The claimant, a Finnish company, undertook to supply the respondent, an Indian company, with equipment for its operations in India. The claimant initiated arbitration proceedings to recover sums it alleged the respondent had failed to pay to it under the supply contract between the parties. The claimant asserted that the respondent had admitted its liability, whereas the respondent maintained that it had a valid defence against payment owing to the defects in the supplies. In the course of the arbitration, a consent order was issued by an Indian state court requiring the respondent to deposit the disputed sum with the court. The claimant requested the arbitral tribunal to render an interim award ordering that the sum deposited with the court be immediately paid to it.

La demanderesse, une société finlandaise, s'engagea à fournir du matériel à la défenderesse, une société indienne, pour son activité en Inde. La demanderesse engagea une procédure d'arbitrage pour recouvrer les sommes que la défenderesse aurait omis de lui payer conformément au contrat de fourniture entre les parties. La demanderesse prétendait que la défenderesse avait admis sa responsabilité, alors que la défenderesse défendait son refus de paiement en arguant de l'état défectueux des biens fournis. Au cours de l'arbitrage, un tribunal étatique indien émit une ordonnance par consentement enjoignant à la défenderesse de mettre la somme en question sous séquestre auprès du tribunal. La demanderesse sollicita du tribunal arbitral une sentence intérimaire ordonnant que la somme mise sous séquestre lui soit immédiatement remise.

El demandante, una sociedad finlandesa, se comprometió a suministrar al demandado, una sociedad india, equipos para sus operaciones en la India. El demandante inició un procedimiento de arbitraje para recuperar importes que, según alegó, el demandado no le había pagado con arreglo al contrato de suministro entre las partes. El demandante afirmó que el demandado había reconocido sus deudas, mientras que el demandado sostuvo que tenía una defensa válida contra el pago habida cuenta de los defectos en los suministros. Durante el procedimiento arbitral, un tribunal estatal indio emitió una orden por consentimiento solicitando al demandado que depositara el importe sujeto a litigio en el tribunal. El demandante solicitó al tribunal arbitral que dictara un laudo interlocutorio ordenando que el importe depositado en el tribunal le sea inmediatamente pagado.

'The tribunal's power to make this interim award

19. The tribunal's power to make an interim award is contained in Article 23(1) of the Rules which provides:

Unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the Arbitral Tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate. The Arbitral Tribunal may make the granting of any such measure subject to appropriate security being furnished by the requesting party. Any such measure shall take the form of an order, giving reasons, or of an Award, as the Arbitral Tribunal considers appropriate.

20. The existence of this power is not disputed by the Respondent. It is common ground between the parties that the question is whether, having regard to all the circumstances, the tribunal considers it appropriate in the present case to make the order for which the Claimant applies by way of an interim award. For the reasons set out below, I consider that an interim award is appropriate in the present case.

The relationship between any interim award and the consent order

21. The Claimant submits that, vis-à-vis the [state court], the tribunal is entitled to make the order applied for by way of an interim award and that the Consent Order specifically envisages that such an interim award will be made. The Respondent accepts that it is open to the tribunal to make such an interim award if the circumstances justify it. However, it submits that the circumstances do not justify it and that nothing in the Consent Order envisages the making of such an interim award.

22. In my judgment, the parties are clearly right to accept that there is nothing in the Consent Order which would prevent the tribunal, in appropriate circumstances, making the order applied for by way of an interim award. Paragraph 3 of the Consent Order expressly envisages that the [state court] will pay out of court the monies deposited by the Respondent in accordance with any interim order of the tribunal. However, I reject the Claimant's submission that the Consent Order specifically envisages that such an interim award will be made. What paragraph 3 of the Consent Order envisages is that the tribunal may make the order applied for by way of an interim or final award and that, were the tribunal to do so, the [state court] would then direct payment out in accordance with any such award.

Admitted liability for [the amount]

23. At the heart of the Claimant's application lies its submission that the [amount] presently deposited with the [state court] represents an admitted liability of the Respondent. Whether or not that submission is correct turns on the proper construction of the . . . letter sent by . . ., an authorised signatory of the Respondent, to . . . the Claimant's Financial Controller, against the background in which it was written.

24. The letter states:

This has reference to your letter dated . . . regarding a settlement of outstanding dues to [Claimant] and subsequent meetings held between us in [city]. In order that we proceed forward in a way that is a holistic solution to the existing situation, I propose the following three options to [Claimant]:

Option 1: [Claimant] makes a proposal to [Respondent] for upgrading the existing [infrastructure . . .]. This will enable [Claimant] to bid for a new contract for a very large capacity expansion in India and enable a settlement of past issues simultaneously.

Option 2: In case [Claimant] is unable to make such an offer, [Claimant] could make a proposal to [Respondent] to operate the existing [infrastructure] till October 2000 and take [it] back at that point in time. This will enable [Claimant] to get [equipment] for redeployment in their labs in India or overseas or in other customers' networks. [Respondent] would be willing to make a one-time payment of [the amount] to [Claimant] as a full and final settlement of all outstanding dues owing to [Claimant] including inter alia all dues under the existing contract between [Respondent] and [Claimant], [Claimant's] support between now and October 2000, the [Claimant's] guarantee that the existing [equipment] will continue to operate without problems till October 2000 and all costs associated with [Claimant] taking the [equipment] back at that point in time.

