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DAMODARAM SANJIVAYYA NATIONAL LAW

UNIVERSITY
VISAKHAPATNAM

PROJECT ON: UNCITRAL Model Law and Indian Arbitration

Law

SUBMITTED BYKISHORE KUNAL

B .A. LLB (HONS)
6th SEMESTER
201124

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ACKNOWLEDGEMENT
I would like to take this opportunity to thank Mr.Vishnu Kumar for his invaluable support,
guidance and advice. I would also like to thank my friends who have always been there to
support me and the library staffs for working long hours to facilitate me with required
materials going a long way in quenching my thirst for education. Last but not the least, my
parents, who made me able to be here and complete my work.

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RESEARCH METHODOLOGY
Aims and Objectives:
The aim of the project is to present a detailed case study of UNCITRAL Model Law and
Indian Arbitration Law, through decisions, statutes, amendments, suggestions and
different writings and articles.

Scope and Limitations:

Though this is an immense project and pages can be written over the topic but because of
certain restrictions and limitations I was not able to deal with the topic in great detail.

Sources of Data:
The following secondary sources of data have been used in the project1

Articles

Books

Websites

Method of Writing:
The method of writing followed in the course of this research paper is primarily analytical.

Mode of Citation:
The researcher has followed a uniform mode of citation throughout the course of this research
paper.

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Table of Contents

1. Introduction.............................................................................................................05
2. PART I - The UNCITRAL Model Law..................................................................06-09
3. PART II Indian Arbitration law and practice ......................................................10-13
4. Indian Arbitration Law Supreme Court Implements UNCITRAL Model Law...14-16
5. Conclusion.................................................................................................................17
6. Bibliography..............................................................................................................18

Introduction
In recent times, the issue of grant of interim relief by arbitral tribunals has become centre
stage. The 1985 Model Law contemplated grant of interim measures (Article 17) but it

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seemed halfhearted, as it did not contain an enforcement mechanism and nor were any
adverse affects sanctioned in the event of noncompliance. The old Article 17 was essentially
premised on voluntary compliance and therefore (not unsurprisingly) was rarely resorted to.
At the same time, an approach to court (while effective) had deterrents (including the
inconvenience of moving a different forum, perhaps through another legal team). Resort to
courts also carried an inbuilt risk of the court predetermining (or influencing) parties
substantive rights. With this backdrop, in the year 2006 UNCITRAL made extensive
amendments to the Model Law and elaborate provisions now stand incorporated on the
subject. This project presents an analysis of the UNCITRAL amendments to the Model Law
and points out some problem areas. In the second part, the article sets out the Indian law and
practice on the subject.
The paper consists of two parts. In the first part, I comment upon the amendments brought
about in the year 2006 to the UNCITRAL Model Law in relation to interim measures. In the
second part, I discuss the Indian law and practice of grant of interim relief by arbitral
tribunals.

PART I - The UNCITRAL Model Law

The 1985 UNCITRAL Model Law provided for interim measures vide Article 17. The
provision however contained two express conditions: The measure had to be shown to be

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necessary and be "In respect of the subject matter of the dispute". Besides, there were at least
two inherent hurdles in the path. First, one has to await the constitution of the tribunal and
allow for a reasonable opportunity for it to assemble at the seat and for the opposite side to
respond to the request. This essentially ruled out relief in the case of urgency (and more often
than not an application for interim relief cannot brook delay). Secondly, there was no
mechanism to enforce an order of the tribunal.
The 1985 Model Law proceeded on an assumption that the parties would voluntarily accept
the interim order of the tribunal and there would be no need to even contemplate of an
enforcement procedure. On the other hand, if a party felt the need for an enforceable order,
it would not be incompatible for it to approach a court with a request in this regard.
The position was not satisfactory and after an elaborated process, in December, 2006 the
UNCITRAL Model Law stood amended. The old Article 17 stands completely replaced by an
extensive scheme providing inter alia for ex parte orders and for interim measures to be
binding and enforceable.
Article 17 now sets forth the powers of the arbitral tribunal in the widest terms. The earlier
twin conditions have been done away with. The amended Article 17 inter alia empowers the
arbitral tribunal to maintain or restore the status quo; direct a party to refrain from doing
anything which may prejudicially affect the arbitral process; provide a means for preserving
assets for satisfaction of the award, or preserve evidence that may be material for
resolution of the dispute. The tribunal may do so by framing its order in a form of an award
or otherwise as it may deem appropriate1.
Article 17 A provides for the conditions which must be satisfied for grant of an interim
measure. These conditions are universally recognised: balance of convenience; irreparable
harm and a reasonable possibility that the requesting party will succeed on the merits of the
claim2.
Article 17 B is somewhat revolutionary in the realm of arbitration as it introduces the
concept of ex parte ad interim orders (called "preliminary orders"). The scope of such orders
is narrower and is essentially confined to maintaining the status quo. An ex parte order shall
1 http://www.kaplegal.com/statutes/index.html,(last visited at 23 Mar 2014)
2 ibid

