Foreign arbitration: Bombay High Court says court delay cannot defeat a Section 9 plea, orders security for admitted $6.69m debt

The Appellant, a Singapore company, claimed that the Respondent owed USD 6,692,500 for goods supplied under six contracts and relied on the Respondent’s communication dated 3 October 2025 as an admission of the outstanding amount.

Before constitution of the arbitral tribunal, the Appellant filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking security for the claim or, alternatively, an injunction against dealings with the Respondent’s Mumbai property.

The tribunal was constituted under the FOSFA Rules while the petition was pending. The Single Judge dismissed the petition; the Appellant appealed under Section 37.

1. Whether the Court could entertain the Section 9 application after the arbitral tribunal was constituted, where the Court found the remedy under Section 17 inefficacious.

2. Whether, on the circumstances presented—including the asserted admission of debt and the availability of assets in India—the Appellant was entitled to interim protection securing its claim.

Section 9(1) of the Arbitration and Conciliation Act, 1996 empowers a court to grant interim measures, including securing the amount in dispute; under Section 9(3), once the tribunal is constituted, the court shall not entertain a Section 9 application unless the remedy under Section 17 is not efficacious.

The Court relied on Arcelor Mittal Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd., which recognises the urgency of interim-relief applications and the court’s discretion in dealing with an application filed before constitution of the tribunal.

It also relied on Norvic Shipping Asia PTE Ltd. v. Zigma International concerning the efficacy-based operation of Section 9(3) and the court’s power to protect the enforceability of an arbitral award.

The Court considered Section 38 of the English Arbitration Act, 1996 and the FOSFA Rules, holding that the tribunal’s powers over property did not provide the relief sought against property outside the subject matter of the arbitration.

It further considered the difficulty of enforcing interim orders from a foreign-seated arbitration in India, referring to Section 13 of the Code of Civil Procedure.

The Court held that the Section 9 petition had been filed before the tribunal was constituted and that the Appellant should not lose the opportunity for consideration merely because the Court heard the matter later.

It found that the powers under Section 38 of the English Arbitration Act, as presented, did not enable the FOSFA tribunal to secure the monetary claim by restraining dealings with property that was not the subject matter of the arbitration.

The Court also found no material establishing that an interim order of the foreign-seated tribunal would be enforceable against the Respondent’s Indian assets, and considered the proposed route through foreign proceedings and subsequent enforcement in India inefficacious.

Given the asserted admission, non-payment, and the Appellant’s prima facie case, the Court concluded that interim protection was warranted.

It directed the Respondent, within two weeks, to furnish a bank guarantee from a nationalised or scheduled commercial bank for USD 6,692,500, together with interest and costs, or the INR equivalent, to the satisfaction of the Prothonotary and Senior Master.

Until compliance, or if the Respondent failed to comply, it was restrained from alienating or creating third-party rights in the specified property until completion of the arbitration proceedings.