Упомянутое судебное решение – шаг на пути к балансированию интересов добросовестных третьих лиц. Обычная теория о том, что только стороны арбитража могут подвергать сомнению правильность временных мер, а третьи стороны – только немые зрители не продвигает дело справедливости. Хотя факты каждого казуса и будут тщательно учитываться при определении того, может ли третья сторона вмешиваться в арбитражный процесс, арбитражное сообщество, несомненно, будет внимательно следить за дальнейшими решениями по этому вопросу.
In the recent case of Prabhat Steel Traders Private Limited v Excel Metal Processors Private Limited,(1) the Bombay High Court issued a landmark ruling regarding third parties’ right to challenge interim measures granted by an arbitral tribunal under Section 17 of the Arbitration and Conciliation Act 1996.
Facts
In an arbitration between Respondent 1 and Respondent 2, the arbitral tribunal passed certain interim measures against Respondent 1 in favour of Respondent 2.
In total, 13 arbitration petitions were filed by various third parties – including the petitioner – under Section 37 of the Arbitration and Conciliation Act, requesting leave to appeal against the arbitral tribunal’s order principally on the grounds that the interim measure was causing severe prejudice to the interests of said parties, including the petitioner.
Respondent 2 raised a preliminary objection about the maintainability of the arbitration petition on the grounds that none of the petitioners were parties to the arbitration agreement between Respondents 1 and 2 and therefore they could not invoke Section 37 of the act.
Arguments
Petitioner’s argument
The petition in support of maintainability argued that various provisions – including Sections 8, 9, 17 and 34 of the Arbitration and Conciliation Act – expressly contemplate an application made by a party; however, no such restriction is found under Section 37 of the act, which is open ended and merely states that “an appeal shall lie from the following order”.
According to the petitioner, if a third party affected by an interim measure granted by a tribunal cannot challenge such order under Section 37, the arbitral proceedings could be used to abuse and prejudice third parties (where the rights and interest of such third parties are involved).
Third parties have the right to file an appeal with leave of the court if their rights are prejudiced by any order passed in proceedings to which they are not party. This right is recognised under the Code of Civil Procedure 1908.
Respondent’s argument
On the contrary, the respondent submitted that third parties cannot interfere in the arbitration process or invoke Section 37. According to the respondent, since the petitioners were not parties to the arbitration agreement, an appeal under Section 37 was not maintainable.
The respondent further contended that the only remedy available to petitioners is to await the outcome of the arbitral proceedings and, if an application for the execution of the arbitral award is made, to oppose the execution application as and when it is filed. There has been a statutory bar against third parties from interfering in arbitral proceedings since the beginning. If any appeal by the third party is permitted under Section 37, it would open the floodgates to litigation.
Finally, the responded argued that Section 17 of the Arbitration and Conciliation Act applies only to the parties under an arbitral agreement and thus Section 37 can be invoked only by such parties – not by third party. Section 37(2) of the act must be read with Section 17. Since Section 17 can be invoked only by parties to an arbitration agreement, Section 37 can also be invoked only by a party to the arbitration agreement.
High court ruling
The single judge of the Bombay High Court held that appeals filed by petitioners under Section 37 of the Arbitration and Conciliation Act are maintainable. While arriving at this conclusion, the high court observed as follows:
Section 2(1)(h) defines ‘party’ as a party to the arbitration agreement.
Sections 2(1)(h) through 2(36) use the expression ‘party’. However, Section 37 does not state that appeals under Section 37 can be filed only by the parties to an arbitration agreement.
Following the enactment of the Arbitration Amendment Act 2015, arbitral tribunals now have the same powers as those vested with the courts under Section 9. Although an application for an interim measure under Section 17 can be made only by a party to the arbitration, the relief granted under Section 17 may in some cases affect third parties. For example, there may be instances when a third party can apply for relief in respect of its goods or property.
Since the powers vested in the courts under Section 9 are identical to the powers given to arbitral tribunals under Section 17, even a third party that is directly or indirectly affected by interim measures granted by an arbitral tribunal can appeal under Section 37. Although a stranger to the arbitration agreement cannot be impleaded as a party to the arbitral proceedings, they are not precluded from challenging any order made by the tribunal under Section 17 if they are aggrieved by such order. Any challenge must be made by way of an appeal under Section 37.
The Bombay High Court relied on the Division Bench’s judgment in Bharat Sanchar Nigam Limited Versus Siemens Financial Pvt Ltd,(2) which held that depending on the facts of the case, even a third party can be added or joined as a party for appropriate relief and effective implementation under a Section 9 petition. There is no total bar on a third party being impleaded, subject to the facts of the case and the contract conditions between the parties.
Section 34 of the act also refers to the expression ‘party’, which is absent under Section 37. The absence of the expression ‘party’ in Section 37 clarifies that the expression ‘party’ was deliberately excluded to provide third parties that are affected by interim measures made by an arbitral tribunal or court with the right to appeal under Section 9.
There is a possibility of collusive proceedings or orders regarding interim measures being obtained by the parties to an arbitration agreement, which may affect third parties’ interests. A third party whose interests are prejudiced by an interim measure obtained by the parties to the arbitration agreement cannot be forced to wait until the outcome of the arbitration proceedings, an award has been issued and an execution application has been filed by the successful party after the other party has exhausted all of its remedies under the act.
Comment
The Bombay High Court’s ruling is a welcome reprieve for non-signatories to arbitration proceedings in situations where disputes between arbitrating parties have a bearing on their rights and interests. The ruling is a step towards balancing innocent parties’ interests. The conventional theory that only parties to an arbitration can question the correctness of interim measures and innocent third parties are mute spectators does not advance the cause of justice. While the facts of each case and the nature of prejudice will be considered when determining whether a third party can intervene, the arbitration community will undoubtedly closely follow further rulings on the subject.
Endnotes
(1) (2018) SCC Online Bom 2347.
(2) (2016) SCC Online Bom 5317.
Авторы: Ajay Bhargava, Arvind Kumar Ray or Maithili Moondra
Источник: https://www.internationallawoffice.com/Newsletters/Arbitration-ADR/India/Khaitan-Co/Non-signatory-to-arbitration-right-to-appeal-under-Section-37?utm_source=ILO+Newsletter&utm_medium=email&utm_content=Newsletter+2018-10-18&utm_campaign=Arbitration+%26+ADR+Newsletter