Bombay High Court: Filing Challenge Against Arbitral Award Does Not Automatically Entitle Losing Party To Continue Interim Protection

The Bombay High Court has declined a request by Oil and Natural Gas Corporation Limited (ONGC) to continue a bank guarantee worth USD 14.82 million after an arbitral tribunal ruled against it in a contractual dispute with Swiber Offshore Construction Pte. Ltd. The Court held that merely challenging an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 does not automatically entitle an unsuccessful party to retain interim protections granted before the award.

The dispute arose from a 2010 offshore construction contract under which Swiber furnished a bank guarantee to secure potential liquidated damages claims by ONGC. However, the arbitral tribunal, by its award dated September 30, 2025, rejected ONGC’s claim for liquidated damages, directed the return of the bank guarantee, and awarded a monetary amount in favour of Swiber. ONGC subsequently challenged the award and sought continuation of the guarantee through proceedings under Section 9 of the Act.

Justice Amit Borkar observed that post-award interim relief cannot be granted routinely and requires the applicant to demonstrate exceptional circumstances. The Court emphasized that an unsuccessful party cannot secure continuation of interim arrangements solely because a challenge to the award is pending. Accepting such a proposition, the Court noted, would effectively grant interim protection to every unsuccessful litigant who files a Section 34 petition.

The Court also relied on earlier consent terms between the parties, under which the bank guarantee was to remain valid only for 120 days after the arbitral award. Since that period had expired, extending the guarantee would amount to altering the parties’ agreed contractual arrangement.

Rejecting ONGC’s argument that Swiber’s liquidation proceedings in Singapore justified continued protection, the Court held that concerns regarding future recovery, without more, did not constitute the extraordinary circumstances required for post-award relief. Finding no compelling grounds to interfere, the Court dismissed ONGC’s petition seeking continuation of the bank guarantee.