Interim Relief Under Arbitration Act Cannot Extend Rights Beyond Parties' Agreement: Bombay High Court

The Bombay High Court recently reiterated that interim protection in arbitration matters is not meant to extend rights beyond what parties have agreed between themselves.

The court made the observation while refusing Oil and Natural Gas Corporation Ltd.'s request to continue a USD 14.82 million bank guarantee furnished by Swiber Offshore Construction Pte. Ltd. The request came after an arbitral tribunal rejected ONGC's liquidated damages claim and directed return of the security.

A single-judge bench of Justice Amit Borkar held that ONGC had failed to establish the existence of such exceptional and compelling circumstances as would justify post-award interim protection.

The Court observed,"The object of Section 9 is to preserve existing securities so that the subject matter of the dispute remains protected pending adjudication. It is not intended to extend existing rights beyond limits agreed upon by the parties."

The dispute arose from a July 2010 contract under which Singapore-based Swiber was engaged to execute offshore works in the Bombay High region. The contract was valued at about USD 148.2 million. It entitled ONGC to recover liquidated damages for delays and required Swiber to furnish a bank guarantee equivalent to 10% of the contract value.

Disputes under the contract were later referred to arbitration. During the proceedings, Swiber furnished and periodically renewed a USD 14.82 million bank guarantee. In September 2025, the arbitral tribunal rejected ONGC's claim for liquidated damages. It directed the return of the guarantee and ordered ONGC to pay Swiber a net amount of USD 4.11 million with interest at 5% per annum.

Seeking continuation of the guarantee, ONGC argued that the award wrongly rejected its claim for about USD 12.48 million in liquidated damages. It contended that expiry of the security would leave it exposed. According to ONGC, the risk was greater because Swiber had been placed into liquidation in Singapore.

Swiber opposed the plea. It relied on consent terms entered into in 2016 under which the parties agreed that the liquidated damages bank guarantee would remain alive only for 120 days after the arbitral award. Swiber argued that ONGC was effectively seeking continuation of a security beyond a period consciously agreed between the parties.

The court found substantial force in that objection. It noted that ONGC had not adequately disclosed the consent arrangement while seeking discretionary relief.

"Where a party seeks continuation of a security beyond the period which it had itself agreed upon in proceedings, failure to disclose that agreement becomes a relevant factor," the court observed.

Justice Borkar noted that the parties had consciously fixed an outer limit for continuation of the guarantee. A direction extending the guarantee beyond that period would effectively enlarge the security arrangement agreed between them.

The court found that the urgency relied upon by ONGC was partly self-created. It noted that ONGC had been aware of the relevant timelines for months before approaching the Court.

"The law certainly protects a diligent litigant. However, where a party allows valuable time to pass and approaches the Court only when the deadline is about to expire, the Court is entitled to consider such conduct while exercising discretionary jurisdiction.". it noted.

Addressing ONGC's concerns about Swiber's liquidation, the Court accepted that recovery could become more difficult if ONGC ultimately succeeded. It nevertheless held that the guarantee had been furnished specifically in connection with the liquidated damages dispute. It was not intended to function as a general security for all claims that ONGC may have against Swiber.

The Court further noted that ONGC's challenge to the arbitral award raised arguable issues. Those issues could be examined in the pending challenge proceedings. However, the Court held that an arguable challenge alone was insufficient to justify post-award protection.

"However, an arguable challenge is not enough. The judgment in Home Care Retail Marts requires something much more. It requires the existence of circumstances that are truly exceptional.", the court observed.

Since the arbitral tribunal had rejected ONGC's liquidated damages claim in its entirety, and the parties had already agreed on the period for which the guarantee would remain alive after the award, the court concluded that the case did not meet the higher threshold required for post-award protection. The petition was consequently dismissed.

For ONGC (Petitioner): Senior Advocate Mr. Zubin Behramkamdin, with Ms. Shreya Gupta, Mr. Abhijeet Sadikale and Ms. Sanjana Kattoor.

For Swiber Offshore Construction Pte. Ltd. (Respondent): Senior Advocate Mr. Venkatesh Dhond, with Ms. Vinodini Srinivasan, Mr. Ganesh Chandru, Mr. Siddhart Agrawal, Mr. Dharmesh S. Jain, Mr. Shashwat Dhyani and Ms. Arpita Tiwari.