Arcelor Mittal Nippon Steel India Ltd v. Essar Bulk Terminal Ltd

1. ArcelorMittal Nippon Steel India Ltd v. Essar Bulk Terminal Ltd Maintaining the balance of power by allowing interim relief cases to be heard by the court following the establishment of an arbitral tribunal Indian pro-arbitration emphasising the importance of minimal judicial involvement in arbitral proceedings or decisions. The Supreme Court of India recently clarified the scope of the courts' power to "entertain" applications for interim relief when the arbitral tribunal has been constituted during the pendency of parties' applications for interim relief before ArcelorMittal Nippon Steel India Ltd v Essar Bulk Terminal Ltd. courts have developed in recent years, a Background 一 posture ArcelorMittal Nippon Steel India Limited (Appellant) and Essar Limited (Respondent) engaged into a cargo handling arrangement (Agreement). All issues arising out of the Agreement were to be resolved in line with the Act's requirements, according to Article 15 of the Agreement. Following that, some disagreements occurred between the parties, prompting the parties arbitration clause Meanwhile, on 15 January 2021 and 16 March 2021, Arcelor and Essar sought interim relief from the Commercial Court in Surat, Gujarat, under Section 9 of the Act (Interim Relief Applications). The Interim Relief Applications were heard by the Commercial Court, which adjourned the case until June 7, 2021. (Order). Bulk Terminal at Hazira Port and adjudicate the court in to the activate Agreement. the in The Supreme Court ruled that once an arbitral tribunal has been established, the court cannot entertain, consider, or decide on an application for interim relief under Section 9 of the (Indian) Arbitration and Conciliation Act, 1996 (Act), unless the remedy under Section 17 of the Act has been rendered ineffective. circumstances, the court may adjudicate the Section 9 application if the date of the Section 9 application before the court precedes the formation of the arbitral tribunal. The following article gives a short overview of the Supreme Court's decision. In certain While the decision was pending, the Gujarat High Court established a three-member arbitral panel to address differences. Arcelor then filed an interim application, requesting that the parties' Interim Relief Applications be sent to the newly formed arbitral the parties' panel. The 01 | October 2021 | Kashyap Partners & Associates LLP

2. Commercial Court, however, rejected the stated interim application in a decision dated July 16, 2021. Arcelor filed a lawsuit in Gujarat's High Court challenging this. The High Court, on the other hand, dismissed the appeal, holding that the Commercial Court has the authority to examine whether the remedy under Section 17 of the Act is ineffective and to directions under Section 9 of the Act. Arcelor appealed the High Court's decision to the Supreme Court, which was resolved in the current case under debate. Court determines that circumstances exist that render the remedy afforded under section 17 ineffective.” Arguments 一 Due to Section 9(3) of the Act, Arcelor contended that after the arbitral panel has been established, the Commercial Court cannot continue to hear the Interim Relief Applications. Section 9(3) is a negative Kompetenz-Kompetenz provision that limits the court's involvement once the arbitral tribunal has been established. It was claimed that the phrase "entertain" as used in Section 9(3) of the Act meant not just admitting for consideration, but adjudication procedure until a decision on the merits was reached. As a result, Arcelor contended that, even if the Order was reserved, the Commercial Court's actions were inconsistent with Section 9(3) of the Act, because the Commercial Court was hearing the Interim Relief Applications while the arbitral tribunal was still in operation. make appropriate Issues 一 The Supreme Court has posed two issues: also the whole 1. If so, what is the real meaning and intent of the word "entertain" in Section 9(3) of the Act? 2. Whether, once an arbitral tribunal has been established, the court must evaluate the efficacy of the remedy under Section 17 before making an order under Section 9(1) of the Act? Section 9(3) of the Act would not be used, according to Essar, because the Interim Relief Applications were fully heard on the merits, entertained, decisions on June 7, 2021, prior to the formation of the Arbitral Tribunal on July 9, 2021. According to Essar, the phrase "entertain" means "take into account" or Because interprets Section 9(3) of the Act, it is reprinted here for your convenience: the Supreme Court's ruling and reserved for “(3) The Court must not hear an application under sub-section (1) once the arbitral tribunal has been established, unless the 02 | October 2021 | Kashyap Partners & Associates LLP

3. "take into consideration in order to deal with." It was further contended that Section 9(3) of the Act was neither non-obstante nor an ouster provision, rendering the courts coram non judice as soon as the Arbitral Tribunal was established. and force an arbitral tribunal to reconsider a subject that has already been reserved for orders under Section 17 of the Act. As a result, the Supreme Court emphasised that the bar of Section 9(3) of the Act would not apply once an interim relief application had been received and considered, as in the current instance, where the hearing had been completed and judgement reserved. Finally, Essar claimed that the parties had spent a significant amount of court time, money, and energy agitating the Interim Relief Applications, and that relegating the Interim Relief Applications to the arbitral tribunal would defeat arbitration. had been Concerning Issue (ii), the Supreme Court concluded that where an application has already been brought up for consideration and is in the process of being examined or has already been considered, the question of whether or not the remedy under Section 17 is effective does not arise. Only when the application is being entertained and/or taken up for consideration by the arbitral tribunal is it necessary to undertake the exercise. the purpose of The Apex Court 一 In response to Issue I the Supreme Court concluded that the term "entertain" in Section 9(3) of the Act implies "to examine" the problems posed by applying one's intellect. When a case is taken up for consideration by the court, it is referred to as a "encounter." The deliberation process might continue until a decision is reached. Thus, under Section 9(3), after the arbitral tribunal has been established and has custody of the parties' dispute, the court cannot hear an application under Section 9 of the Act unless the remedy under Section 17 is ineffective. In the current instance, the Supreme Court concluded that because the Commercial Court had already heard and reviewed the application under Section 9 of the Act, it was unnecessary for the Commercial Court to assess the efficacy of relief under Section 17 of the Act. Conclusion 一 In this instance, however, the Supreme Court agreed with Essar that the object of Section 9(3) cannot be to turn back the clock Finally, the Supreme Court has confirmed that an arbitral tribunal can be given partial and limited priority over courts where the 03 | October 2021 | Kashyap Partners & Associates LLP

4. legislation permits it. With this judgement, the Apex Court has delicately balanced the arbitral procedure in the hands of both courts and arbitral tribunals. application has been submitted but has yet to be reviewed by the court, and an arbitral tribunal has been meanwhile, the courts shall not take up the interim relief case because of the bar imposed by Section 9 (3) of the Act. Regardless, the Supreme Court concluded that even if an application under Section 9 had been entertained before the creation of the tribunal, the court maintains authority to instruct the parties to approach the arbitral tribunal. If required, while making such reference, it may grant a limited order of interim protection, particularly when there has been a considerable interval between the hearings such that a party’s application needs to virtually be considered afresh, or the hearing has just begun and is expected to take a lot of time established in the Section 9(1) establishes distinct phases at which parties may seek interim relief from the court. This can happen: (a) before the start of arbitral proceedings, (b) during arbitral proceedings, or (c) at any point after an arbitral award is made but before it is enforced under Section 36 of the Act. If the interim relief application has already been considered, that is, if an order has been reserved or a judgement has been issued, it means that a significant amount of time and resources have been invested in it. As a result, sending the matter back to the arbitral tribunal for a new hearing would be impossible. However, if the interim relief Disclaimer: This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. 04 | October 2021 | Kashyap Partners & Associates LLP