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14 September 2021, Tuesday

3 years ago

SIAC’s Emergency Arbitrator order in India-seated arbitration is enforceable in India under Section 17 (2) ACA (Supreme Court of India)

06 August 2021 | Amazon.com NV Investment Holdings LLC v. Future Retail Limited and others | Civil Appeal Nos. 4492-4493 and connected matters | RF Nariman & BR Gavai JJ | 2021 SCC OnLine SC 557

We have covered this case in an Update here.

Amazon and the future group are arbitrating their widely reported disputes (explained in another Update here) under the SIAC Rules. On Amazon’s application, SIAC appointed an Emergency Arbitrator, which on 25 October 2020, passed some injunctive orders against the Future group until an order by the arbitral tribunal when constituted.

Two sets of proceedings arose from this. The first was an anti-arbitration suit by Future, pending before an appellate bench of the Delhi High Court (on Amazon’s appeal from the judgment of Mukta Gupta J).

Relevant for this Highlight is the second set. Amazon filed an application in the Delhi High Court under Section 17 ACA read with Order XXXIX Rule 2A, CPC to “enforce” the Emergency Arbitrator’s order. This means that Amazon filed that petition seeking orders identical to that passed by the Emergency Arbitrator and simultaneously praying to punish the respondents for violating the Emergency Arbitrator’s order. A single judge of the Delhi High Court (JR Midha J) first made an order of status quo, followed by a detailed order. Successive appeals were filed by Future in which a 2-judge bench stayed both orders. As Future would later say, both appeals were filed under Order XLIII, Rule 1(r) CPC.

Now, Amazon challenged the stay orders in the Supreme Court in special leave petitions.

Two questions arose: (i) whether Emergency Arbitrator’s order under SIAC Rules is an order within the contemplation of the ACA and Section 17(1) ACA, and (ii) was the appeal maintainable?

On the first question, the court held that Emergency Arbitrator’s order under the SIAC Rules is valid and enforceable in India under the ACA. Given the facts of the case and the arguments advanced, the court gave several reasons to reach this conclusion. At least thirteen can be easily gleaned:

  1. A conjoint reading of specific provisions of the ACA [paras 31-34].
  2. No express or implied bar in the ACA [para 35].
  3. Party autonomy, which is a pillar of the ACA [para 36-42].
  4. The meaning of “arbitral tribunal” depends on the context [paras 43-47]. So, in this context, it would not simply mean an arbitral tribunal constituted to give interim orders, interim and final awards.
  5. No inconsistency in SIAC Rules and the ACA [paras 48-49].
  6. The parties agreement adopted SIAC rules as a whole and did not exclude the emergency arbitration provisions [paras 50-52].
  7. Merely because the Parliament did not adopt the Law Commissions recommendation to have a specific provision for emergency arbitrators, it does not matter [para 53].
  8. The BN Srikrishna Committee Report recognised that it is possible to interpret Section 17 ACA to include
  9. emergency arbitrator’s orders [paras 55-56].
  10. The interpretation in favour furthers the objective of decongesting the clogged court system [para 57-62].
  11. The Future group cannot resile from its agreement and participation in the emergency proceedings [para 63].
  12. It is wholly incorrect that the Emergency Arbitrator under the SIAC Rules is not an independent judicial body like an arbitral tribunal [para 64]
  13. It is also incorrect that the ACA is an ouster statute, and there was no room for interpreting anything under the ACA as implied. The ACA is a complete break from the past. It is not an ouster statute but favours the remedy of arbitration to de-clog civil courts [para 65].
  14. There is no stamp of invalidity on the forehead of any order [paras 66-67].

On the second question, Amazon contended that Future’s appeals (before the 2-judge bench of the High Court) were not maintainable. Future’s essential point in defence was that the orders made in enforcement proceedings are outside the ACA and instead are under the CPC. Therefore, in enforcement proceedings--both under Section 17(2) ACA and under Section 36(1) ACA--appeals could be filed under the CPC. [see paras 25, 29-30, and 69 onwards]

The court rejected Future’s defence and held that the appeals were not maintainable.

See our Update on the judgment here.

Access the judgment here.

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Categories: Adhunik Steels | Appealable Orders | Arbitral Tribunal | BALCO | Commencement of Arbitral Proceedings | Emergency Arbitration | Emergency Arbitrator | Emergency Award | Enforcement | Enforcement of Emergency Award | Enforcement of Interim Order | Enforcement Under Section 17 ACA | Enforcement Under Section 9 ACA | Interim Measures by Court | Interim Measures Ordered by Arbitral Tribunal | Kandla Export | Object of ACA | Order XLIII CPC | Order XXXIX CPC | Order XXXIX Rule 2A CPC | Party Autonomy | Section 17 ACA | Section 2 (1) (a) | Section 2 (6) ACA | Section 2 (8) ACA | Section 21 ACA | Section 36 ACA | Section 37 ACA | Section 9 ACA | Section 94 CPC | SIAC | SIAC Rules

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