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2016 (10) TMI 1353 - HC - Indian LawsEffect of depriving the Petitioners and their representatives of the exercise of their rights to have an absolute say on the hiring and dismissal of employees of the Society - seeking direction to Respondents through their directors, officers, agents, representatives and employees to cease and desist from interfering with any aspect of the hiring and dismissal rights of the Petitioners - payment of salaries to Dr. C.S. Sharma and/or take necessary steps to effect prompt payments of salaries to any other employees hired by the Society - seeking restraint on Respondents No. 1 and 2 including through their affiliates, related parties, directors, officers, agents, representatives and employees from taking any steps whatsoever in contravention of clause 3.1.2 of the Share Purchase Agreement. Interpretation of statute - Section 26 of the Amendment Act - Whether the provisions of the Amendment Act are applicable to the present proceedings? - HELD THAT - Section 26 expressly provides that nothing in the Amendment Act would apply to pending arbitral proceedings. The proposal that the Amendment Act shall apply only to fresh arbitrations was accepted as is plainly evident from the language of the latter part of Section 26 of the Amendment Act. No. specific provision was enacted with regard to the applicability of the amendment to fresh applications . However, it was enacted that the Amendment Act would come into force from 23.10.2015 and therefore would be plainly applicable to the proceedings instituted after the said date. Whether by virtue of the proviso introduced in Section 2(2) of the Act, recourse to Section 9 of the Act is available in relation to the arbitral proceedings? - HELD THAT - In the present case, there is no dispute as to the law governing the arbitration. Clause 15.1 of the Agreement expressly provides that the laws as applicable in Singapore will apply to the entire contract. Further the seat of the arbitration is also in Singapore. The petitioners had also applied under Section 12(6) of the International Arbitration Act, (IAA) - the law as applicable to the International Arbitration in Singapore - for the judgment in terms of the order passed by the Arbitral tribunal. Whether an agreement between the parties that a foreign law would be applicable to the arbitration, implicitly excludes the applicability of Section 9 of the Act? - HELD THAT - The very purpose of amending Section 2(2) of the Act was to enable a party to approach the courts in India for interim relief in respect of the arbitral proceedings held or to be held outside India - The Article 17-J of the Model Law specifically provides that the Court shall have the same powers for issuing interim measures in relation to the arbitral proceedings irrespective of the seat of such arbitral proceedings. In terms of the UNCITRAL Model Law, arbitral proceedings are governed by the law as applicable at the seat of the arbitration; nonetheless, it would be open for the Courts to issue interim orders even in respect of the arbitral proceedings that are held outside the State. The object of amending Section 2(2) of the Act is inter alia to incorporate such provision in the Act. The SIAC Rules are clearly in conformity with the UNCITRAL Model Law and permit the parties to approach the Court for interim relief. As pointed out earlier, UNCITRAL Model Law expressly provides for courts to grant interim orders in aid to proceedings held outside the State. And, the proviso to Section 2(2) of the Act also enables a party to have recourse to Section 9 of the Act notwithstanding that the seat of arbitration is outside India. Thus, the inescapable conclusion is that since the parties had agreed that the arbitration be conducted as per SIAC Rules, they had impliedly agreed that it would not be incompatible for them to approach the Courts for interim relief. This would also include the Courts other than Singapore. It is relevant to mention that IAA is based on UNCITRAL Model Law and SIAC Rules are also complimentary to IAA/UNCITRAL Model law - the contention that the parties by agreeing that the proper law applicable to arbitration would be the law in Singapore have excluded the applicability of Section 9 of the Act. Whether the petitioner can approach this Court for an interim relief considering that it has already approached the Arbitral Tribunal in Singapore and thereafter, also obtained a judgment in terms of the interim order from the Singapore High Court? - HELD THAT - It is relevant to mention that Article 17H of the UNCITRAL Model Law contains express provisions for enforcement of interim measures. However the Act does not contain any provision pari materia to Article 17H for enforcement of interim orders granted by an Arbitral Tribunal outside the India. Section 17 of the Act is clearly not applicable in respect of arbitral proceedings held outside India - the emergency award passed by the Arbitral Tribunal cannot be enforced under the Act and the only method for enforcing the same would be for the petitioner to file a suit. A party seeking interim measures cannot be precluded from doing so only for the reason that it had obtained a similar order from an arbitral tribunal. Needless to state that the question whether the interim orders should be granted under section 9 of the Act or not would have to be considered by the Courts independent of the orders passed by the arbitral tribunal. Recourse to Section 9 of the Act is not available for the purpose of enforcing the orders of the arbitral tribunal; but that does not mean that the Court cannot independently apply its mind and grant interim relief in cases where it is warranted - It is relevant to note that the provisions under Article 17 I (2) of the Model Law, the court enforcing an interim order passed by an Arbitral Tribunal in prescribed form undertakes a review of the substance of interim measure the Model Law. To that extent, a Court while examining a similar relief under Section 9 of the Act would be unfettered by the findings or the view of the Arbitral Tribunal. The present petition is maintainable.
