Section 9 of the Indian Arbitration and Conciliation Act 1996 (1996 Act) empowers the court to grant interim measures before or during the arbitral proceedings or at any time after the making of the arbitral award but before the award is enforced.

Part I of the 1996 Act deals with domestic arbitration and section 2(2) provides that Part I of the 1996 Act shall apply where the place of arbitration is in India.

Article 23 of the International Chamber of Commerce Rules 1998 (ICC Rules) permits the parties to the arbitration agreement to apply to a competent judicial authority for interim and conservatory measures.

An investment agreement (agreement) was entered into between Aitreya Limited, a company incorporated in the British Virgin Islands (petitioner) and Energy Innovations Limited (EIL), a company incorporated in Dubai, with an understanding that the petitioner would invest certain amounts in EIL which would be further re-invested by EIL in Dans Energy Private Limited & Others, a company incorporated in India (respondent). The investment was to be done in two tranches pursuant to which the petitioner would be entitled to a 50% stake in the respondent indirectly through investment in EIL. The agreement provided that the disputes would be resolved by arbitration in Singapore in accordance with the ICC Rules and that the agreement would be governed by the English law. Moreover, the agreement also provided for an injunctive relief clause whereby the parties were empowered to approach any court of competent jurisdiction at any time for suitable interim relief.

Certain disputes arose between the parties with regard to the second tranche and therefore the petitioner demanded the repayment of the first tranche investment already made by the petitioner. The petitioner, fearing that EIL and the respondent would dissipate their assets to defeat the petitioner's claim, invoked the arbitration clause and filed a petition under section 9 of the 1996 Act in the Delhi High Court seeking an injunction against EIL and the respondent restraining them from dissipating any of their assets.

The Delhi High Court held that it jurisdiction to entertain the petition under section 9, as the parties had neither expressly nor impliedly excluded Part I of the Act. For this purpose, the court relied on the Supreme Court of India's decision in Bhatia International Ltd v Bulk Trading SA and another (2002) 4 SCC 105 (Bhatia International), in which the Supreme Court held that Part I of the 1996 Act applies even when the seat of arbitration is outside India, unless expressly excluded. The court was persuaded to rely on Bhatia International as the ICC Rules applied in that case as well. Additionally, the court observed that both Article 23 of the ICC Rules and the injunctive relief clause in the agreement between the parties empowered the parties to seek interim relief from any court of competent jurisdiction.

As far as implied exclusion of Part I is concerned, the court distinguished the Supreme Court's decisions in Videocon Industries Limited v Union of India (2011) 6 SCC 161 (Videocon Industries) and Yograj Infrastructure Limited v Ssang Yong Engineering and Construction Company Limited (Civil Appeal No. 7562 of 2011) (Yograj Infrastructure), concluding that there was no implied exclusion of Part I in the present case as the agreement did not provide for a law governing the arbitration. The court observed that in Videocon Industries, Part I was impliedly excluded as the parties had agreed to:

Likewise, in Yograj Infrastructure, there was an implied exclusion of Part I, as by making express reference to the SIAC Rules, the arbitration was to be governed by the Singapore International Arbitration Act 2002 (see Legal updates, Indian Supreme Court adopts a pro-arbitration approach and Yograj Infrastructure: Reinforcing India's position as an arbitration-friendly jurisdiction. Therefore, the court applied Part I of the Act and granted interim relief to the petitioner.

Surprisingly, in this decision, the court did not refer to the Supreme Court of India's decision in Dozco India P. Ltd v Doosan Infracore Co. Ltd (Arbitration Petition no. 5 of 2008, decided on 8th October 2010 by the Delhi High Court), where Part I was not applied even though the parties had chosen the ICC Rules, as there was no express law governing the arbitration, just as in the present case. If the court had analysed that decision, it would have reached the opposite decision in this case.

Also, while applying Part I, although the court successfully distinguished Videocon Industries and Yograj Infrastructure, the court did not apply the ratio of the Gujarat High Court's decision in Hardy Oil and Gas Ltd v Hindustan Oil Exploration Co. Ltd. (2006) 1 GLR 658. The court was of the opinion that the ratio of Bhatia International was not noticed in Hardy Oil, whereas it should have been, as the LCIA Rules (which applied in Hardy Oil) also contained a provision for interim relief in the same way that Article 23 of the ICC Rules did. However, the court did not take into account that in Hardy Oil, Part I was not applied because the agreement between the parties had specifically provided for a foreign law governing the arbitration, unlike the present case which did not provide for a law governing the arbitration.

Given that in the recent past, Indian courts have successfully attempted to minimise their intervention in arbitration and that they have by and large taken a pro-arbitration stance, this decision to an extent would have an adverse effect on the perception of India being an arbitration-friendly jurisdiction.