Supreme Court Decouples Interim Protection Post-Award in Indian Arbitration

• The Supreme Court of India has decoupled interim protection from the question of winning or losing in Indian arbitration.
• The losing party can now seek Section 9 protection even after an award has been issued.
• The court's decision introduces the concept of 'fluid entitlement', recognizing that an award can be severable, modifiable, and/or set aside.
• This may expose clients to compliance risks if they fail to navigate this new landscape.

The losing party may seek interim protection under Section 9 even after the award, decoupling that protection from the question of winning or losing.

The Supreme Court of India has made a significant ruling in Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi, decoupling interim protection from the question of winning or losing in Indian arbitration. This means that the losing party can now seek Section 9 protection even after an award has been issued. The court's decision marks a departure from the traditional binary approach, where the unsuccessful party was barred from seeking interim protection under Section 9. Instead, the court has introduced the concept of 'fluid entitlement', recognizing that an award can be severable, modifiable, and/or set aside, leaving the unsuccessful party with a suspended future claim.

The Arbitration and Conciliation Act 1996 is the governing law for arbitration in India. Section 9 of the Act provides for interim protection to parties involved in an arbitration proceeding. However, the traditional interpretation of Section 9 has been that it only protects the 'fruits of the award' to the award holder, leaving the unsuccessful party with no protection under this section. The High Court of Bombay's decision in Dirk India reinforced this binary approach, limiting the scope of Section 9 protection. In contrast, the Supreme Court's recent ruling in Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi has introduced a new reading of Section 9, recognizing that interim protection is not solely for enforcement purposes but also to safeguard the subject matter from vulnerability.

The Supreme Court's decision in Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi has significant implications for lawyers advising on Indian arbitration. The decoupling of interim protection from the question of winning or losing may expose clients to compliance risks if they fail to navigate this new landscape. This requires a deeper understanding of the fluid entitlement concept and its application in Indian arbitration law. As the court's decision marks a shift away from traditional binary thinking, it is essential for practitioners to adapt their approach to ensure that clients receive adequate protection under Section 9, even after an award has been issued.

Lawyers advising on Indian arbitration should note that the Supreme Court has decoupled interim protection from the question of winning or losing, allowing the losing party to seek Section 9 protection even after an award. This may expose clients to compliance risks if they fail to navigate this new landscape.

Source: Original reporting via The liminal award: 'Fluid entitlement' and the decoupling of interim protection post-award