Interim Relief On Foreign Arbitral Award Available Even After Enforcement Plea, Until It Becomes Decree: Bombay High Court

The Bombay High Court on Tuesday held that courts can grant interim protective measures under Section 9 of the Arbitration and Conciliation Act to secure the amount awarded under a foreign arbitral award even after a petition seeking its recognition and enforcement has been filed.

Justice Somasekhar Sundaresan made the observation while hearing a petition filed by Osterreichischer Lloyd Seereederei (Cyprus) Ltd against Victore Ships Pvt Ltd seeking interlocutory protection to secure the awarded amount pending enforcement of a foreign arbitral award dated March 23, 2020.

Rejecting the respondent's objection to the maintainability of the petition, the court said the jurisdiction of a Section 9 court continues until the foreign award becomes a decree of an Indian court.

“It is after the stage at which the foreign award becomes a decree of an Indian Court that the words 'but before it is enforced in accordance with section 36' used in Section 9(1) of the Act would present any basis for the Section 9 Court to refrain from entertaining prayers for any protective measures, since at that stage execution proceedings would have commenced, without the need to file a new set of proceedings,” the court observed.

The award directed payment of USD 269,105.08 to the petitioner.

Following the award, the petitioner filed a Commercial Arbitration Petition under Sections 47 and 48 of the Arbitration and Conciliation Act seeking recognition and enforcement of the foreign arbitral award.

Alongside the enforcement proceedings, the petitioner sought interim protection to ensure that the respondent did not dissipate its assets before the award could be enforced.

Victore Ships opposed the plea, arguing that once enforcement proceedings are initiated under the statutory framework governing foreign awards, the court cannot grant separate interim protection.

Rejecting the contention, the court noted that a foreign arbitral award does not automatically become a decree in India and becomes enforceable only after the court is satisfied that it meets the statutory requirements for enforcement.

The court therefore directed the respondent to deposit USD 269,105.08 in its Indian rupee equivalent with the registry of the court within four weeks.

Pending such deposit, the respondent was restrained from selling, disposing, alienating, encumbering, or creating third-party interests in its movable and immovable assets.