Bombay High Court Says Choosing Foreign Arbitration Does Not Automatically Bar Interim Relief from Indian Courts
Bombay High Court Says Section 9 Relief Is Available in Foreign-Seated Arbitration Unless Expressly Ousted by Agreement
Facts
Malaney Trading & Services LLP filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, against Uzer Makina VE Kalip Sanayi A.S. and others in relation to disputes arising from a Commercial Agency and Distribution Agreement dated 08 February 2017.
Under the agreement, Malaney was appointed as the exclusive agent/distributor for Uzer Makina’s technology in India, particularly for the Indian tyre industry. Malaney claimed that it was entitled to commission on transactions carried out by Uzer Makina in India.
The disputes between Malaney and Uzer Makina were already pending before the Netherlands Arbitration Institute. A Partial Award dated 16 February 2024 had been passed in favour of Malaney on several claims, while some claims were rejected. Quantification of the awarded amounts was still pending.
CEAT Limited and MRF Limited, Indian tyre manufacturers, had availed Uzer Makina’s technology. Uzer Ithalat Ihracat Sanayi Ve Tic. A.S., a near wholly-owned subsidiary of Uzer Makina, was also involved, and MRF had made certain remittances to it.
Earlier orders of the Bombay High Court had directed that if MRF intended to make any payment to Uzer Makina, it must give Malaney ten days’ prior notice. Later, when MRF proposed to remit about EUR 170,000 to Uzer Ithalat, the Court restrained MRF from transferring that amount.
During the proceedings, it emerged that MRF had made multiple remittances even after the earlier protective orders. The Court also noted previous findings that Uzer Ithalat appeared to be the alter ego and almost wholly-owned subsidiary of Uzer Makina.
Issues
- Whether the Bombay High Court could grant interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, in relation to a foreign-seated arbitration.
- Whether the existence of emergency/interim relief provisions under the rules of the Netherlands Arbitration Institute amounted to an implied exclusion of Section 9 jurisdiction.
- Whether Malaney was entitled to protective interim measures to secure the fruits of the foreign arbitral award.
- What amount should be secured, considering the existing deposits made before the Court and the reliefs sought in the Section 9 petition.
Petitioner’s Arguments
Malaney argued that it had already succeeded in the foreign arbitration on several issues and that a Partial Award had been passed in its favour.
It contended that MRF and Uzer Makina/Uzer Ithalat had acted in breach of earlier orders of the Bombay High Court by making and receiving remittances despite directions restraining such transfers.
Malaney submitted that unless further security was directed, the fruits of the arbitration would be seriously jeopardised by the time the foreign award was recognised and enforced in India.
It also argued that Uzer Ithalat was not an independent third party but was closely connected with Uzer Makina and had been used as a recipient of payments that should otherwise have been available for securing Malaney’s claims.
Malaney sought security for the awarded/claim amount and requested the Court to preserve the subject matter of the arbitration until enforcement proceedings could be pursued.
Respondent’s Arguments
Uzer Makina and Uzer Ithalat opposed the grant of relief mainly on jurisdiction and quantum.
They argued that Section 9 jurisdiction was not available because the arbitration was foreign-seated and conducted before the Netherlands Arbitration Institute. According to them, since the institutional rules provided for emergency or interim measures, the parties must be treated as having agreed to seek such relief only before that forum.
It was contended that the availability of interim measures under the institutional rules constituted an “agreement to the contrary” under Section 2(2) of the Arbitration and Conciliation Act, thereby excluding Section 9.
On quantum, it was argued that substantial amounts had already been deposited in Court and that any direction for further deposit could not exceed the relief actually sought in the Section 9 petition.
MRF had earlier taken the stand that the restraint applied only to remittances to Uzer Makina and not to Uzer Ithalat, which was a separate legal entity.
Analysis of the Law
The Bombay High Court examined Section 2(2) of the Arbitration and Conciliation Act, 1996. The proviso to Section 2(2) makes Section 9 applicable even to international commercial arbitrations seated outside India, provided the foreign award is enforceable under Part II of the Act and there is no agreement to the contrary.
