effective on their part. There can be many reasons for this lower efficacy such as limited powers of the arbitral tribunal or its institution etc.
In these kinds of situations, the aggrieved party can make an application to the Court for interim measures under Section 9 of the Act 1996. The application can be applied to the Court before or during or any time after making the arbitral award but before its enforcement. But the party making an application should be part of the arbitration agreement and only then it can apply for interim measures in the Court.
However, post the 2015 amendment in the Arbitration Act, sub-section (2) and (3) were introduced to Section 9 of the Act, stating that the Court shall not entertain any other application u/s 9 of the Act after the institution of the Arbitral Tribunal. The word clearly mention “the Court shall not entertain” phrase indicating that the Court should not be involved any further in these arbitration matters.
The “Doctrine of clean hands” can be related with this provision which means that in case the person is approaching the Court, then he should have a genuine and bonafide intention to do so and not with some malafide intent for securing the protection of Section 9 from the Court. With the 2015 amendment, Section 9 has become a discretionary remedy and it permits the party to secure protection from the Court, only if the court deems it to be fair and suitable to do so.
In the landmark judgment of Uppal Eng. Co. Pvt Ltd. v. Cimmco Birla Ltd., the petitioner failed to mention about its application filed under Section 17 of the Act seeking for similar reliefs from the Arbitral Tribunal, the Court after looking into the facts stated that the petitioner had suppressed vital facts and hence they would not be entitled to relief under Section 9 on this sole reason.
Comparison of Article 9 of UNCITRAL Model and Section 9 of the Arbitration Act
Section 9 of the Arbitration Act finds its roots from Article 9 of the UNCITRAL Model Law wherein the parties of the arbitration agreement can seek for interim reliefs from the Courts. Although, one major difference between Section 9 of the Act and Article of the UNCITRAL Model is that, Article 9 of the Model Law permits the parties to seek for their interim reliefs at two stages only. They are-
- Before the initiation of the arbitration proceedings and
- During the ongoing course of arbitration proceedings
Whereas under Section 9 of the Act, it also entitles the parties to file for an application of interim relief after the arbitral awards are made but before its enforcement. It should be noted that Section 9 doesn’t explicitly bar any party from approaching the Court for any kind of interim relief but in the latest judgments it has been witnessed once the arbitral awards are made, only the winning party is allowed to approach the court for interim relief while the losing party in the arbitration proceedings shall not be entitled to seek any interim relief under this provision.
This particular issue is still in question before the Supreme Court in the case of Home Cares Retail Mats Pvt. Ltd. v. Haresh N Sanghavi (SLP (C) No. 29972 of 2015). Even though, it is stated in many of the judgments that right to apply for interim measures is given to the winning party, it can be debated that Section 9 should extend to both the parties i.e. successful as well as unsuccessful parties in the arbitration proceedings at either of the three stages mentioned under Section 9 of the Act before the Court.
An absolute imposition of restriction on the Court’s power to grant interim measures to an unsuccessful party in the arbitration proceedings is neither the focus nor the intention of the legislature. It also doesn’t project a justified precedent. Even though, the courts should be careful in providing the remedy under Section 9 so as to prevent its misuse by the parties and grant it to those who are in exceptional need of this provision.
Section 11 (Appointment of Arbitrators)
The fundamental theme of the Arbitration and Conciliation Act 1996 is “party autonomy” as stated above. And the Parliament has made sure of this element while drafting the Arbitration Act that party autonomy is not compromised at any stage. The Act contains adequate provisions for dealing with situations and settings wherein the Court may enter the scene of arbitration, if intervention is required.
One such provision is Section 11 of the Act apart from Section 9 wherein one can witness court’s intervention in the arbitration procedure. This provision permits the parties to choose their own methods and procedures for appointment of arbitrator. The parties need to describe the extent and role of courts for the appointment of arbitrators. There are certain cases of non-appointment in an International Commercial Arbitration (one of the parties is foreign), then such a party can even approach the Supreme Court for appointment of their arbitrator.
