Author: Alisha Sarkar, University of Engineering and Management
A) INTRODUCTION
As far as settling commercial conflicts is concerned, arbitration tops the list of preferred methods among the various approaches to conflict resolution. One of the factors leading to an even greater use of arbitration is the freedom granted to the parties to conduct the arbitral proceedings in accordance with the law they have chosen, along with their selected arbitrators and at a location convenient to all, as opposed to the fixations of a court.
Additionally, since the parties have a large degree of discretion in arbitral proceedings, they are also, in most cases, allowed to set the procedural rules for the resolution of disputes. The arbitral proceedings are usually accompanied by some procedural safeguards, such as interlocutory or interim measures of protection for the parties during the course of the proceedings.
There are some individuals who use delay strategies, such as wasting assets, with the aim of either dragging on matters or harming the rights of the other party or parties. A number of stakeholders in a company may even interfere with the functions of the company. If that is the case, it is possible that the final relief granted by the tribunal will become nugatory unless the tribunal or court is capable of granting interim protection of the rights of parties in dispute. Thus, the importance of interim relief between arbitral tribunals and their respective limitations becomes significant.
B) DEFINITION
The ‘scope of interim relief’ refers to measures or orders an arbitral tribunal can issue while the arbitration proceedings are still ongoing, from the commencement of arbitration up until a final award is issued. These measures aim to safeguard the interests of the parties involved while ensuring that the proceedings remain undisturbed.
Interim Relief Can Be Granted To:
- Preserve evidence – Protect specific materials relevant to the dispute from being tampered with or altered.
- Maintain the status quo – Prevent changes that might impede the arbitration proceedings or render the eventual award useless.
- Prevent harm – Offer protection against anticipated physical or monetary losses.
- Ensure enforcement of the award – Safeguard the property of a party in anticipation of the award to ensure it will be enforced.
Interim relief often takes the form of injunctions or orders to preserve the parties’ existing positions, including the restraint of particular actions. The rules of arbitration or the laws of a particular jurisdiction often set out the scope of such interim relief and the manner in which it can be sought. The extent and access to these remedies may vary based on the uniqueness of the arbitration rules and the national legislative structure of the state where the arbitration is conducted. Examples include the UNCITRAL Arbitration Rules, ICC, or other institutional rules.
C) HISTORICAL BACKGROUND
The evolution of the arbitrational process embraces well-deserved reforms in international relations. The causes for such changes rest on the development of arbitration as a means of Alternative Dispute Resolution (ADR), with an increased emphasis on the need for such relief mechanisms during arbitration.
Arbitration has been practiced for more than two millennia, with its earliest proponents being the Greeks and Romans, who employed some form of arbitration. However, during these periods, formally structured arbitration and principles such as the sanctity of impartial arbitration and international treaty law were absent.
During the medieval period in Europe, arbitration was widely used, particularly in commercial disputes concerning trade and merchant affairs. However, interim measures were not a part of these processes. Any form of interim action or stopping measure was put ‘on hold’ by local courts or based on specific contracts between the parties involved.
With the expansion of international commerce in the 19th century, there was an increased demand for arbitration in international disputes, creating the necessity for more efficient and formal relief mechanisms.
D) TYPES OF INTERIM RELIEF
Interim arbitration relief can be either limiting or expansive, depending on the conflict and the individual characteristics or needs of the parties. The purpose of these measures is to be temporary and enable the preservation of rights, maintenance of status quo, or prevention of harm until the final award of arbitration is issued.
1. Injunctive Relief (Interim Injunctions)
An injunction is an order prohibiting a party from taking a specific action or compelling it to perform a specific action. It is broadly divided into two categories:
- Prohibitory Injunction: Orders a party to refrain from certain actions (e.g., stopping activities like continuing a specific business practice, breaching a contract, or committing a wrongful act).
- Mandatory Injunction: Orders a party to perform certain acts (e.g., comply with contractual obligations like returning assets to the rightful owner).
2. Asset-Freezing Orders (Mareva Injunctions)
These orders prevent a litigant from dissipating or concealing assets that could be used to reimburse a future arbitral award. This remedy is particularly used when it is anticipated that a party might relocate or hide assets to avoid execution of a potential award.
3. Specific Performance
This remedy compels a party to undertake an action as per the contractual agreement. If damages are insufficient to rectify the violation, an arbitral tribunal may order specific performance as an interim measure.
4. Security for Costs
In situations where a party may be unable to satisfy the arbitration costs after losing, the tribunal may order the concerned party to provide financial security to cover costs if the claim fails.
5. Orders for Preservation of Evidence
Arbitral tribunals may direct any party to the arbitration to preserve crucial evidence required in adjudication, such as preventing the destruction of documents, securing materials, or capturing photographic evidence.
6. Orders to Maintain the Status Quo
An order prohibiting modifications that could alter the dispute’s legal parameters, ensuring stability during proceedings.
7. Interim Payment Orders
These require one party to make a payment to another during arbitration, particularly in large financial disputes where urgent cash is required.
8. Emergency Arbitrator & Interim Measures Before Tribunal Formation
Many modern arbitration systems provide for the appointment of an Emergency Arbitrator (EA), who can grant interim relief before the tribunal is formally constituted.
9. Suspension of Contractual Performance
Suspending part of a contract’s performance during arbitration to prevent actions that would undermine the contract or arbitration itself.
E) LEGAL PROVISIONS & SPECIFICATIONS
Legal provisions governing interim relief in arbitration include:
- UNCITRAL Model Law (Article 17) – Recognizes the power of the tribunal to grant interim measures.
- New York Convention (1958, Article V) – Supports enforcement of interim relief in line with arbitration agreements.
- Arbitration and Conciliation Act, 1996 (India) – Sections 9 and 17 grant power to courts and tribunals to provide interim relief.
- Federal Arbitration Act (USA) – Allows courts to grant interim relief (Sections 5, 7, 8).
- Institutional Arbitration Rules – ICC, SIAC, LCIA provide procedures for emergency arbitration and interim relief.
F) CONCLUSION
Interim relief plays a crucial role in preserving rights, maintaining the arbitration process, and ensuring effective enforcement of final awards. The recognition of emergency arbitrators, greater judicial oversight, and legal advancements continue to shape the role of interim relief in arbitration proceedings in India.
G) REFERENCES
- Cases Referred:
- Texaco Overseas Petroleum Co. v. Libya (1977)
- National Thermal Power Corporation Ltd. v. Siemens Atkeing (2007)
- Statutes Referred:
- Section 9: Interim Measures by Court
- Section 17: Interim Measures by Arbitral Tribunal
- Section 36: Enforcement of Interim Orders
