Section 17 of the Arbitration and Conciliation Act, 1996: Interim Measures, Case Laws, and Amendments

Introduction to Section 17 of the Arbitration and Conciliation Act, 1996

Section 17 of the Arbitration and Conciliation Act, 1996, allows the arbitral tribunal to order any party to take interim measures of protection as it may consider necessary in respect of the subject-matter of the dispute. The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section (1).

Key Case Laws Related to Section 17 of the Arbitration and Conciliation Act, 1996

Here are some important case laws related to Section 17 of the Arbitration and Conciliation Act, 1996:

1. Srei Infrastructure Finance Ltd. v. Tuff Drilling Pvt. Ltd. (2018): In this case, the Supreme Court of India held that there may be some leeway provided to the parties in the Arbitration and Conciliation Act, 1996 to select the arbitrator, however, the functioning of an arbitral tribunal always remains in strict adherence to the Act.
2. Sundaram Finance Ltd vs P.Sakthivel (2018): The Sole Arbitrator passed an interim order dated 26.07.2017 under Section 17 of the Arbitration and Conciliation Act, 1996, attaching the property of the respondents as they failed to furnish security as ordered by the Arbitral Tribunal on 31.05.2017.
3. Excel Metal Processors Private Limited, Arbitration Petition No. 619 of 2017: This case held that a perusal of Section 17 (1) (ii) clearly indicates that though such interim measures under Section 17 of the Arbitration Act can be applied only by a party to the arbitral tribunal and more particularly specified in Section 17 (1) (ii) (a) to (e), such reliefs may in some of the cases affect even third parties.

Interim Measures by the Arbitral Tribunal

The interim measures that can be taken by the arbitral tribunal include:

• Appointment of a guardian
• Securing the amount of dispute in the arbitration
• Preservation, interim custody or sale of any goods or property which are the subject matter of the arbitration agreement.

These measures are enforceable in the same way as if it had been an order of the court, which means that it can be enforced by the Civil Procedure Code, 1908.

Appeal against Interim Orders

Under the Arbitration and Conciliation Act, 1996, an appeal against an interim order can be made to a suitable court as per Section 37(1)(b) of the Act.

Amendments to Section 17 of the Arbitration through the 2015 Amendment Act

The 2015 Amendment Act brought significant changes to Section 17 of the Arbitration and Conciliation Act, 1996. Here are the key amendments:

• The entire Section 17 was substituted, which made the powers of the tribunal to pass interim orders equivalent to those of civil courts in Section 9.
• The powers are better well-defined now and can be enforced by their own independent force.
• The amended Section 17 specified the types of reliefs which a party could seek, inter alia, appointment of a guardian, securing the amount of dispute in the arbitration, preservation, interim custody or sale of any goods or property which are the subject matter of the arbitration agreement.
• The objective of amending Section 17 of the Act was to empower the tribunal with the same powers as a civil court under Section 9 of the Act in relation to the grant of interim measures.
• The arbitral tribunal was given the same powers as that of a Civil Court under the CPC in relation to grant of interim injunctions.

Conclusion

These amendments aimed to reduce the role of Courts in granting interim relief and reform provisions regarding the ‘independence and impartiality’ of arbitrators. The changes brought about by the 2015 Amendment Act have significantly impacted the arbitration landscape in India, making the process more efficient and effective.