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be valid only for 20 days from the date of its issuance (within which time the tribunal may
affirm or modify the order after notice and an opportunity to the opposite side to present its
case). The general condition for ex parte orders is that the tribunal will require the applicant
to provide appropriate security in connection with the same unless the tribunal considers it
unnecessary to do so. An ex parte order shall be binding on the parties but shall not be
enforceable by a court process. Further such an order shall not be in the form of an award3.
Perhaps the most far reaching amendment to the Model Law is vide Article 17 H and I. This
provides for recognition and enforcement of an interim measure ordered by the tribunal (i.e.
other than an ex parte order). Article 17 H inter alia states that an interim measure shall be
recognized as binding, unless otherwise stated by the tribunal. It may be enforced upon
application to a competent court irrespective of the country in which it was issued.
Recognition and enforcement may be refused only on the grounds stated in Article 17 I. Sub
Articles (i) to (iv) of Article 36 (1) (a) of the Model Law constitute the first set of grounds
for refusal to enforce an interim measure. Further, an interim measure will not be recognised
if the court finds that the grounds set forth in Article 36 1 (b) (i) or (ii) apply to the interim
measure in question. Article 36 1 (b) (i) provides for refusal to enforce if the subject matter of
the dispute is not capable of settlement by arbitration under the laws of the enforcing State
and Article 36 (1) (b) (ii) provides for the public policy ground.
Comments on the 2006 Amendments to the Model Law:
The UNCITRAL has moved boldly to try and address the limitations and hurdles in the way
of an arbitral tribunal in relation to interim measures. Though a new approach was warranted,
I have some reservations on the amendments. I may elaborate my reasons as follows:
(i) To begin with Article 17 (2) states that the interim measure can take any form i.e. it can be
in the form of an order simpliciter or in the form of an award. To my mind, these are two
completely different types of orders and cannot be treated in the same breath or be made
subject to the same set of rules. An interim order can of course be in the form of an interim
award but then an award is a final pronouncement on the issues it determines. It cannot be
called a "temporary measure" which the arbitral tribunal may modify or alter as it wishes as it
goes along. Once pronounced it becomes final and the arbitrators become functus officio in
relation to that issue. They cannot retrace their steps. Further, setting aside or enforcement of
3 Supra note 1

