Interim measures in international arbitration

Introduction

Interim measures in international arbitration are temporary protective orders granted by an arbitral tribunal or competent court to preserve the rights and interests of parties while arbitration proceedings are pending. These measures are intended to prevent irreparable harm, preserve disputed property, maintain the existing position of the parties and ensure that the final arbitral award remains effective and enforceable.

International commercial disputes may involve assets, businesses, bank accounts, intellectual property, confidential information and contractual obligations located in different countries. If a party transfers assets, destroys evidence or continues harmful activities during arbitration, the final award may become ineffective. Interim measures therefore play an important role in maintaining fairness and protecting the integrity of arbitration.

Meaning and objectives of interim measures

Interim measures are temporary legal protections granted before or during arbitration. They do not normally determine the final rights and liabilities of the parties. Instead, they preserve the position until the arbitral tribunal delivers its final decision.

The major objectives include:

Preservation of assets: Preventing parties from transferring or disposing of assets to defeat a future arbitral award.

Preservation of evidence: Protecting documents, electronic records and physical materials necessary for arbitration.

Protection against irreparable harm: Preventing damage that cannot adequately be compensated through monetary damages.

Maintenance of status quo: Ensuring that neither party changes the disputed position unfairly during proceedings.

Security for claims: Requiring appropriate security where necessary to protect a party's interests.

Types of interim measures

1. Injunctions

An injunction directs a party to perform or refrain from performing a particular act. For example, an arbitral tribunal may restrain a party from transferring disputed intellectual property or disclosing confidential commercial information.

2. Asset preservation orders

These measures protect assets that may be required to satisfy a future arbitral award. They are particularly relevant in international commercial disputes involving substantial financial claims.

3. Evidence preservation orders

A tribunal may direct parties to preserve relevant documents, electronic communications, technical records and other evidence to prevent destruction or alteration.

4. Status quo orders

These orders prevent parties from making significant changes to the existing contractual or commercial position until the dispute is resolved.

5. Security for costs

In appropriate circumstances, a tribunal may direct a claimant to provide security for costs to protect the respondent against the risk of unrecoverable arbitration expenses. Such orders are not automatic and depend on the applicable arbitration rules and circumstances.

Legal framework under Indian law

The Arbitration and Conciliation Act, 1996 provides the principal framework for interim measures in India.

Section 9 – Interim measures by courts

Section 9 empowers Indian courts to grant interim protection before, during or after arbitral proceedings but before enforcement of the award. Available measures include:

Appointment of a guardian for a minor or person of unsound mind for arbitral proceedings.

Preservation, interim custody or sale of goods forming part of the dispute.

Securing the amount in dispute.

Detention, preservation or inspection of property.

Interim injunctions and appointment of receivers.

Other protective measures considered just and convenient by the court.

For international commercial arbitration seated outside India, Section 9 is generally available unless the parties have agreed otherwise, subject to the statutory exception concerning arbitration agreements governed by certain institutional rules.

Section 17 – Interim measures by arbitral tribunals

Section 17 empowers an arbitral tribunal to grant interim measures during arbitral proceedings. These may include preservation of goods, securing the disputed amount, inspection of property and other protective directions.

Under Section 17(2), an order of the arbitral tribunal is enforceable in the same manner as an order of a court.

Section 2(2) – Territorial application

The proviso to Section 2(2) extends certain provisions, including Section 9, to international commercial arbitrations seated outside India, subject to the statutory conditions and exclusions.

International legal framework

The UNCITRAL Model Law on International Commercial Arbitration provides an important international framework for interim measures.

Article 17: Recognises the power of arbitral tribunals to grant interim measures.

Article 17A: Establishes conditions for granting interim measures, including potential harm and proportionality.

Article 17B: Provides for preliminary orders in certain circumstances.

Article 17H: Addresses recognition and enforcement of interim measures.

Article 17I: Provides grounds for refusing recognition or enforcement.

Institutional arbitration rules also provide similar powers. For example, the ICC Arbitration Rules, SIAC Rules and LCIA Rules contain provisions concerning interim relief and emergency arbitrators.

Important case laws

1. Sundaram Finance Ltd. v. NEPC India Ltd. (1999)

The Supreme Court held that a court may grant interim protection under Section 9 even before arbitral proceedings formally commence, provided the applicant demonstrates an intention to take the dispute to arbitration. The judgment established the importance of Section 9 in protecting parties before arbitration begins.

2. Firm Ashok Traders v. Gurumukh Das Saluja (2004)

The Supreme Court clarified that Section 9 provides an interim protective remedy connected with arbitration. It emphasised that a person seeking relief must be a party to an arbitration agreement and that the court's jurisdiction is intended to support arbitration rather than replace it.

3. Arcelor Mittal Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd. (2021)

The Supreme Court examined the relationship between Sections 9 and 17 of the Arbitration and Conciliation Act. It clarified the circumstances in which courts may entertain Section 9 applications after constitution of the arbitral tribunal. The judgment emphasised the importance of the tribunal's ability to grant effective interim protection.

4. Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. (2021)

The Supreme Court recognised the enforceability of an emergency arbitrator's award under the relevant framework of the Arbitration and Conciliation Act, particularly Section 17. The judgment is significant because it strengthened the role of emergency arbitration in providing urgent interim relief in India.

5. Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd. (2007)

The Supreme Court held that the principles governing temporary injunctions under the Code of Civil Procedure are relevant when courts consider interim relief under Section 9. The court must consider factors such as prima facie case, balance of convenience and irreparable injury.

Conditions for granting interim measures

Interim relief is not granted automatically. Courts and arbitral tribunals generally examine the following factors:

Whether the applicant has a prima facie case.

Whether there is a genuine risk of irreparable harm.

Whether the balance of convenience favours granting protection.

Whether the requested measure is necessary and proportionate.

Whether the measure would unfairly prejudice the opposing party.

In international arbitration, the tribunal must also consider the applicable arbitration agreement, institutional rules and relevant national law.

Challenges in international arbitration

Interim measures create several practical and legal difficulties. Different countries may apply different standards for granting injunctions and asset-freezing orders. An order issued by an arbitral tribunal may also require recognition or enforcement by a national court.

Other difficulties include jurisdictional conflicts, emergency relief procedures, confidentiality concerns and the possibility that a party may move assets across national borders. Consequently, effective cooperation between arbitral tribunals and national courts is essential.

Conclusion

Interim measures are an essential part of international arbitration because they protect parties against immediate harm and preserve the effectiveness of final arbitral awards. The Arbitration and Conciliation Act, 1996, particularly Sections 9 and 17, provides an important framework in India. International instruments such as the UNCITRAL Model Law and institutional arbitration rules further strengthen interim protection. Judicial decisions have also clarified the relationship between court intervention and arbitral tribunal authority, promoting effective and reliable international dispute resolution.