Arbitration Act: Supreme Court Says Arbitral Tribunal Should Decide Interim Relief Once Constituted

The Supreme Court has held that once an arbitral tribunal has been constituted and is already hearing the dispute, it is generally the appropriate forum to decide applications seeking interim relief under the Arbitration and Conciliation Act, 1996.

A Bench of Justices K V Vishwanathan and Arun Palli said courts should ordinarily allow the arbitral tribunal to decide what interim measures are necessary, including measures to secure the amount in dispute, when arbitration proceedings are already underway.

Court was dealing with a plea filed by Liberty Investment Pvt Ltd against a September 22, 2026 order of the division bench of the Bombay High Court.

The Bench said the arbitral tribunal, having already been constituted under the Federation of Oils, Seeds and Fats Association Rules, 2025 (FOSFA Rules) and having proceeded substantially with the hearing, was in the best position to determine whether any interim protection was required.

Court referred the parties back to the arbitral tribunal for a decision on interim relief, while keeping the existing injunction in force until November 20, 2026.

The Bench said the Supreme Court exercises its jurisdiction under Article 136 with restraint when parties are already engaged in arbitration proceedings, preferring to allow the arbitral tribunal to decide questions relating to interim measures.

Article 136 of the Constitution of India provides the Supreme Court with the discretionary authority to permit special leave to appeal against any judgment, decree, determination, sentence, or order issued by any court or tribunal within the country.

"Times without number, this Court and several High Courts have on the constitution of the Arbitral Tribunal, even allowed orders made under Section 9, to be subject to further orders that the Tribunal may make under Section 17," the Bench said.

What was the dispute over interim relief?

The dispute arose from an application under Section 9 read with Section 9(3) of the Arbitration and Conciliation Act, 1996, seeking an injunction against Liberty Investment.

Section 9 allows a party to approach a court for interim measures before or during arbitration. Section 9(3), however, restricts the court from entertaining such an application once the arbitral tribunal has been constituted, unless the court finds that the remedy under Section 17 would not be efficacious.

The single judge of the Bombay High Court had dismissed the application on January 8, 2026, holding it to be not maintainable because the arbitral tribunal under the contract had already been constituted on November 17, 2025.

The respondent challenged that decision before the division bench. The division bench proceeded to consider the application on merits and held that the remedy before the FOSFA Tribunal was not efficacious.

Liberty Investment challenged the division bench's September 22, 2026 order before the Supreme Court.

What did Liberty Investment argue?

Liberty Investment's counsel argued that if the division bench considered the Section 9 application maintainable, it should have sent the matter back to the Single Judge for consideration on merits instead of deciding it itself.

The company also pointed out that the arbitral tribunal had been constituted on November 17, 2025 and was already deep into the proceedings. The minutes of the tribunal and correspondence exchanged between the parties showed that hearings were underway and that a claim for set-off had also been raised.

The company argued that the division bench was wrong in holding that the remedy before the FOSFA Tribunal was not efficacious. Referring to Rule 4 of the FOSFA Rules and Section 38 of the English Arbitration Act, 1996, it submitted that the tribunal had the power to grant the relief sought in the Section 9 application.

The respondent, however, argued that there was a categorical admission regarding the amounts in dispute. It also contended that Section 38 of the English Arbitration Act did not provide for the same relief as an application under Section 9 of the Indian Arbitration Act.

The respondent further argued that the properties in question were situated in India and an injunction granted by the arbitral tribunal would not be capable of enforcement in India.

Liberty Investment denied that there was any categorical admission of liability. It said the document relied upon by the respondent had been executed during "without prejudice" negotiations in Singapore and that it had a legitimate claim for set-off.

What did the Supreme Court say about the tribunal's powers?

The Bench said the arbitral tribunal had broad powers under Section 38 to issue directions concerning property that was the subject of the arbitration proceedings, including its preservation and detention, subject to the agreement between the parties.

Court said the tribunal, having all the relevant documents before it, would be able to determine whether there was an admission of liability, whether Liberty Investment had a claim for set-off and whether that claim had prima facie merit.

It could also determine whether the circumstances justified the grant of an injunction, the Bench said.

"We are of the opinion that the Arbitral Tribunal with all the documents before it will be able to appreciate whether there was any admission of liability; whether there is any claim inter-alia for set off and whether that claim has prima facie merit and also as to whether there is any case made out for grant of injunctive relief," the Bench said.

The Bench therefore held that the arbitral tribunal should have the final say on the interim relief at this stage.

Since the injunction under the September 22 order had been operating, the Supreme Court directed the respondent to approach the arbitral tribunal and obtain appropriate orders before November 20, 2026.

The Bench further directed that if the arbitral tribunal finds that it has no jurisdiction to grant the injunction, the existing High Court order would continue to operate and Liberty Investment would be entitled to pursue its challenge before the Supreme Court on merits.

"We make it clear that we have not entered upon the merits of the matter at this stage," the Bench said.

Court also clarified that the observations made by the division bench on the merits were made only for deciding the Section 9 application and would not influence the arbitral tribunal's decision.

Leaving all contentions open, the Bench noted that both parties agreed that the arbitral tribunal had jurisdiction to consider the reliefs sought in the application, particularly relief relating to securing the amount in dispute.

Case Title: Liberty Investment Pvt Ltd Vs Sunfield Global Pvt PTE Ltd

Bench: Justices K V Vishwanathan and Arun Palli 

Date of Order: October 07, 2026