APPARENT LACUNA IN ARBITRATION AND CONCILIATION ACT, 1996

By Prakhar Deep, Sagnik Chatterjee and Ashish Tiwari

The scope of § 9 is wider than that of § 17. § 9 and 17 both deal with the interim measures of

protection. The court and arbitral tribunal appear to have concurrent jurisdiction which, though

not identical, is somewhere overlapping. The salient points of difference between these two are

many. First of all the party autonomy is different. One such situation is to grant interim

measures of protection as contemplated by § 9. This is similar to the power available to the

court under the Arbitration Act of 1940. But what is clearly revolutionary is § 17 of the Act,

which also uses the phrase ‘Interim measures of protection’ and thus gives co-terminus power

to the Arbitral Tribunal as well. The phrase’ unless otherwise agreed by the parties’ ushers in

party autonomy and indicates that this provision is of non-mandatory nature. The non-

mandatory provisions are primarily of importance where a set of arbitral rules is agreed on as

are used in institutional arbitration.1

In some jurisdictions, the relevant law specifically provides that in the first instance, an

application should be made to the tribunal and then only to the court. For instance, § 38(3) to

(6) of English Arbitration Act 1996, in the absence of an agreement by the parties to the

contrary, the delineate the default parameters of tribunal jurisdiction to make interim orders of

protection. § 44(3) vests the court with powers in support of arbitral proceedings and

prescribes the procedure for exercise of power. But there is no similar provision in model law or

is § 9 of this Act. This section is not identical to Article 9 of the Modal Law, though codifies its

spirit, It appears rather to have been influenced by the language of § 41(b) and Second

Schedule of the Act of 1940, albeit both the provisions, as observed by the Supreme Court in

Sundaram Finance Ltd v NEPC India LTD 2 are very different from the provisions of § 9 and 17 of

this Act. The parties therefore, have the choice whether to approach the arbitral tribunal under

§ 17 or court under § 9, for seeking an interim measure of protection. As the modern trend of

arbitration law is to marginalize court intervention, the balance normally should tilt in favour of

1 In this connection such institutional rules on this question are the LVIA Rules particularly Rule-25’Interim and Conservatory Measure’ is remarkably explicit2 2 SCC 479, 487 (1999)

the tribunal because it will be more expeditious and less expensive. Legendary legal personality

Nani Palkiwala mentioned that arbitration has to be made compulsory in commercial matters. It

has benefits like speedy justice, its economical, finality as arbitrators award is unchallengeable

except on narrow grounds and finally justice as the final outcome of arbitration is as likely -to

be marked by justice as is a case in a court of law. The law should provide for compulsory

adjudication or arbitration to settle all industrial disputes3. The court has the coercive power to

enforce its orders. But the arbitral tribunal is not competent to exercise any such power. The

lack of power to enforce an interim measure for protection, leaves the tribunal with no

effective way of forcing the party to obey the order, that is to say, it has no teeth.

§ 38 of the English Arbitration Act 1996, 4 unless otherwise agreed by the parties, confer the

powers to order interim measure of protection on the arbitral tribunal. This power particularly

includes express power to order a party to furnish security for the costs of arbitration, a power

previously preserve of the court only. The 1996 act does not otherwise specify the basis on

which security for costs should or should not be granted and the tribunal therefore has a broad

3 M.V Kamath, Convocation Address , Xavier labour relations instituts at Jamshedpur, 29 feb 1980, Obedience to Unenforceable,nani Palkiwala A life.4 The English Arbitration Act, 1996: section 38 General Powers exercisable by the Tribunal.

(1) The parties are free to agree on the powers exercisable by the Tribunal for the purposes of and in relation to the proceedings.

(2) Unless otherwise agreed by the parties the tribunal has the following powers.This power shall not be exercised on the ground that the claimant is-(a) An individual ordinarily resident outside the United Kingdom, or(b) A corporate of association incorporated or formed under the law of the country outside the United

Kingdom, or whose central management and control is exercised outside the United Kingdom(c) The tribunal may order a claimant to provide security for the costs of the arbitration.

This power shall not be exercised on the ground that the claimant is-(i) An individual ordinarily resident outside the United Kingdom, or (ii) A corporation or association incorporated or formed under the law of a country outside the United Kingdom, or whose central management and control is exercised outside the United Kingdom.

(d) The tribunal may give directions in relation to any property which is the subject of the proceedings or as to which any question arises in the proceedings, and which is owned by or is in the possession of a party to the proceedings-(i) For the inspection, photographing, preservation, custody or detention of the property by the

tribunal, an expert or a party, or (ii) Ordering the examples be taken from, pr any observation be made of or experiment conducted

upon the property.(e) The tribunal may direct that a party or witness shall be examined on oath or affirmation, amd may for

that purpose administer any necessary oath or taken any necessary affirmation.(f) The tribunal may give directions to a party for the preservation for the purposes of any evidence in his

custody or control.

discretion. It seems likely though that in practice the tribunal will have regard to similar

consideration as those applied by court in dealing with applications under RSC O 23.5

The abolition of the dual mechanism of interim relief also needs to be given a serious thought,

if reduction of Court Intervention, which is one of the primary objectives of the Arbitration and

Conciliation Act, 1996 is to be attained.

5 Russell on Arbitration, twenty-first edition, 1997, p 206 para 5-098