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an award (final or interim) is already a subject matter of Articles 34 and 36 of the Model Law.
There cannot be another (parallel) provision i.e. Article 17 (H) and (I) on the same subject.
There cannot be two provisions for enforcement of the same award.
Thus interim measures which take the form of an interim award ought not to have been
included in the new Article 17 scheme.
(ii) I also find the provisions for ex parte interim orders to sit uneasily with the role and
standing of an arbitral tribunal in the eyes of the parties. Arbitration is not a dispute resolution
mechanism by impersonal judges (akin to a court). The tribunal is a creation of the parties
who perceive it as an amiable forum. It is out of character to expect the tribunal to receive a
secretive communication from one party and pass binding orders thereon. It would be an
embarrassment if later they have to turn around and reverse their decision (after hearing the
other side). It certainly will not be the best startoff for any arbitration. Further an ex parte
order by the tribunal (though "binding") is not capable of being enforced in court under
Article 17 C (5). It will have to undergo a waiting period of up to 20 days and if the order is
maintained (after hearing the opposite side) the resultant order will be subject to enforcement
by court. An ex parte order is usually warranted in rare cases where the aggrieved party
cannot afford to lose any time. The process of issuance of an exparte order (first provisionally
and then finally) renders the whole exercise of doubtful value and perhaps in the interest of
efficiency and costs it may have been better to leave the subject of an ex parte orders to the
courts.
(iii) Further, I find the enforcement provisions (Article 17 I) to be too drastic. For all
practical purposes, it clothes an interim measure with the same vigour as a final award (but
the two are not the same). A final award is based on merits and evidence and follows the
full legal process (including an obligation to give reasons). An interim measure is not
and it is anomalous to give an interim measure the same standing and as a final award
with little discretion with the court except to enforce, as it is obliged a final award.
(iv) Under the Model Law if a challenge on bias is turned down by the arbitral
tribunal one can appeal by way of an interim recourse ) to court (under Article 13). It is for
this reason that a challenge on the ground of arbitrator's bias is not a ground for setting aside
an award under Article 34 or for resisting enforcement under Article 36. However, in relation
to interim measures, it should have been included in Article 17 I. Now one may have a

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situation that there is no adequate opportunity to challenge an interim measure on the ground
of bias.
(v) The amended Model Law seeks to achieve what the New York Convention never
attempted to i.e. give interim orders passed in another State the same enforceability as a
final order.
For the above reasons I apprehend that the amended Model Law may not find the widespread
favour which the 1985 version did. In India, courts are zealous of their role in dispensation of
justice. The system is not very tolerant of the doors of the court being shut as Article 17 I
seeks to. We still have to come to terms with Article 34 of the Model Law (which does not
allow a challenge on merits in relation to a final award). A 2003 Indian Supreme Court
decision4 (which has consistently been followed since) allows a final award to be challenged
on merits. I therefore see little hope of Article 17 I being adopted as part of Indian law.
This part is largely restricted to enforcement of foreign awards governed by the New York
Convention or the Geneva Convention. Part I is thus, (by its very nature) not a complete
code. This led to judicial innovation by the Supreme Court in the case of Bhatia International
v. Bulk Trading5. Here the Indian courts jurisdiction was invoked by a party seeking interim
measures of protection in relation to arbitration under the ICC Rules to be conducted in Paris.
The provision for interim measure (section 9) was to be found in Part II alone (which applies
only to domestic arbitration).Hence the Court was faced with a situation that there was no
proprio vigore legal provision under which it could grant interim measure of protection.
Creatively interpreting the Act, the Supreme Court held that the general provisions of Part I
would apply also to offshore arbitrations, unless the parties expressly or impliedly exclude
applicability of the same. Hence by judicial innovation, the Supreme Court extended
applicability of the general provisions of Part II to off-shore arbitrations as well.

4 ONGC v. Saw Pipes Ltd; (2003) 5 SCC 705

5 (2002) 4 SCC 105

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PART II Indian Arbitration law and practice

On 20th of January 1996 by way of a special Ordinance, India promulgated a new
Arbitration Act6. It is essentially based on the 1985 Model Law and the 1976 UNCITRAL
Arbitration Rules with very few departures.
In relation to interim measures the Act follows Article 17 but adds an interesting twist. While
it does not create any mechanism for enforcement of the tribunal's interim measures, a
provision is made for an appeal to court from an order of the tribunal "granting or refusing to
grant an interim measure". This creates a grey area. A party is technically obliged to appeal if
it feels aggrieved by the interim order but it is not stated as to what will be the consequence if
it simply chooses to disobey it. At the same time if the succeeding party wishes to enforce it,
there is no enabling mechanism for it to do so. The succeeding party would necessarily be
driven to start a second round of litigation this time going to a court and hoping that the
court would endorse what the tribunal ordered or at least accept the tribunal's findings as a
prima facie basis for an interim order of protection in the same manner and to the same
extent as ordered by the tribunal. Clearly this is an unsatisfactory state of affairs.
Court mechanism:
Like the Model Law the Indian Act also enables an approach to a court for interim relief.
Resort to court has its pros and cons. To begin with one has to take ones case to a forum
which presumably the parties wished to avoid in the first place by having an arbitration
clause. Further, one may have to involve another set of lawyers, either because the
competent court is in another seat, or the arbitration bar is distinct from the court bar.
When approached, the court may be minded to clarify that its order is interim in nature and
would not bind the arbitral tribunal from holding otherwise on merits but nevertheless when
a court decides an issue (even though prima facie) in a certain manner it may impact the final
decision or compromise independent decision making by the tribunal. The High Court of

