Protection of Award Amount Paramount: Delhi HC Directs Reliance Infrastructure to Secure Assets Worth US$ 135 Million in Shanghai Electric Arbitration Case

The High Court of Delhi, in the landmark case of Shanghai Electric Group Co. Ltd. Versus Reliance Infrastructure Ltd., has upheld the enforceability of interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 in the context of foreign arbitral awards. The Court ordered Reliance Infrastructure to refrain from alienating assets up to US$ 135,320,728.42 to ensure the enforceability of a Singapore International Arbitration Centre award. The decision, delivered by Justices Sanjeev Sachdeva and Manoj Jain on 6^th March 2024, also dismissed cross objections raised by Reliance Infrastructure regarding jurisdiction and the applicability of Section 9 of the Act.

Legal Point: The key legal issue addressed was the grant of interim measures under Section 9 of the Arbitration Act for foreign arbitral awards and the jurisdiction of Indian courts in such matters.

Facts and Issues: The case involved a dispute over equipment supply and service contracts for the Sasan UMPP, with Shanghai Electric alleging unpaid dues of approximately INR 1100 Crores by Reliance Infrastructure. Following an arbitration process under the Singapore International Arbitration Centre, which resulted in an award favoring Shanghai Electric, the appellant sought interim reliefs in India to secure the award amount, apprehending non-compliance by Reliance Infrastructure.

Jurisdiction and Interim Measures: The Court confirmed its jurisdiction under Section 9 of the Arbitration Act based on the location of assets in Delhi. It emphasized the necessity of interim measures to preserve assets for enforcing foreign arbitral awards.

Financial Condition of Respondent: Observations were made on Reliance Infrastructure’s financial health and previous assurances to the court, which led to the necessity of granting interim measures.

Dismissal of Cross Objections: Reliance Infrastructure’s objections on jurisdiction and Section 9 applicability were dismissed, affirming the court’s stance on its authority to grant interim measures in cases of international arbitration.

Decision: The High Court ordered Reliance Infrastructure Ltd. To refrain from selling, alienating, transferring, or encumbering assets amounting to US$ 135,320,728.42. This decision aims to preserve the enforceability of the foreign arbitral award, subject to any existing charges on the assets.

Date of Decision: 06^th March 2024

Shanghai Electric Group Co. Ltd. Versus Reliance Infrastructure Ltd.