Bar On Court Granting Interim Relief Once Tribunal Is Constituted Applies Even In Foreign Arbitration: Bombay HC

The Bombay High Court has refused to grant interim relief to a Singapore-based company, holding that once a foreign-seated arbitral tribunal is constituted, Indian courts should be slow in entertaining unless the party shows that the tribunal cannot provide an effective remedy.

Justice Bharati Dangre clarified that this principle applies even to foreign-seated arbitrations. While Section 9 of the Arbitration and Conciliation Act (for interim relief) can be invoked in such cases, the bar under Section 9(3) (bar on relief after constitution of arbitral tribunal) still operates after the tribunal is in place.

“Without taking recourse to the remedy available to move the Arbitral Tribunal, the Petitioner has approached this Court by invoking Section 9… in the wake of the embargo created under sub-section (3) as the Tribunal is already constituted and the better course available to a party is to approach the Tribunal, and in this case, I do not find that the Tribunal is lacking power to consider such a request,” the court said.

The case arose from contracts between Sunfield Global Pte. Limited and Mumbai-based Liberty Investments Private Limited for the supply of crude sunflower seed oil. Sunfield alleged that over USD 6.6 million remained unpaid despite acknowledgements of debt and partial payments and sought directions to secure the amount or restrain Liberty from dealing with its property.

Liberty opposed the plea, pointing out that the contracts provided for London-seated arbitration under Federation of Oils, Seeds and Fats Association (FOSFA) Rules and that a three-member tribunal had already been constituted.

Rejecting Sunfield's argument that the tribunal lacked powers to grant effective interim relief, the court held that under FOSFA Rules read with Section 38 of the English Arbitration Act, the tribunal can entertain interlocutory applications and pass orders to preserve or protect property.

“The relief sought… can also be sought under Section 38 read with FOSFA Rules,” the court observed.

Holding that Sunfield failed to show that the tribunal's remedy was inefficacious, the court dismissed the petition, leaving the company to pursue relief before the arbitral tribunal.