The Court held that Section 9 jurisdiction is available in foreign-seated arbitrations unless the parties have clearly agreed to exclude it.
The Court rejected the argument that merely agreeing to arbitrate under institutional rules that provide emergency or interim measures automatically excludes Section 9 jurisdiction. According to the Court, ouster of jurisdiction must be express. Even if ouster by necessary implication is considered, the mere availability of emergency/interim relief under institutional rules is not enough.
The Court observed that commercial parties may choose institutional arbitration and still preserve their right to seek interim protection from courts unless the agreement clearly bars such recourse.
The Court also noted an important difference between domestic and foreign awards. In domestic arbitration, an award becomes enforceable as a decree after the time for challenge expires. In contrast, a foreign award must first be recognised and enforced under Part II before execution can proceed. Therefore, interim protection may be necessary to preserve the fruits of a foreign award.
Precedent Analysis
The Court considered the Delhi High Court decision in Ashwani Minda v. U-Shin Ltd., where Section 9 relief had been declined after a party had already unsuccessfully pursued emergency arbitration.
However, the Bombay High Court distinguished that decision. It observed that Ashwani Minda was based on its specific facts, particularly because the party had already taken a chance before the emergency arbitrator and then sought a second opportunity under Section 9.
In the present case, no emergency/interim proceedings had been pursued before the Netherlands Arbitration Institute. Instead, the parties had already approached the Bombay High Court under Section 9 as early as May 2022, and interim arrangements had been made by the Court.
The Court also noted that the Division Bench of the Delhi High Court had kept the broader legal issue in Ashwani Minda open. Therefore, that decision could not be treated as laying down an absolute rule that institutional emergency relief automatically bars Section 9 jurisdiction.
Court’s Reasoning
The Court held that there was no express agreement excluding Section 9 jurisdiction. The mere presence of emergency or interim relief provisions in the rules of the Netherlands Arbitration Institute did not amount to an implied exclusion.
The Court found that earlier orders of the Section 9 Court had already been passed and that there was a judicial finding that those orders had been flouted. MRF had made payments, and Uzer Makina/Uzer Ithalat had received payments despite the Court’s protective directions.
This conduct created a real threat that the fruits of the arbitration could be defeated before the foreign award was recognised and enforced in India.
The Court also considered the competing figures placed by the parties. Malaney valued the award at about EUR 2.35 million, while Uzer Makina valued it at about EUR 1.53 million. However, the Court also kept in mind that Malaney had not amended its Section 9 petition after the award to expand the scope of relief.
Since the petition sought security of EUR 1.2 million and approximately EUR 800,000 had already been deposited in Court, the Court directed that the shortfall between the amount already deposited and the INR equivalent of EUR 1.2 million should be secured.
Conclusion
The Bombay High Court held that Section 9 relief is available even in a foreign-seated arbitration unless the parties have expressly or clearly excluded such jurisdiction.
The Court clarified that the existence of emergency/interim relief provisions in institutional arbitration rules does not, by itself, oust the jurisdiction of Indian courts under Section 9.
Considering the conduct of MRF, Uzer Makina and Uzer Ithalat, and the risk of frustrating enforcement of the foreign arbitral award, the Court directed Uzer Makina to deposit the difference between the amount already lying in Court and the INR equivalent of EUR 1.2 million.
The Court further directed that if MRF or CEAT had any obligation to make payments to Uzer Makina, Uzer Ithalat or any similarly placed affiliate, such amounts must be deposited in Court until the total deposit reaches the INR equivalent of EUR 1.2 million. Only thereafter could any remittance be made out of India.
The Section 9 petition was finally disposed of, and the deposits were directed to abide by the final outcome of the arbitration proceedings.
Case Details
Case: Malaney Trading & Services LLP v. Uzer Makina VE Kalip Sanayi A.S. & Ors.
Court: Bombay High Court, Ordinary Original Civil Jurisdiction, Commercial Division
Case Number: Commercial Arbitration Petition No. 228 of 2022
Judge: Justice Somasekhar Sundaresan
Date: 07 July 2026
Result: Section 9 petition disposed of; further security directed to preserve the fruits of the foreign arbitration award.
