15 July 2024 Arbitration Law >> Business & Commercial Law  

In a recent judicial decision under the Arbitration and Conciliation Act, 1996 between Welspun Enterprises Ltd vs Kasthuri Infra Projects Pvt. Ltd., the High Court has underscored the pivotal role of Arbitral Tribunals once constituted, particularly in matters concerning interim relief during ongoing arbitration proceedings.

The case stemmed from a contractual dispute related to a construction and procurement agreement, where the petitioner alleged substantial breaches by the respondent. Seeking damages and various injunctions, the petitioner initially approached the Court for interim measures.

However, crucially, during the pendency of these proceedings, a three-member Arbitral Tribunal had been established and was actively engaged with the case, having received all relevant pleadings. This prompted the Court to deliberate on whether it should continue handling the interim relief application or defer to the Arbitral Tribunal.

Citing legal precedents, including the principles articulated in Arcelor Mittal Nippon Steel India Ltd v. Essar Bulk Terminal Ltd, the Court emphasized that once an Arbitral Tribunal assumes jurisdiction over a dispute, the Court's involvement in interim measures should be minimal unless circumstances dictate otherwise. The rationale behind this approach lies in avoiding potential interference with the Tribunal's proceedings and respecting the specialized expertise of arbitrators in resolving disputes efficiently.

Consequently, the Court decided not to entertain the petitioner's application for interim relief but instead directed the Arbitral Tribunal to consider the matter under Section 17 of the 1996 Act. This section pertains to interim measures that the Tribunal can grant during the arbitration process, ensuring expeditious resolution of disputes without unnecessary delays caused by parallel judicial proceedings.

Furthermore, the Court acknowledged the urgency expressed by the parties, especially regarding certain intervention applications related to property rights and financial obligations. It urged the Arbitral Tribunal to handle these matters promptly, recognizing the practical implications for all involved parties, including a micro-industry respondent facing financial challenges.

In conclusion, the decision highlights a judicial commitment to uphold the efficiency and autonomy of Arbitral Tribunals once constituted under the Arbitration and Conciliation Act. By deferring to the Tribunal's jurisdiction for interim relief, the Court not only promotes the principles of arbitration but also reinforces the legislative intent behind providing an alternative dispute resolution mechanism that is both effective and responsive to the complexities of modern commercial disputes.