2002 (3) TMI 824 - SC - Indian Laws

Indian Courts Can Grant Interim Relief in International Arbitrations Under Arbitration Act

Bhatia International Versus Bulk Trading SA

Bhatia International Versus Bulk Trading SA - [2002] 37 SCL 434 (SC), 2002 AIR 1432, 2002 (2) SCR 411, 2002 (4) SCC 105 Issues Involved:1. Applicability of Part I of the Arbitration and Conciliation Act, 1996 to international commercial arbitrations held outside India.2. Jurisdiction of Indian courts to grant interim relief under Section 9 of the Act for arbitrations held outside India.3. Interpretation of Section 2(2) of the Act in relation to international commercial arbitrations.4. Conflict between different High Courts' interpretations of the Act.Detailed Analysis:1. Applicability of Part I of the Arbitration and Conciliation Act, 1996 to International Commercial Arbitrations Held Outside IndiaThe primary issue was whether Part I of the Arbitration and Conciliation Act, 1996 applies to international commercial arbitrations held outside India. The appellant argued that Part I should only apply to arbitrations conducted within India, relying on Section 2(2) of the Act, which states that 'Part I shall apply where the place of arbitration is in India.' The appellant contended that the Act, based on the UNCITRAL Model Law, intentionally omitted the application of Part I to arbitrations held outside India. However, the court held that Part I applies to all arbitrations, including international commercial arbitrations held outside India, unless expressly excluded by the parties.2. Jurisdiction of Indian Courts to Grant Interim Relief Under Section 9 of the Act for Arbitrations Held Outside IndiaThe appellant contended that Indian courts do not have jurisdiction to grant interim relief under Section 9 for arbitrations held outside India. The court, however, interpreted Section 9 to allow parties to apply for interim measures before, during, or after arbitral proceedings, regardless of whether the arbitration takes place in India or abroad. The court emphasized that the language of Section 9 does not restrict its application to domestic arbitrations and that excluding such relief would leave parties remedyless, particularly when properties or assets are located in India.3. Interpretation of Section 2(2) of the Act in Relation to International Commercial ArbitrationsThe appellant argued that Section 2(2) implies that Part I does not apply to arbitrations held outside India. The court disagreed, stating that Section 2(2) does not explicitly exclude the application of Part I to international commercial arbitrations held outside India. The court noted that the Act does not distinguish between domestic and international commercial arbitrations in its definition and that the intention of the legislature was to apply Part I to all arbitrations unless specifically excluded by agreement.4. Conflict Between Different High Courts' Interpretations of the ActThe court acknowledged the conflicting interpretations by various High Courts regarding the applicability of Part I to international commercial arbitrations held outside India. The court reviewed decisions from the High Courts of Orissa, Bombay, Madras, Delhi, and Calcutta, which had previously held that Part I does not apply to such arbitrations. The court concluded that these interpretations were incorrect and that a proper reading of the Act indicates that Part I applies to international commercial arbitrations held outside India unless expressly excluded by the parties.ConclusionThe Supreme Court held that Part I of the Arbitration and Conciliation Act, 1996, applies to all arbitrations, including international commercial arbitrations held outside India, unless the parties agree to exclude it. The court affirmed the jurisdiction of Indian courts to grant interim relief under Section 9 for arbitrations held outside India, rejecting the appellant's contention that such relief is not available. The appeal was dismissed, and the court's interpretation aimed to avoid leaving parties without remedies and to ensure the smooth functioning of the arbitration process.