Court directs Zigma International to secure claim through deposit or bank guarantee amid ongoing arbitration proceedings in London.
In a significant ruling, the Bombay High Court has granted interim relief to Norvic Shipping Asia PTE Limited in its arbitration dispute with Zigma International. The legal battle, rooted in a Repayment Schedule Agreement signed on January 9, 2025, has seen the petitioner, Norvic Shipping, seeking protection of its claims during ongoing arbitration proceedings under the London Maritime Arbitrators Association (LMAA).
Presided over by Justice Amit Borkar, the court was moved by Norvic Shipping under Section 9 of the Arbitration and Conciliation Act, 1996. The petitioner sought interim measures to prevent the diminution of Zigma International's assets, arguing the necessity to secure assets pending the arbitration's outcome.
The court's decision mandates Zigma International to either deposit USD 262,837.98 and GBP 9,400 with the court or furnish an unconditional and irrevocable bank guarantee for the equivalent amount. This measure aims to ensure the enforceability of a potential arbitral award. The court found a strong prima facie case favoring the petitioner, emphasizing the acknowledgment of debt by the respondent and the default in payment of installments as agreed.
Justice Borkar noted the peculiar circumstances, such as the respondent's financial distress and inconsistent defenses, which could potentially compromise the petitioner's ability to enforce the arbitral award if assets were depleted. The court also considered the international nature of the arbitration, which could render interim orders from the LMAA unenforceable against assets located in India, thus justifying the intervention under Section 9.
However, the court declined to appoint a Receiver or order a blanket attachment of assets, deeming such measures disproportionate at this stage. Instead, Zigma International is restrained from alienating or encumbering its assets beyond ordinary business operations until compliance with the court's order.
This decision underscores the Bombay High Court's commitment to safeguarding the arbitral process and ensuring that interim relief mechanisms are effectively utilized to preserve the rights of parties engaged in cross-border commercial disputes.
Bottom line:-
Arbitration and Conciliation Act, 1996 - Section 9 - Interim protection to secure assets in support of arbitration proceedings - Court's jurisdiction under Section 9 can be exercised even after constitution of the Arbitral Tribunal if remedy under Section 17 is not efficacious.
Statutory provision(s): Arbitration and Conciliation Act, 1996 - Sections 9, 17
Norvic Shipping Asia PTE Limited v. Zigma International, (Bombay) : Law Finder Doc id # 2933536
