Preserving Assets pending enforcement of a Foreign Award

Introduction

The Hon’ble Bombay High Court in its latest judgment titled Osterreichischer Lloyd Seereederei (Cyprus) Ltd. v. Victore Ships Pvt. Ltd (2026:BHC-OS:6178), examined the maintainability of a Petition under Section 9 of the Arbitration and Conciliation Act, 1996 (Act) for grant of Interim measures, while a petition for an enforcement of a foreign award is pending. 

Brief facts

The Petitioner sought interlocutory measures of protection to secure the amount awarded under the award. There was also a parallel Petition filed by the Petitioner seeking enforcement of the foreign award in India.

The Respondent opposed the maintainability of the Section 9 petition inter-alia on the ground that the language of Section 9 suggests that after a Petition of execution of award is filed a Section 9 Petition is not maintainable and conflicting views may emerge where two courts entertain Petitions at different stages in relation to the same award.

Analysis and Reasoning

The Hon’ble court specifically dealt with the nuanced objection of the Respondent, whether the ability to invoke Section 9 comes to an end with the filing of a Petition under Part II¹ of the Act.

At the first blush, the language of proviso to Section 2 sub-clause (2) is sufficient to indicate that Section 9 applies to international commercial arbitrations, even where the place of arbitration is outside India and the arbitral award made is recognisable and enforceable under Part II of the Act. However, a deeper examination was undertaken to address the controversy, especially considering the phrase under Section 9 which provides “but before it is enforced in accordance with section 36”.

The court compared the scheme of Part I and Part II of the Act which deals with enforcement of domestic and foreign award respectively.

The court observed that the triggering point of enforcement of a domestic award to be treated as a decree is on the expiry of the period of challenge under Section 34 (if no challenge is mounted) or upon the Section 34 Court rejecting a challenge or upon a Section 34 Court refusing to grant any stay on the operation of the arbitral award.

Further so far as the scheme of enforcement of a foreign award is concerned, the triggering point of enforcement thereof under Section 49 of the Act is when the court is satisfied that the foreign award is enforceable once it has passed the muster of Section 48 of the Act. It is at that stage that the foreign award is granted the status of a decree.

Therefore, for a foreign award, positive affirmation and validation is necessary for the Indian Courts to treat a foreign award as a decree, but for a domestic award, unless the Section 34 Court interferes, the arbitral award is statutorily treated as a decree.

The court also examined the legislative intent of not providing any time limit under Part II for operation of Section 9 in so far as it relates to foreign award, presumably after noticing the scheme of how domestic and foreign award respectively become decrees. 

Ultimately while rejecting the objection of the Respondent the Hon’ble High Court observed that a Section 9 Court cannot be denuded of its jurisdiction to protect a foreign award holder from dissipation of assets by the award debtor simply because of an apprehension of schematic anomaly. 

In any event the scheme of Part II of the Act is that first and foremost a petition for recognition and thereafter, without the need for another fresh set of proceedings being filed, upon the foreign award being conferred with the status of a decree under Section 49 of the Act, the proceedings would stand translated into execution proceedings.

Finally, while disposing of the Section 9 Petition the Court inter-alia directed deposit of the entire amount awarded under the arbitral award with the registry of the Court.

Comment

In the authors view, the judgment is very well nuanced and rooted in the pro-enforcement bias principle laid down by the Hon’ble Supreme Court of India. The judgment could serve as a tool to seek appropriate interim measures of protection against award debtors notwithstanding their right or ability to resist enforceability of foreign awards. It could also allow foreign award holders to explore alternate jurisdictions seeking interim measures of protection against award debtors where assets are found, other than the court where the main petition for enforcement of foreign award may be pending.

Authors

Sumeet Lall                                
Partner, CSL Chambers        
Sumeet.Lall@cslchambers.com

Sidhant Kapoor                              
Legal Director, CSL Chambers           
Sidhant.Kapoor@cslchambers.com
                                       
Devesh Kumar Singh  
Associate, CSL Chambers                
Devesh.Singh@cslchambers.com
  
**CSL Chambers, is an associated firm of Clyde & Co LLP, a Full-Service Global Law Firm.

For any inquiries, please feel free to contact the authors