6 The Arbitration & Conciliation Act, 1996

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Delhi has held7 that if resort is made to both an arbitral tribunal and the courts for an interim
measure and there is a conflict or an overlap, the order of the court will have primacy. This is
on the principle that a court is a higher judicial forum. Thus having to go to a court has its
complications.
The upside of resort to court is that it is effective and expeditious in a manner that an arbitral
tribunal's order can never be and can also be directed to third parties if needed. Therefore
resort to court may well be necessary and it is important to have a strong provision
empowering the courts as well to grant interim measures.
Section 9 of the Indian Arbitration Act is based on the Article 9 of the Model Law but it takes
it further. It empowers the Court beyond what Article 9 does. The Model Law enables a party
to approach a court for an interim measure of protection before or during the arbitral
proceedings. The Indian Act goes further by enabling an approach to court before, during or
even after the arbitral award is delivered (but before its enforcement by court). If there is
recourse to court before commencement of arbitration, the applicant must satisfy the court
that it intends to take recourse to the arbitration proceedings within a short period of time and
can be put to terms in this regard by the court 8. In other words the law discourages a party
from taking an interim order before the arbitral proceedings commence and then keep the
arbitration in abeyance. The other departure the Indian Act makes from the Model Law is that
it extensively sets out the types of interim measures of protection the court may pass. These
include:
The preservation, interim custody or sale of any goods which are the subject matter of the
arbitration agreement;
Securing the amount in dispute in the arbitration;
The detention, preservation or inspection of any property or thing which is the subject
matter of the dispute in arbitration;

7
National Highways Authority of India (NHAI) v. China Coal Construction Group Corporation; decision dated 2
3rd January 2006 of High Court of Delhi.

8 Sundaram Finance Ltd. v. M/s NEPC India Limited; AIR 1999 SCC 565

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Authorising any person to enter upon any land or building in the possession of any party or
authorising any samples to be taken or any observation to be made or experiment to be tried
which may be necessary or expedient for the purpose of obtaining full information or
evidence;
Appointment of a Receiver; and
The residuary power to pass "such other interim measure of protection as may appear
to the court to be just and convenient".
Section 9 then goes on to clarify that the court shall have the same power to pass an interim
order as it has in relation to in any other proceeding before it.
Accordingly one may briefly explain the general provisions in India in matters of grant of
temporary injunctions and interlocutory orders. Under Indian law9, courts have wide power to
grant such orders (including Mareva injunctions and Anton Piller Orders). An application in
this regard is dealt with on the basis of affidavits (i.e. without the need for any oral evidence).
Indian courts are liberal in matters of granting interlocutory relief (chiefly as the main suit
can take an inordinate period of time to reach conclusion and it may become necessary to
protect the equities in the meanwhile). It is not typical in India to ask the party safeguarded to
provide a security for the measure.
The remedy is discretionary and granted on three considerations: (i) the court finds that the
applicant has a good prima facie case in its favour; (ii) there is a balance of convenience in
favour of grant of an interlocutory order (the court compares the inconvenience to either party
to see which way the balance lies); and (iii) irreparable injury i.e. that which cannot be
rectified by compensation in terms of money.
The court does not undertake and indeed is not expected to undertake a detailed
exercise on the merits of the case. The court would also not grant an interim remedy which
would in effect amount to granting the final relief or make the final relief infructuous;
nor will it grant an interim relief which cannot in law be granted by way of a final relief. An
ex parte order can be granted in very exceptional circumstances. Essentially the court must be
satisfied that the object of granting the measure would be frustrated by the process of
notifying the opposite party.
9 Order XXXVIII and XXXIX of the Code of Civil Procedure, 1908

