LUCKNOW

Alternative Dispute Resolution

Final Draft
on
Challenges during the enforcement of interim
measures granted by arbitral tribunal in
International Commercial arbitration and their
solution
Submitted By: Submitted To:
Shwetanshu Dubey Mrs. Shakuntala Sangam
Enroll. Number: 137 Assistant Professor (Law)
BA. LLB (Hons.)
Semester VIII
INTRODUCTION
The strategy of seeking efficient interim measures can dictate the ultimate consequence in
a dispute. Interim measures preserve the sanctity of arbitral proceedings and avert a
situation which is likely to render an arbitration award meaningless. They may go
towards facilitating conduct of arbitral proceedings or avoiding loss or damage or to
preserve a state of affairs, or facilitating later enforcement of the award, for example,
preserving the property or value that are the subject of the proceedings.
Parties often find it necessary to seek interim measures of protection in order to safeguard
their substantive rights before the commencement of arbitral proceedings or during the
pendency of the arbitration but prior to the final resolution of the dispute. State courts are
not always available, or they may be otherwise ill-equipped, to provide effective interim
relief in cross-border commercial disputes. That is why most jurisdictions nowadays
approve also the arbitrators’ power to order interim measures. One important problem
with interim relief ordered by arbitrator is that an arbitral tribunal cannot function before
it has been properly constituted. Therefore many arbitration institutes have recently
adopted separate “emergency arbitrator rules”, which are meant to provide an effective
mechanism whereby a party in need of urgent interim relief that cannot await the
constitution of an arbitral tribunal, may apply for the appointment of an “emergency
arbitrator”, who is vested with the power to grant interim measures at very short notice.
The introduction of emergency arbitrator provisions in institutional rules further
reinforces the expanding powers of the arbitral tribunal. In the Amendment Act, the
legislature has sought to limit the powers of the courts under Section 9 of the Arbitration
and Conciliation Act,1996 and to expand the powers of the arbitral tribunal under Section
17 of the Act. Section 17 of the 1996 Act is one such integral provision that grants an
arbitral tribunal the power to order interim measures of protection, critical for the efficacy
of an arbitration system. It ensures that for the purposes of interim reliefs parties can
approach the arbitral tribunal rather than anticipating orders from a court. The real value
in section 17, however, was seriously compromised under the old regime given the lack
of any suitable statutory mechanism for the enforcement of such interim orders issued by
an arbitral tribunal.

One of the shortcomings of arbitrator ordered interim relief is that an arbitral tribunal
obviously cannot order interim measures of protection before it has been properly
constituted. In international disputes, it is not unusual that the appointment of arbitrator
can take many weeks, if not months, especially if the arbitration agreement provides for a
three-person tribunal and one of the parties is uncooperative or downright obstructive.
Considering that the most crucial time for seeking provisional measures is often at the
outset of the parties’ dispute, this inherent limitation may have severe consequences for a
party and, in the worst case scenario, frustrate the arbitral tribunal’s ability to provide
effective final relief.
AIM AND OBJECTIVE OF STUDY:
Measures aimed at preserving or restoring status quo, or otherwise clarifying the parties’
contractual relationship, during the pendency of the arbitral proceedings. Examples
include: order to refrain from disposing of the object of the dispute; order to deposit the
goods in dispute with a custodian; order for the sale of perishable goods and placing the
proceeds of the sale in an escrow account; order requiring a contractor to continue
construction works and/or compelling the owner to continue paying instalments, if
necessary into an escrow account controlled by the arbitral tribunal; order requiring a
manufacturer to continue supplying a distributor, or requiring a distributor to continue
selling a manufacturer’s product; order prohibiting a party from continuing to
manufacture and sell products which are the subject of disputed patent rights; order to
stop using disputed trademarks; order authorizing a party to discontinue or suspend work
or the performance of other contractual obligations; order prohibiting a party from calling
upon a bank guarantee, or returning to the bank a guarantee called upon in an unjustified
manner; order suspending the effect of a corporate resolution; order confirming that an
individual has, for the time being, no authority to act on behalf of another party; order
ensuring the claimant's enjoyment of its rights (e.g., voting shares in compliance with a
shareholders’ agreement); order providing access to company records in order to
supervise the company’s management and performance; order directing a party to abstain
from undertaking certain activities which do not correspond to the regular course of
business; order appointing a neutral manager for some or all of the company’s activities.

RESEARCH METHODOLOGY:
The quality and value of research depends upon the proper and particular methodology
adopted for the completion of research work. Looking at the vastness of the research
topic - historical, doctrinal legal research methodology has been adopted. To make an
authenticated study of the research topic “ Challenges during the enforcement of interim
measures granted by arbitral tribunal in International Commercial arbitration and their
solution enormous amount of study material is required. The relevant information and
data necessary for its completion has been gathered from both primary as well as
secondary sources available in the books, journals, periodicals, newspapers, research
articles and proceedings of the seminars, conferences, conventions and annual reports on
environment, websites.

CONCLUSION
The importance of interim orders by arbitral tribunals has been widely recognised in
international arbitration. Such measures are commonly used in practice in relation to
urgent interim reliefs, and even by emergency arbitrators. Indubitably, the system of
recognition and enforcement of interim orders is an edifice of international arbitration.
With the possibility that parties may avoid compliance with such measures directed by
arbitral tribunals seated outside India, there is a need for a statutory machinery to enforce
these measures. It is necessary that an assistance should be available from the legislative
pillars, as well as the courts in India to, ensure that such orders are not reduced to mere
‘paper orders. However, the Indian arbitration law remains silent about the fate of such
interim orders issued by tribunals seated outside India, warranting an overhaul of section
17 yet again.

Pre-arbitral and arbitrator-ordered interim measures of protection have various benefits.

Especially in cases where the courts cannot be trusted for whatever reason, they may
prove invaluable to an applicant in need of urgent interim relief. However, for pre-arbitral
and arbitrator ordered provisional measures to be fully effective, national laws should
provide a proper mechanism for their enforcement through the judicial system. Otherwise
the parties may need to rely exclusively on the arbitrators’ persuasive powers and limited
authority to draw adverse inferences from a party’s non-compliance with a decision
granting interim relief. And even where the national legal system permits the enforcement
of orders or awards issued by arbitral tribunals or emergency arbitrators, there will
probably still be a finite number of instances where state courts remain the only viable
alternative, particularly when extreme urgency requires action in a matter of hours, or
there is otherwise a need for full-scale ex parte relief.

BIBLIOGRAPHY
1.http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research
%20Papers/Interim_Reliefs_in_Arbitral_Proceedings.pdf

2. Redfern –hunter on International Commercial Arbitration

3. Interim Measures in International Commercial Arbitration: Past, Present and Future by

Sandeep Adhipathi

4. UNCITRAL Arbitration Rules 2010: A Review by Badrinath Srinivasan