Issues Involved:
1. Maintainability of the petition under Section 9 of the Arbitration and Conciliation Act, 1996. 2. Applicability of the Arbitration and Conciliation (Amendment) Act, 2015. 3. Interpretation of Section 26 of the Amendment Act. 4. Whether Section 9 of the Act applies to international commercial arbitration with a seat outside India. 5. Whether the parties have impliedly excluded the applicability of Section 9 of the Act. 6. Whether the petitioner can approach the court for interim relief after obtaining an emergency award from the arbitral tribunal. Detailed Analysis: 1. Maintainability of the Petition under Section 9 of the Arbitration and Conciliation Act, 1996: The petitioners filed a petition under Section 9 of the Act for interim reliefs related to the Share Purchase Agreement. The respondents challenged the maintainability of the petition on the grounds that the arbitration was seated in Singapore, and hence Part I of the Act, including Section 9, was inapplicable. 2. Applicability of the Arbitration and Conciliation (Amendment) Act, 2015: The respondents argued that the Amendment Act was inapplicable as the arbitration proceedings commenced before the Amendment Act came into force on 23.10.2015. The court examined Section 26 of the Amendment Act, which states that the Act shall not apply to arbitral proceedings commenced before the Amendment Act unless the parties agree otherwise. 3. Interpretation of Section 26 of the Amendment Act: The court interpreted Section 26, noting that it is in two parts: the first part excludes the applicability of the Amendment Act to arbitral proceedings commenced before 23.10.2015, and the second part applies the Amendment Act to arbitral proceedings commenced on or after 23.10.2015. The court concluded that Section 26 does not cover proceedings in courts related to arbitral proceedings commenced before the Amendment Act. 4. Whether Section 9 of the Act Applies to International Commercial Arbitration with a Seat Outside India: The court noted that the Amendment Act introduced a proviso to Section 2(2) of the Act, making Sections 9, 27, 37(1)(a), and 37(3) applicable to international commercial arbitration even if the seat of arbitration is outside India, provided there is no agreement to the contrary. 5. Whether the Parties Have Impliedly Excluded the Applicability of Section 9 of the Act: The court examined the Dispute Resolution Clause of the agreement, which stated that the agreement would be governed by the laws of Singapore and arbitration would be conducted under the SIAC Rules. The court noted that the SIAC Rules allow parties to seek interim relief from courts, implying that seeking interim relief from courts is not incompatible with the arbitration proceedings. Thus, the court concluded that the parties had not impliedly excluded the applicability of Section 9 of the Act. 6. Whether the Petitioner Can Approach the Court for Interim Relief After Obtaining an Emergency Award from the Arbitral Tribunal: The court observed that the Act does not contain provisions for enforcing interim orders granted by an arbitral tribunal outside India. Therefore, the emergency award passed by the arbitral tribunal cannot be enforced under the Act, and the petitioner would have to file a suit for enforcement. However, the court held that a party seeking interim measures cannot be precluded from doing so only because it had obtained a similar order from the arbitral tribunal. The court can independently apply its mind and grant interim relief if warranted. Conclusion: The court concluded that the present petition under Section 9 of the Act is maintainable and should be considered on its merits. The court emphasized that the Amendment Act applies to proceedings instituted in courts after 23.10.2015, and the parties had not excluded the applicability of Section 9 by agreeing to the SIAC Rules.
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