1999 (11) TMI 891 - HC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of Indian courts to grant interim relief in international arbitration.
2. Applicability of the Arbitration and Conciliation Act, 1996 to international arbitration.
3. Petitioner's entitlement to interim relief.

Issue-wise Detailed Analysis:

1. Jurisdiction of Indian courts to grant interim relief in international arbitration:

The petitioner, an Australian company, sought interim relief from the Delhi High Court to restrain the Indian Oil Corporation (respondent No. 2) from making payments to Skoda export (respondent No. 1) under a contract. The petitioner argued that the court has the power to grant such relief under the Arbitration and Conciliation Act, 1996, even if the arbitration is to be conducted outside India. The court examined Section 2(2) of the Act, which states that Part I applies where the place of arbitration is in India, and concluded that this does not exclude international arbitrations. The court also referred to Article 8.5 of the ICC rules, which allows parties to seek interim measures from competent judicial authorities. The court held that it has jurisdiction to grant interim relief to preserve assets or funds during arbitration proceedings.

2. Applicability of the Arbitration and Conciliation Act, 1996 to international arbitration:

The court analyzed various sections of the Arbitration and Conciliation Act, 1996, including Sections 2(3), 2(4), and 2(5), which collectively indicate that Part I of the Act applies to all arbitrations and related proceedings, including international commercial arbitration. The court also referenced the UNCITRAL Model Law and the New York Convention, which the Act is based on, to support its interpretation. The court concluded that the Act's provisions are designed for universal application and that Indian courts have the power to grant interim relief in international arbitration cases.

3. Petitioner's entitlement to interim relief:

The petitioner argued that it had a strong prima facie case and that irreparable harm would be caused if interim relief was not granted. The petitioner presented a report indicating that respondent No. 1's net worth was significantly lower than the claim amount, raising concerns about the respondent's ability to pay. However, the court noted that respondent No. 1 is a solvent company and has not defaulted on its financial commitments. The court also considered the fact that the petitioner obtained an ex-parte interim order without serving a copy to respondent No. 1, which raised concerns about fairness. The court concluded that the petitioner had not provided sufficient material to justify the interim relief and that the balance of convenience was not in favor of the petitioner. Consequently, the court vacated the ex-parte ad interim injunction granted earlier.

Conclusion:

The court held that it has jurisdiction to grant interim relief in international arbitration cases under the Arbitration and Conciliation Act, 1996. However, in this specific case, the petitioner failed to make a strong case for interim relief, and the court vacated the previously granted ex-parte injunction. The court emphasized the importance of exercising discretion cautiously and only in exceptional cases where there is adequate material to support the need for interim relief.