Section 9 Relief Survives Part II Enforcement

The Bombay High Court considered whether a party can invoke Section 9 of the Arbitration and Conciliation Act, 1996 after filing a petition under Part II for recognition and enforcement of a foreign award. Justice Somasekhar Sundaresan held that Section 9 remains available in such a situation.

The petitioner sought interim protection to secure a foreign award dated 23 March 2020 for USD 269,105.08. A separate petition under Sections 47 and 48 for enforcement of the same award was already pending. The respondent objected that once Part II proceedings are initiated, Section 9 cannot be used, since enforcement and execution are rolled into one composite process and the award is treated as a decree for enforcement purposes.

The Court examined Section 9(1), which permits an application before, during, or after arbitral proceedings, but before enforcement under Section 36. It also relied on Section 2(2), which extends Section 9 to international commercial arbitration even where the seat is outside India, and where the award is enforceable under Part II. On that basis, the Court held that Section 9 does apply to a foreign award.

The real question was whether the filing of a Part II enforcement petition cuts off that remedy. The Court answered in the negative. It accepted the petitioner’s submission that, unlike a domestic award that may operate as a decree in the enforcement context, a foreign award still requires recognition before enforcement can follow. Until that stage is reached, interim protection may be necessary to prevent the award from becoming a paper award.

The Court therefore granted protective relief. The respondent was directed to deposit USD 269,105.08 in its INR equivalent, calculated at the USD-INR exchange rate as on the date of the order, within four weeks. Pending deposit, the respondent was restrained from selling, disposing of, alienating, encumbering, or creating third-party rights in its movable and immovable properties, except to the extent needed to generate funds for the deposit.

The respondent was also directed to file an affidavit within two weeks of the order being uploaded, disclosing its bank accounts, assets, assets sold in the last two years with sale documents, creditors and debtors, pending legal proceedings including winding-up proceedings, and all encumbered assets with details of the mortgage or charge holders.

The Section 9 petition was disposed of, and the Part II petition was directed to be listed two weeks later.

Practical takeaway: a foreign award debtor cannot assume that filing a Part II enforcement petition blocks Section 9 interim protection.