Foreign arbitral tribunal’s interim remedy held inefficacious in India; Bombay HC orders security for admitted USD 66.9 million claim

Sunfield Global Pte. Ltd., a Singaporean company, entered into six contracts with Liberty Investments Pvt. Ltd. for the supply of 11,500 metric tonnes of oil.

Sunfield claimed that Liberty admitted owing USD 66,92,500 but failed to pay the amount despite repeated assurances, including a communication dated 3 October 2025.

Sunfield filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking either a direction to Liberty to furnish security by way of a bank guarantee for the admitted amount, interest and costs, or an injunction restraining Liberty from alienating or creating third-party rights in its Mumbai property.

The arbitration was seated in England and administered under the FOSFA Rules.

Although the Section 9 petition was filed before constitution of the arbitral tribunal, a three-member FOSFA tribunal was constituted on 17 November 2025 while the petition was pending.

The Single Judge dismissed the Section 9 petition, following which Sunfield preferred the present appeal under Section 37 of the Act.

Whether the High Court could entertain and grant relief under Section 9 when the arbitral tribunal was constituted after the Section 9 petition had been filed but before its adjudication?

Whether the remedy available before the FOSFA arbitral tribunal under Section 17 of the Arbitration and Conciliation Act, the FOSFA Rules and Section 38 of the English Arbitration Act was an efficacious alternative remedy for securing Sunfield’s admitted monetary claim and protecting assets situated in India?

Whether Sunfield had established a sufficient prima facie case, balance of convenience and risk of irreparable prejudice warranting a bank guarantee or injunction under Section 9?

Section 9(1) of the Arbitration and Conciliation Act, 1996 empowers a court to grant interim measures, including measures for securing the amount in dispute, injunctions and other just and convenient protective orders.

Under Section 9(3), once an arbitral tribunal is constituted, the court ordinarily cannot entertain a Section 9 application unless the remedy under Section 17 is not efficacious.

Relying on Arcelor Mittal Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd., the Court held that Section 9(3) does not defeat an application filed before constitution of the tribunal, and that the court may consider whether relief ought to have been granted when the application was filed.

The Court also relied on Norvic Shipping Asia PTE Ltd. v. Zigma International, which held that Section 9 relief is not confined by the strict requirements of Order XXXVIII Rule 5 CPC, and that a strong possibility of diminution or unavailability of assets may justify protection where the award may otherwise become ineffective.

Section 38(4) of the English Arbitration Act was construed as conferring powers concerning preservation, inspection, custody or detention of property forming the subject matter of the proceedings, and not as providing an equivalent remedy for securing a monetary claim against unrelated assets.

The Court distinguished Ashwani Minda v. U-Shin Ltd., where Section 9 relief was refused as a second attempt after failure before the arbitral tribunal.

The Court held that Sunfield had validly approached the Court before constitution of the FOSFA tribunal and could not be deprived of relief merely because the Court decided the petition later.

Liberty’s reliance on Section 9(3) failed because it did not demonstrate that the FOSFA tribunal could grant effective protection against assets situated in India.

Rule 4 of the FOSFA Rules merely referred to interlocutory applications, while Section 38 of the English Arbitration Act principally concerned preservation or inspection of property connected with the proceedings; neither provision clearly enabled the tribunal to direct security for the admitted debt or protect unrelated Indian immovable property.

The Court further considered that an interim foreign order would not itself be executable in India, potentially requiring additional foreign and Indian proceedings and thereby making the remedy inefficacious.

Sunfield’s prima facie case was strengthened by Liberty’s admitted liability and continued non-payment.

Since Liberty had not shown a genuine defence or demonstrated that the claim could otherwise be secured, the Court found that the balance of convenience and risk of irreparable prejudice favoured Sunfield.

Liberty was directed, within two weeks, either to furnish a bank guarantee issued by a nationalised or scheduled commercial bank for USD 66,92,500, together with interest and costs, or the equivalent INR amount, to the satisfaction of the Prothonotary and Senior Master.

Until compliance, Liberty was restrained from alienating or creating third-party rights, title or interest in the subject Mumbai property, with the restraint continuing through completion of the arbitration proceedings.