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It may be stated that this was premised on the assumption that the Indian court would
otherwise have jurisdiction in relation to the matter (in international sense). This became
clear in a subsequent decision of the supreme court in Shreejee Traco (I)Pvt. Ltd v Paperline
International Inc10. Here the courts assistance was sought for appointing an arbitrator in an
offshore arbitration. The power of appointment by court exists under section 11 of part II of
the act. The court declined to exercise jurisdiction. It found that the arbitration was to be
conducted in New York and that the law governing the arbitration proceedings would be the
law of seat of the arbitration. Hence the extension of part II provisions to foreign arbitrations
sanctified by Bhatia11 could not be restored to in every case. The Indian courts would have to
first determine if it has jurisdiction, in International sense.
Amendments on the anvil:
Over the years attempts have been made to amend the Arbitration Act (including the
provisions dealing with interim measures). In 2003 at the recommendation of the Law
Commission of India extensive amendments were proposed. First, it was proposed to add to
and elaborate the powers of the tribunal in relation to interim measure (i.e. 12 modify Section
17, corresponding to Article 17 of the Model Law). Then a parallel committee proposed that
interim measures of protection ordered by the arbitral tribunal be enforceable through courts.
A new Section was proposed to provide inter alia that the courts may refuse to enforce an
interim measure of protection only if it is satisfied that:
(i) There is a substantial question of law relating to any ground for refusal; or
(ii) The applicant has failed to provide appropriate security in connection with the interim
measure as ordered.
However the Amendment Bill ran into trouble as there was difference of opinion on some
major proposals (other than in relation to interim measures). As a result the Bill and also a
subsequent attempt to amend the Act have come to naught and is not likely to be taken
forward in the near future.

10 (2003) 9 SCC 79.

11 Supra note 2

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Indian Arbitration Law Supreme Court Implements UNCITRAL Model Law

Recently, on September 6, 2012, the five members constitutional bench of the Indian supreme
court ("Supreme Court") in 'Bharat Aluminum Co. Vs. Kaiser Aluminium Technical
Service Inc.12 ("Balco Judgment")' after reconsidering its various previous decisions on the
Indian Arbitration & Conciliation Act 1996 ("Indian Arbitration Act") concluded that the
Indian Arbitration Act should be interpreted in a manner to give effect to the intent of Indian
Parliament. In Balco Judgement, the Supreme Court reversed its earlier rulings in cases of
'Bhatia International v Bulk Trading S.A & Anr 13and 'Venture Global Engineering v Satyam
Computer Services Ltd and Anr14 stating that findings in these judgments were incorrect.
Based on the Balco Judgment, the following is new legal position w.r.t. arbitrations law in
India which is in line with the intention of the parliament when they enacted Indian
Arbitration Act in 1996:
a. The Indian Arbitration Act has accepted the territoriality principle which has been
adopted in the UNCITRAL Model Law. Accordingly, Part I of the Indian Arbitration
Act applies only to arbitrations taking place in India irrespective of whether such
arbitrations takes place between Indian parties or between the Indian and foreign
parties ("Domestic Awards"). The Domestic Awards can be challenged (section 34)
and are enforceable (section 36) under Part I of the Indian Arbitration Act.

12 Civil Appeal No. 7019 of 2005

13 2004 (2) SCC 105
14 2008 (4) SCC 190

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b. Part I of the Indian Arbitration Act has no application to arbitrations seated outside
India irrespective of whether parties chose to apply the Indian Arbitration Act or not
("Foreign Awards"). The grounds to challenge of awards given in Part I (section 34)
of the Indian Arbitration Act are thus applicable only to Domestic Awards and not to
Foreign Awards.
c. The law of the seat or place where the arbitration is held is normally the law to govern
the arbitration. If the agreement provides for a "seat/place" outside India, Part I of the
Indian Arbitration Act would be inapplicable to the extent inconsistent with the
arbitration law of the seat/place, even if the agreement purports to provide that the
Indian Arbitration Act shall govern the arbitration proceedings.
d. In case of Domestic Awards, Indian laws shall prevail if substantive law conflicts with
the laws of India. In case of Foreign Awards, the conflict of laws rules of the country
in which the arbitration takes place would have to be applied.
e. There is no provision under the Civil Procedure Code 1908 or under the Indian
Arbitration Act for a court to grant interim measures in terms of Part I (section 9) of
the Indian Arbitration Act in arbitrations which take place outside India, even though
the parties by agreement may have made the Indian Arbitration Act as the governing
law of arbitration. An inter-parte suit simply for interim relief pending arbitration
outside India would not be maintainable in India.
f. The regulation of conduct of arbitration and challenge would be done by the courts of
the country in which arbitration is conducted. Accordingly, a Foreign Award can be
annulled by the court of the country in which the award was made, i.e., the country of
the procedural law/curial law ("First Alternative") and not before the courts of the
country under the law of which the award was made, i.e., the country of substantive
law ("Second Alternative"). It can be challenged in the courts of the Second
Alternative, only if the court of the First Alternative had no power to annul the award
under its national laws.
g. The Indian Arbitration Act intentionally limits it to awards made in pursuance of an
agreement to which the New York Convention or the Geneva Protocol applies.

