India – Courts Can Continue Adjudication Of Ongoing Application Seeking Interim Reliefs Even Post The Constitution Of An Arbitral Tribunal.

Date: 14 September 2021
 

Summary:
 

In the present case, Arcelor Mittal Nippon Steel India Ltd. (“AMNS”) and Essar Bulk Terminal Ltd. (“Essar”) had entered into an agreement and subsequently due to some disputes arising between them, both sought interim relief under the Arbitration Act before the Commercial Courts in Surat. The Commercial Court heard the applications and reserved it for orders for a future date. While the orders were still reserved before the Commercial Courts, the Gujarat High Court, on an application from AMNS, constituted an arbitral tribunal to resolve the main dispute. AMNS filled an interim application before the Commercial Court praying that the interim relief applications filled by the parties be also referred to the newly appointed arbitral tribunal. However, the Commercial Courts dismissed this application. The Commercial Court’s order was challenged by AMNS before the Gujarat High Court. However, the same was dismissed with the Gujarat High Court holding that the Commercial Court should be permitted to pronounce the order on both the interim relief applications, and consequently AMNS approached the SC challenging the Gujarat High Court’s order.
 

The issues for consideration before the SC was whether the Commercial Court has the power to entertain an application under Arbitration Act once the arbitral tribunal had been constituted. SC held that even after the constitution of an arbitral tribunal, the Commercial Court is not denuded of the power to grant interim relief under the Arbitration Act. SC opined that the expression "entertain" means considering the issues raised by application of mind. The Commercial Court entertains a case when it takes a matter up for consideration. The process of consideration could continue till the pronouncement of judgement. Once an arbitral tribunal is constituted, the Commercial Court cannot take up an application for granting interim reliefs for consideration, unless it can be shown that remedy of interim reliefs from the arbitral tribunal is inefficacious. However, once an application is entertained i.e., it is taken up for consideration by the Commercial Court, and the Commercial Court has applied its mind, then it can certainly proceed to adjudicate the application. SC held that the Gujarat High Court rightly directed the Commercial Court to proceed to complete the adjudication on the interim relief applications.
 

al@acuitylaw.co.in