Gujarat HC: Exercise of Jurisdiction must be in nature of ‘Interim Measures’ under Section 9 of Arbitration Act


Mitali Palnitkar

Published On: February 07, 2022 at 15:38 IST

On February 6, 2022, the Gujarat High Court observed that Section 9 of Arbitration Act envisaged ‘Interim measures’ and the Courts shall not Adjudicate a substantive issue at that stage. Also, similar interim measures cannot be claimed before the Arbitral Tribunal once the Jurisdiction is invoked under Section 9 and the remedy is exhausted.

The Bench comprised of Justice Niral Mehta and Justice JB Pardiwala. Bench was hearing the First Appeals that challenged the Surat Commercial Court Order passed under Section 9 of the Act.

In the Case, the Appellant, EBTL (Essar Bulk Terminal Ltd) and the Respondent, AMNS (Arcelor Mittal Nippon Steel) had executed a Principal Agreement with respect to Cargo Handling Charges (CHC). EBTL had an obligation of maintaining a draft of 10 metres at the terminal for transporting the iron ore via vessels.

An amendment in the agreement stated that AMNS shall pay CHC in INR (Indian Rupee) equivalent to USD (United States Dollar) denominated tariff. In June 2020, EBTL stated that it would declare terminal draft at 10 metres due to non-payment of additional CHC.

AMNS invoked Arbitration clause and filed an Application under Section 11 of the Act for appointing an Arbitrator and also filed an Application under Section 9 of the Act seeking to pass an Order restraining EBTL from declaring terminal draft at 10 metres. Another issue of contention was the dollarization of tariff.

The Commercial Court viewed that AMNS was under the obligation to pay dollarized CHC as per the dollar rate as on December 30, 2020. The EBTL was directed to maintain a channel depth of 10 metres below the chart datum as an interim measure under Section 9(1)(ii)(e).

The issues before the High Court were that whether the Commercial Court in exercise of its power under Section 9 was right in directing EBTL by way of an interim measure on favour of AMNS. Also, if the Commercial Court was justified in directing EBTL to provide services AMNS though it was not paying the agreed Dollar Tariff.

The High Court observed certain principles and Precedents and opined that directing EBTL to maintain channel depth of 10 metres below chart datum always, amounted to Adjudication of substantive issue. It also referred to the Judgment in the Case of Kiritkumar Futarmal Jain v Valencia Corporation (2019).

The Bench allowed the First Appeal partly and quashed the Order directing EBTL of maintaining channel depth of 10 metres always. It dismissed the other three Appeals. The request of AMNS to direct EBTL to maintain the 10-metre limit always was declined by the Court.

Also read: Growing Relevance of Arbitration in India

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