Report No. 176
(i) Omission to apply sec. 9 to international arbitrations outside India to be rectified-
We shall first take up the disadvantages so far as omission of section 9 is concerned. In cases of international arbitration where the seat of arbitration is outside India, a serious controversy has arisen in the Indian Courts. These are cases where interim measures could not be granted by Indian courts under Section 9 to an Indian national before commencement of arbitration (or after the award) against property of a foreign party. By the time the Indian party takes steps to move the courts in the country in which the seat of arbitration is located, the property may have been removed or transferred.
Art. 1(2) of the Model Law reads as follows:
"Art. 1(2): The provision of the law, except Articles 8, 9, 35 and 36 apply only if the place of arbitration is in the territory of the State." (Art. 9 of the Model Law corresponds to sec. 9 of the 1996 Act).
This aspect somehow escaped attention, when sec.2(2) was drafted in the 1996 Act. That section confined Part I (including sections 8, 9, 35 and 36) only to arbitrations where the place of arbitration is in India. As stated above, this provision has caused serious prejudice to an aggrieved party in as much as these provisions do not apply to international arbitrations where the place of arbitration is outside India, or where the seat of arbitration is not defined in the arbitration agreement.
Almost all countries which have adopted the UNCITRAL Model apply provisions in their legislation corresponding to Art.8, 9, 35 and 36 to international arbitration held outside their countries. The Delhi High Court, in certain judgments, took the view that sec.2(2) read with sec.2(5) would enable sec.9 to be applied even in cases of international arbitration held outside India (see Dominant Offset pvt. Ltd. vs. Adamovoske Strajirny: 1997(2) Arb.L.R.335 (Del), Suzuki Motors Corporation vs. UOI 1997(2) Arb. L.R. 477 (Del) and in Marriot International Inc. vs. Ansal Hotels 1999(82) DLT 13.
Similar view was taken by the Delhi High Court by a Bench in Olex Forcas Ltd. vs. Skoda Export Co. Ltd. AIR 2000 Delhi 161, referring in sec.2(5). But a contrary view has been taken by another Division Bench of the Delhi High Court in Marriot International Inc. vs. Ansal Hotels 1999(82)DLT 13 and it held that interim measures could be granted in such cases.
The Calcutta High Court has also held in East Coast Shipping Ltd. vs. M.J. Scrap (P) Ltd. 1977(1) Cal HN. 444 that interim measures could be granted in view of the clear language in sec.2(2). A Division Bench in Kaventers Agro Ltd. vs. Seagram of the same High Court (APO 449, 448/97, dated 27.1.98) has also taken the same view. The Supreme Court Judgment in Thyssen Stahlunion GMBH vs. Steel Authority of India Ltd.: 1999(9) SCC 334 did refer to sec.2(2) and sec.2(7) but this aspect did not directly fall for consideration.
There has been an absolute unanimity that this deficiency in sec.2(2) has to be immediately remedied by making sec.9 (and other provisions like sections 8, 35 and 36) applicable to international arbitrations where the place of arbitration is outside India or where the place of arbitration is not specified in the arbitration agreement. In fact, the provision in sec.2(3) of the English Act, 1996 applies sec.9 even to other international arbitrations where no seat of arbitration is referred to in the arbitration agreement.
It also extends the support of sec.43 and 44 of that Act to such arbitration. Section 43 of the English Act deals with 'securing the attendance of witnesses' and is akin to sec. 27 of the Indian Act 1996. Therefore, in sec. 2(2) it can be stated that the provisions of sec. 9 and sec. 27 shall also apply to international arbitrations where the place of arbitration is outside India or where the place of arbitration is not specified in the agreement.