Uno Minda Limited vs Westport Fuel System Italia Srl on 23 February, 2023

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Delhi High Court - Orders

Uno Minda Limited vs Westport Fuel System Italia Srl on 23 February, 2023

1. On the last occasion one of the issues which stood flagged was whether the Petitioners should be relegated to pursue the remedy of an emergency arbitration in light of the Singapore International Arbitration Centre Rules 2016 [SIAC Rules] which governed. It was in the aforesaid backdrop that Mr. Krishnan, learned senior counsel, had taken time to obtain instructions.

2. Insofar as the aforesaid issue is concerned learned senior counsel has placed for the consideration of the Court the judgments rendered in Raffles Design International India Private Limited & Anr. Vs. Educomp Professional Education Limited & Ors. [2016 SCC OnLine Del 5521] and Shanghai Electric Group Co. Ltd. vs. Reliance Infrastructure Ltd. [2022 SCC OnLine Del 2112]. In Raffles while dealing with the subject of the efficacy of an emergency arbitration under the SIAC Rules the learned Judge had observed as follows:

"98. It is seen that the parties had expressly agreed that the arbitration shall be governed by the SIAC Rules. It is relevant to note that Rule 26.3 of the SIAC Rules, expressly provides that:-

"26.3 A request for interim relief made by a party to a judicial authority prior to the constitution of the Tribunal, or in exceptional circumstances thereafter, is not incompatible with these Rules."

[Rule 30.3 of SIAC Rules, 2016 is similarly worded to Rule 26.3 Signature Not Verified quoted above.] Digitally Signed By:NEHA Signing Date:24.02.2023 18:44:49

99. This is pari materia to Article 9 of the Model Rules. The SIAC Rules must be read as a part of the agreement between the parties and the only conclusion that can be drawn is that the parties had expressly agreed that seeking an interim order from the Courts would not be incompatible with the arbitral proceedings.

100. 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.

101. In the circumstances, 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 cannot be accepted.

102. The only question that now remains to be considered is 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.

103. 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.

104. In the circumstances, 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."

3. The decision in Raffles was again noticed in Shanghai Electric Group Co. Ltd. where too the following pertinent observations were made: -

"78. This brings us to another decision of this Court in Raffles Design (Supra), wherein certain disputes arose between the parties in relation to a Share Purchase Agreement. Petitioner therein invoked the arbitration clause which provided for reference of Signature Not Verified disputes to the Singapore International Arbitration Centre Digitally Signed By:NEHA Signing Date:24.02.2023 18:44:49 ("SIAC"). Thereafter, pursuant to Rule 26.2 of the SIAC Rules, Petitioner sought appointment of an emergency Arbitrator. The Emergency Award was granted in favour of Petitioner therein, who then filed an application before the High Court of Republic at Singapore under Section 12 of the International Arbitration Act, 1994 seeking enforcement of the emergency award. Since Respondents therein acted in contravention of the Petitioner's rights despite the emergency award, a petition under Section 9 of the Arbitration and Conciliation Act, 1996 came to be filed. The Court, while rejecting the contention of the Respondent regarding the applicability of Section 9, observed as under:

"97. The contention that the parties have impliedly agreed to exclude Section 9 of the Act, has to be considered in the above backdrop.

98. It is seen that the parties had expressly agreed that the arbitration shall be governed by the SIAC Rules. It is relevant to note that Rule 26.3 of the SIAC Rules, expressly provides that:-

"26.3 A request for interim relief made by a party to a judicial authority prior to the constitution of the Tribunal, or in exceptional circumstances thereafter, is not incompatible with these Rules."

[Rule 30.3 of SIAC Rules, 2016 is similarly worded to Rule 26.3 quoted above.]

101. In the circumstances, the contention that the parties by agreeing that the proper law applicable to arbitration would be the law in Singapore have excluded the Signature Not Verified applicability of Section 9 of the Act cannot be accepted.

Digitally Signed By:NEHA Signing Date:24.02.2023 18:44:49

[Emphasis Supplied]

79. As can be seen from the extracted portion, although the question qua efficaciousness of the Arbitral Tribunal was not specifically raised in the said judgement; nonetheless, the above- noted observations are germane and reflect the opinion of the Court qua maintainability of Section 9 petition in relation to enforcement of interim orders.

80. From the above discussion and analysis of the caselaw it emerges that the emergency award/ foreign interim orders cannot be enforced directly. In the present case, the arbitration is based on UNCITRAL Law, which permits parties to approach the Courts for interim relief - which means courts other than those of Singapore. SEGCL cannot approach the seat court (in this case, Singapore), as there is no provision for execution of an interim order passed by a foreign court under the Code of Civil Procedure (which contemplates for execution of foreign decrees under Section 13 read with Section 44A). In fact, any meaningful provisional reliefs such as attachment of RELIANCE's assets and properties, including bank guarantees and directions to third-parties could only be granted by a court of competent jurisdiction in India, and not by the Arbitral Tribunal or a foreign court, since there is no provision corresponding to Section 17 for enforcement of interim orders.

81. Accordingly, the Court finds merit in the plea of SEGCL that the remedy before the Arbitral Tribunal is inefficacious. Thus, the Court holds that the remedy to invoke Section 9 of the Act is available to SEGCL, notwithstanding the constitution of the Arbitral Tribunal."

4. Consequently, the Court upholds the right of the Petitioners to pursue the petitions under Section 9 of the Arbitration and Conciliation Act, 1996 [the Act] before this Court especially since as on date the Arbitral Tribunal is yet to be constituted.

Signature Not Verified

5. Although the Respondents had been placed on notice in terms Digitally Signed By:NEHA Signing Date:24.02.2023 18:44:49 of the earlier orders passed, learned counsel appearing on its behalf prays for further time to file a response on the present petitions. Let the response be filed within a period of two weeks from today. The Petitioner would have one week thereafter to file a rejoinder affidavit.

6. Let these matters be called again on 23.03.2023.

YASHWANT VARMA, J FEBRUARY 23, 2023 rsk Signature Not Verified Digitally Signed By:NEHA Signing Date:24.02.2023 18:44:49

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Delhi High Court - Orders