Section 9 of the Act provides for interim measures by a court before or during arbitration proceedings, or at any time before the enforcement of an arbitral award.

Section 34 of the Act enables the court to set aside a domestic arbitral award on specified grounds.

Section 42 of the Act provides that the Indian court first seised of any matter relating to an arbitration shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of those arbitral proceedings.

Section 47 of the Act provides for documents to be produced before the court at the time of enforcement of a foreign award.

Section 48(3) of the Act enables the court to adjourn proceedings for the enforcement of a foreign award where an application to set aside the foreign award has been made to the "competent authority of the country in which that award was made".

Pacific Basin Ihx (UK) Limited (petitioner) was a ship owner, operator and charterer. The petitioner entered into a contract of affreightment with Ashapura Minechem Limited (respondent) to ship certain goods. Disputes arose between the parties.

The respondent filed a civil suit seeking that the contract be declared null and void and the petitioner be restrained from invoking the arbitration clause in the contract. The respondent obtained an injunction from the civil court in Jamkhambalia in the State of Gujarat, India, restraining arbitration. The suit was then transferred to a principal civil judge, Jamkhambalia, who vacated the injunction and an arbitrator was appointed to settle the disputes.

The arbitration was held in the UK (recognised by the Indian government as a reciprocating territory for the purposes of enforcement of foreign awards under the New York Convention) and the petitioner and respondent were given an opportunity to submit their documents and claims. The petitioner submitted documents, but the respondent did not do so. After giving a final opportunity to the respondent, the arbitrator proceeded with the arbitral proceedings in the absence of the respondent, and made and published his award.

While the respondent made an application for setting aside a foreign arbitral award under section 34 of the Act in a court in the state of Gujarat, the petitioner approached the High Court to enforce the arbitral award.

The question for the High Court was whether it could enforce the arbitral award given that a petition to set aside the award (though filed under section 34 of the same Act, which relates to domestic awards) was filed first in time and as section 42 of the Act was attracted. Also the court was not subordinate to the High Court.

The High Court stayed the enforcement proceedings pending a decision on the application for setting aside the award filed before another court, as the High Court was not competent to interfere with a proceeding in a court not subordinate to it. However, sensitive to the ramifications of being constrained to stay enforcement of a foreign arbitral award, the High Court directed that the stay was conditional upon the respondent depositing monies with the court (the total of which was similar to the sum awarded to the petitioner).

The High Court confirmed that the question whether a foreign arbitral award can be set aside under section 34 of the Act could only be answered by the court where the proceedings for setting aside the foreign award were instituted. This has to be seen in the context of the other court not being subordinate to the High Court.

The High Court in this case took note of the actions of the respondent in relation to the arbitration proceedings, and while concerned about the ramifications of effectively staying the enforcement of a foreign arbitral award, felt constrained to do so due to judicial propriety. However, by ordering a conditional stay and directing an amount similar to the amount awarded to the petitioner to be deposited with the court, the court has not just rendered substantive justice but also sent a message to deter frivolous defences or challenges to arbitral awards.

The observations and reasoning of the High Court are heartening not just as evidence that the courts are conscious to "....ensure that the main objectives of New York Convention are not defeated ...." but also in coming up with alternative methods of maintaining judicial propriety.

Please note: The Division Bench of the High Court of Bombay has just stayed the direction of the single Judge, ordering the deposit of monies. Readers will be updated of any further developments.

Pacific Basin Ihx (UK) Ltd. v. Ashapura Minechem Ltd. 2011 (113) Bom LR 74.