Initially Section 11 of the Act was enacted with the vision, that in case if one of the parties is unable to appoint an arbitrator with respect to the terms of their arbitration agreement or within 30 days of the receipt of a request from the other party to appoint an arbitrator, or in the worst case scenario if there is no procedure decided between the parties regarding the arbitration resolution. In either of these situations the requesting party is allowed to approach the Chief Justice of India and make a request to the Chief Justice for appointing an arbitrator. Then, the Chief Justice may himself or by any other person or institution elected by him appoint an arbitrator for the requesting party.
Although, it should be observed that the time period of 60 days from the date of service of notice on the opposite party is only directory and the Apex Court or the person or institution authorised should make an attempt to obey this timeline.
Recent 2019 Amendment in Section 11
Recently, there have been certain changes made in the Arbitration and Conciliation Act 1996 to keep it at par with the needs of society and parties who are involved in these proceedings. Section 11 of the Arbitration and Conciliation Act was significantly amended in 2019. As mentioned above, Section 11 of the Act speaks about appointment of arbitrators in the Arbitral Institutions nominated by the Supreme Court.
These arbitral institutions are put on a grade system by the Arbitration Council of India (ACI) which is a body set up by the Central government in pursuant to Section 43-B of the 2019 Amendment Act. As per Section 43-I, it mentions the basis of gradation of these arbitral institutions focuses on the infrastructure of the institutions, quality and competency of the arbitrators, performance and compliances followed with regard to speedy disposal of domestic as well as international commercial arbitrations and much more as specified in the regulations.
Another notable change in Section 11 in the 2019 Amendment Act is with respect to those circumstances wherein the parties fail to appoint the arbitrators, then it has to be entrusted with the arbitral institution rather than to the Apex Court or High Court depending upon the case. Hence, this amendment has brought in uniformity and streamlined the process of appointment of arbitrators. It has also given more power to arbitral institutions and ACI, instead of constantly relying on Supreme Court or High Court for intervention in such matters.
But the Arbitration Council of India is not established yet, so until the ACI is established, the mode of appointment of arbitrator remains unchanged for the time being under Section 11 of the Act. But one can make out a loophole that even with the setting up of the ACI, the 2019 Amendment Act doesn’t postulate any rules or procedures that need to be followed in these arbitral institution under the guidance of ACI with regard to making appointments in Section 11 of the Act.
For example, there are no specified rules or explicit provisions explaining the scope and space of arbitral institution while they are appointing the arbitrator and if there is any need of an inquiry or process which should be carried out by the arbitral institution for fair appointments of arbitrators. The recent amendment has definitely brought a shift in the style of operations of arbitration, but at the same time the arbitral institutions have been tasked with immense responsibilities of appointments too, and there is no further specification given with respect to the procedure or rules for appointment of arbitrators.
The Courts have used previous judgments and precedents for proper interpretations of this scope while they are requested to carry out such appointments under Section 11 applications. But once this responsibility is transferred, it is doubtful that the arbitral institutions would carry out such level of research and analysis for undertaking the appointment of arbitrators under Section 11 of the Act. Hence, the institutions should be either trained by the Supreme Court and High Court judges for the same or they should devise a uniform method for such appointment of arbitrators to keep fair and just for all parties.
Therefore, it can concluded that arbitration is still a growing concept in India and to make people and parties more acquainted with the concept of arbitration or alternate dispute resolution, the legislation should come up with arbitration-friendly jurisdictions which can be easily adopted by private parties especially in case of commercial dispute resolutions. In the last two three decades, arbitration has become more favoured by commercial enterprises and parties due to its speedy resolutions and less complications. This preference has rocketed in this pandemic era, as arbitration hearings can be done via online mode also and there is no need for a hearing date from the Court. The parties and arbitrators have to be present only.
Section 9 and Section 11 both speak of court intervention to some extent in the arbitration proceedings, but this intervention is sought only when the parties have a genuine reason to do so and have no other option left but to approach the court. This is also changing with the upcoming amendments, as arbitration will soon become a full-fledged alternate dispute redressal platform wherein the final authorities will be none other than the arbitral institutions and ACI. Hence, the Apex Court should try and take all possible measures to confirm that Arbitral Tribunals are set up in the least possible time, once the parties start appearing before it.
This article is authored by Rhea Banerjee.