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Therefore, no remedy is provided for the enforcement of the 'non convention awards'
under the Indian Arbitration Act.
h. Most importantly, these findings of the Supreme Court are applicable only to
arbitration agreements executed after 6 September 2012. Thus all disputes pursuant to
arbitration agreement entered into upto 6 September 2012 shall be decided by old
precedents irrespective of fact that according to the Supreme Court such rulings were
incorrect and have been reversed.
It is noted that the foreign investors/parties have been facing problems in enforcing the
Foreign Awards in India against Indian parties because earlier the Supreme Court consistently
held that provisions of Part I of the Indian Arbitration Act are applicable to the Foreign
Awards as well. Thus, the Foreign Awards were subject to interference by Indian courts both
during pendency of arbitration proceedings and at enforcement stage because Indian parties
were entitled to challenge the Foreign Awards on various grounds available under Part I of
the Indian Arbitration Act. Also, under such proceedings, the Foreign Awards were
challenged on merits as well before the Indian courts. Therefore, now in view of the Balco
Judgment, the Indian parties will no more enjoy such protections if the place/seat of
arbitration is outside India.

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Conclusion:
Considering the growing significance of arbitrations in resolution of international disputes, it
is only appropriate that arbitral tribunals be empowered in relation to grant of interim
measures of protection. The 1985 Model Law was quite inadequate in this regard. At the
same time, in my respectful view, the 2006 amendments to Article 17 propose a leap too long,
especially in relation to the enforcement provisions. I apprehend that these provisions may
not meet with the wide acceptance the 1985 version did (and in the absence of uniform
application, the Model Law will not serve the purpose it set out to). In my respectful view
fresh proposals need to be mooted which would render the arbitral tribunal's decision binding
and also enforceable. An aggrieved party should be able to resist enforcement on narrow
grounds such as patent illegality, irregularity or gross unfairness of the result but to render an
interim measure the same degree of enforceability as a final award is potentially unfair and
jurisprudentially inappropriate.

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Bibliography
Books Referred:
1. Madhabhusi Sridhar, Alternative Dispute Resolution, 1st Edition: 2011, LexisNexis
Butterworths, Wadhwa Nagpur, Haryana.
2. O. P. Malhotra and Indu Malhotra, The Law and Practice of Arbitration and Conciliation,
2nd Edition: 2006, LexisNexis, Butterworths, New Delhi.
3. N. K. Acharya, Law Relating to Arbitration and ADR, 3 rd Edition: 2011, Asia Law House,
Hyderabad.
4. P.C.Markanda, Law Relating to Arbitration and Conciliation, 7 th Edition: 2008,
LexisNexis Butterworths, Wadhwa, Nagpur, Haryana.
5. V.A.Mohta, Arbitration and Conciliation, 1st Edition: 2001, All India Reporter Pvt. Ltd.,
Mumbai.
6. G.K.Kwatra, Arbitration and Conciliation Law of India, 7 th Edition: 2010, Universal Law
Publishing Co., Delhi.

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Websites Referred:
1. http://www.kaplegal.com (last visited on 21st march 2014)
2. https://ipba.org/media/fck/files/Arbitration (last visited on 21st march 2014)
3. http://www.mondaq.com (last visited on 22nd march 2014)
4. www.mediate.com (last visited on 22nd march 2014)