Interim Relief Cannot Rewrite Contracts
Bombay High Court’s Arbitration Ruling Protects Party Autonomy
ONGC’s Plea for Extended Bank Guarantee Rejected
By Our Legal Correspondent
New Delhi: June 16, 2026:
The Bombay High Court has ruled that interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 cannot extend rights beyond what parties have contractually agreed. This decision, arising from ONGC’s attempt to prolong a USD 14.82 million bank guarantee against Swiber Offshore, reinforces the principle that courts must respect the boundaries of party autonomy in arbitration.
Arbitration in India is governed by the Arbitration and Conciliation Act, 1996 (A&C Act), modelled on the UNCITRAL framework. A recurring issue is whether courts, under Section 9, can grant interim reliefs that effectively expand contractual rights. The Bombay High Court’s ruling in ONGC v. Swiber Offshore Construction Pte. Ltd. (2026) provides clarity: interim relief cannot enlarge rights beyond the parties’ agreement.
Case Background
Contract (2010): ONGC engaged Swiber Offshore for offshore works worth USD 148.2 million.
Bank Guarantee: Swiber furnished a guarantee of USD 14.82 million (10% contract value) to secure liquidated damages.
Arbitral Award (2025): Tribunal rejected ONGC’s damages claim, ordered return of guarantee, and directed ONGC to pay Swiber USD 4.11 million with 5% interest.
Consent Terms (2016): Parties agreed guarantee would remain alive only 120 days post-award.
ONGC’s Plea: Sought continuation of guarantee citing Swiber’s liquidation in Singapore.
Court’s Findings
Section 9’s Scope
Objective: Preserve existing securities pending adjudication.
Limitation: Cannot extend rights beyond contractual limits.
Consent Terms Binding
Parties consciously agreed to a 120-day limit.
Extending beyond this would rewrite the contract.
Disclosure Failure
ONGC did not adequately disclose consent terms.
Court held this omission undermined its plea.
Threshold for Post-Award Relief
Following Supreme Court’s ruling in Home Care Retail Marts v. Haresh Sanghavi (2026), post-award relief requires exceptional circumstances.
Mere filing of a Section 34 challenge is insufficient.
Liquidation Argument Rejected
Guarantee tied only to liquidated damages dispute.
Cannot serve as general security for all claims.
Key Legal Principles
Party Autonomy: Arbitration is rooted in respecting contractual boundaries.
Fraud vs. Risk: Courts distinguish between genuine fraud and commercial risk.
Exceptional Circumstances Test: Post-award interim relief requires compelling justification.
Disclosure Duty: Parties must fully disclose prior agreements when seeking discretionary relief.
Comparative Perspective
India: Section 9 interim relief limited to preserving subject matter.
UK: Courts grant interim measures but avoid altering contractual rights.
Singapore: Strong emphasis on party autonomy; interim relief tied strictly to agreed terms.
Inference: Indian courts align with global arbitration norms, emphasizing contractual sanctity.
Implications
For Corporates: Cannot rely on courts to extend securities beyond agreed limits.
For Arbitration Practice: Reinforces predictability and party autonomy.
For Policy: Encourages careful drafting of consent terms and security arrangements.
For ONGC: Must pursue remedies through Section 34 challenge, not interim relief.
Conclusion
The Bombay High Court’s ruling is a landmark affirmation of party autonomy in arbitration. It underscores that interim relief is protective, not creative—courts cannot rewrite contracts under the guise of interim measures. This strengthens India’s arbitration framework by aligning judicial practice with international standards.
FAQs
1. What does Section 9 of the Arbitration Act provide?
Section 9 allows courts to grant interim measures to preserve the subject matter of disputes, including securities, property, or funds.
2. Can interim relief extend contractual rights?
No. Courts cannot enlarge rights beyond what parties have agreed. Relief is limited to preserving existing arrangements.
3. Why was ONGC’s plea rejected?
Because ONGC sought continuation of a bank guarantee beyond the 120-day limit agreed in consent terms.
4. Does filing a Section 34 challenge automatically justify interim relief?
No. The Court held that mere challenge is insufficient; exceptional circumstances must be shown.
5. What precedent did the Court rely on?
The Supreme Court’s ruling in Home Care Retail Marts v. Haresh Sanghavi (2026), which set a higher threshold for post-award relief.
6. How did Swiber’s liquidation affect the case?
The Court acknowledged risk but held that the guarantee was tied only to liquidated damages, not general claims.
7. What is the duty of disclosure in interim relief applications?
Applicants must disclose all relevant agreements, including consent terms, to ensure fairness.
8. What is the significance of party autonomy in arbitration?
It ensures that arbitration respects contractual boundaries and prevents judicial overreach.
9. Can courts extend securities beyond agreed timelines?
No. Courts cannot rewrite contracts; securities expire as per agreed terms.
10. What lessons does this case offer?
Parties must draft clear consent terms, disclose them fully, and avoid relying on courts to extend contractual protections.