The Section 9 Bar: Once a Tribunal is Constituted, the Civil Court Door Shuts

"Exploring the Implications of the Section 9 Bar: Understanding Civil Court Limitations Post-Tribunal Constitution with adrEdge."

ArcelorMittal Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd. | Supreme Court of India | Civil Appeal No. 5700 of 2021 | Decided: 14.09.2021

The moment an arbitral tribunal is constituted, a civil court's power to entertain a fresh application for interim relief is not merely curtailed. It is effectively suspended, unless the applicant can demonstrate that the remedy before the tribunal is not efficacious. The Supreme Court's ruling in ArcelorMittal Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd. has clarified exactly what this means in practice, and the answer matters for anyone who believes that filing a Section 9 application early in the day and then sitting on it is a viable litigation strategy.

The Facts

The dispute arose from a Cargo Handling Agreement between the parties at Hazira Port. After ArcelorMittal invoked arbitration in November 2020, both sides filed applications for interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 before the Commercial Court at Surat. The applications were heard extensively over 11 full days spanning 36 listing dates, with pleadings running to over 2,200 pages. By 7 June 2021, the matter had been fully argued and was reserved for orders.

Then, on 9 July 2021, a three-member arbitral tribunal was constituted by the Supreme Court under Section 11. ArcelorMittal immediately filed an application before the Commercial Court seeking to have both Section 9 applications referred to the newly constituted tribunal. The Commercial Court dismissed this request. The Gujarat High Court upheld the dismissal, but directed the Commercial Court to proceed to pass orders while keeping Section 9(3) in mind. ArcelorMittal then appealed to the Supreme Court.

The Core Question: What Does 'Entertain' Mean?

Section 9(3) of the Act, introduced by the 2015 Amendment, provides that once an arbitral tribunal has been constituted, the Court shall not entertain an application under Sub-section (1), unless the Court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious.

The word at the centre of the dispute was 'entertain'. ArcelorMittal argued that 'entertain' means the entire process of taking up an application for consideration, right through to the pronouncement of an order, and that since the Commercial Court had not yet pronounced its orders, it was still entertaining the applications when the tribunal was constituted. On this reading, the bar under Section 9(3) would have applied, and the court would have been required to first examine whether the Section 17 remedy was efficacious before passing any orders.

Essar argued the opposite. Its case was that 'entertain' means the first occasion when the court applies its mind to the application and takes it up for consideration. Since the applications had been fully heard and reserved for orders well before the tribunal was constituted, they had already been entertained in that sense, and Section 9(3) had no further role to play.

What the Court Held

The Supreme Court settled the meaning of 'entertain' by tracing its consistent interpretation across a line of authority. Drawing on Lakshmi Rattan Engineering Works Ltd. v. Asstt. Commissioner Sales Tax and Martin and Harris Ltd. v. VIth Additional District Judge, the Court held that 'entertain' means to take up for consideration and apply judicial mind to the issues raised. It is not the same as merely filing or admitting an application. The process of consideration can continue until the pronouncement of the final order.

However, and this is the crux, the bar under Section 9(3) operates at the point when the court would take up the application for consideration. If a tribunal is constituted while the application is already in the process of being considered, having been heard and reserved for orders, the bar does not require the court to start the examination of Section 17 efficacy afresh. The court held that where an application has already been entertained and the hearing concluded before the tribunal was constituted, the commercial court is entitled to proceed to pronounce its orders without separately examining whether the remedy under Section 17 is efficacious.

The appeal was accordingly allowed only to the narrow extent of clarifying that the Commercial Court would not need to conduct the Section 17 efficacy inquiry, since the applications had already been entertained before the tribunal was constituted. The direction to proceed to adjudication was affirmed.

The Bigger Picture: What Section 9(3) Was Designed to Do

The Court was careful to explain the legislative purpose behind Section 9(3). Introduced by the 2015 Amendment, it was designed to reduce the flow of Section 9 petitions to courts once a tribunal is in place, for two practical reasons: to decongest the court system, and to allow the tribunal, which has the same powers as a court under the amended Section 17, to handle interim relief in a timely manner. An order passed by the tribunal under Section 17 is deemed to be an order of court for all purposes and is enforceable under the Code of Civil Procedure in the same manner. There is therefore no structural reason for a court to continue entertaining interim relief applications once a functional tribunal is available.

The Court was also clear that a party cannot manufacture inefficacy of the Section 17 remedy through its own conduct. If a party deliberately delays the appointment process or refuses to cooperate with the tribunal, it cannot then turn around and claim that the Section 17 route is not efficacious in order to justify approaching a civil court under Section 9.

What This Means for ODR and Institutional Arbitration

For parties using institutional arbitration or ODR platforms, this ruling has an important practical consequence. Once an arbitrator is appointed and the tribunal is formally constituted, a party that has not yet filed a Section 9 application before a civil court, or has filed one but not had it taken up for consideration, is effectively barred from pursuing that route for interim relief absent genuine inefficacy of the tribunal remedy. The Section 17 route before the tribunal is the proper and intended avenue.

This reinforces the structural advantage of institutional and ODR-administered arbitration. The moment the tribunal is constituted through the platform's appointment mechanism, the dispute resolution process is firmly in the arbitral domain. Attempts to introduce parallel civil court proceedings for injunctions at that stage will face the Section 9(3) bar, and the burden of proving inefficacy rests squarely on the party seeking to go around the tribunal.