Option 3: In case [Claimant] is unable to make the offer suggested in Option 2 above, [Respondent] would be willing to make a one-time payment of [the amount] to [Claimant] as a full and final settlement of all dues owing to [Claimant] under the existing contract between [Claimant] and [Respondent]. This will enable [Claimant] to receive a one-time settlement quickly.

I look forward to a response from [Claimant] regarding moving forward towards a final settlement.

25. The Claimant submits that the letter shows that, as at [date], the Respondent accepted that a sum of at least [the amount] was due and payable to the Claimant under the Supply Contract; that the terms of the letter must have been in the [state court]'s mind when the Consent Order was made; and that no question of any defence to the Claimant's claim was apparent at the time of the letter. On the other hand, the Respondent submits that the letter was an offer to settle its dispute with the Claimant made without prejudice to the Respondent's rights and contentions and while negotiations were being conducted between the parties.

26. I agree with the Claimant that the . . . letter shows an acceptance by the Respondent that sums were owing from it to the Claimant under the Supply Contract. This is apparent from the terms of options 2 and 3 set out in the letter. I also dismiss the bald assertion in paragraph 3(g) of [Respondent's general manager]'s affidavit that the proposal to settle for [the amount] was "extraordinarily charitable". However, on the basis of the material before the tribunal on this application, I am not prepared to conclude that the letter comprises the clear admission of liability for at least [the amount] which the Claimant alleges it to be. Although the letter is not expressed to be written on a without prejudice basis, it was clearly written in the context of ongoing negotiations between the parties with a view to reaching an amicable settlement of their dispute. This is apparent from the letter dated [one month earlier] referred to in the opening paragraph of the . . . 2000 letter and from the fact that a series of meetings had been taking place between the parties which are referred to in both letters regarding a settlement of outstanding dues to the Claimant. Under option 2, the [amount] was being offered as a one-off payment as a full and final settlement of all outstanding dues owing to the Claimant in respect not only of the Supply Contract but also other matters. It is only under option 3-which is curiously not relied upon by the Claimant in paragraph 22 of its Request for Arbitration although it is relied upon in paragraph 15 of its written submissions in support of the present application-that the Claimant's case may be founded. Taken together with the other matters to which I have referred, I am, as I have already said, not prepared on this application to determine that it amounts to an admission of liability for at least [the amount]. However sceptical one might be of other explanations, the possibility that there are other explanations cannot at this stage be excluded.

27. In the present context, I do not consider that the Claimant derives support from the Consent Order or the absence of any mention of a defence. As paragraph 5 of the Consent Order made clear, it was passed without prejudice to the parties' respective positions. The absence of any mention of a defence is a strong pointer towards the Respondent having accepted that it was liable to the Claimant. As I have already said, I agree with the Claimant that the . . . letter shows an acceptance by the Respondent that sums were owing from it to the Claimant under the Supply Contract. However, the absence of any mention of a defence does not establish that the Claimant admitted liability for [the amount].

Defence to the claim

28. The Claimant next submits that the [amount] is a reasonable proportion of the sum which is likely to be awarded in its favour in any final award in the arbitration. It relies upon the fact that the Respondent has filed no Answer in the arbitration and submits that the allegations made in the winding up proceedings in India are without merit. It further submits that the Respondent's conduct in the arbitration demonstrates the Respondent's intention is simply to delay and obstruct the obtaining by the Claimant of an award in its favour. On the other hand, the Respondent submits that it has valid and substantial defences. By a fax dated . . . 2003, it raised a claim for damages caused by the Claimant's alleged failure fully to perform and comply with all of its obligations under the Supply Contract and disputed that it was itself in breach on the grounds that there was a change in governmental policies and other reasons beyond its control. These allegations are reiterated in the Respondent's written submissions in reply to the present application. The Respondent also disputes that its conduct in the arbitration has been due to the efforts between the parties to reach an amicable settlement and that it should not be blamed for the delays which have occurred.

29. In the light of the fax dated . . . 2003, the Respondent is entitled to have and will have determined in the arbitration the questions whether the Claimant has fully performed and complied with all of its obligations under the Supply Contract; if not, whether the Respondent is entitled to recover damages; and whether the Claimant's letter . . . proposing a 30% discount on the original price of the equipment supplied constitutes an admission by the Claimant of a deficiency in quality, quantity, delay or price of the equipment supplied by it. These issues are covered by issues (1) and (2) set out in paragraph 6.1 of the Terms of Reference. However, these allegations are so far wholly unparticularized . . .

30. On the basis of the material before the tribunal on this application, the Respondent has not established a sufficient evidential basis for its allegations to enable me to conclude that there is merit in its defences or counterclaim. In my judgment, therefore, the Claimant is entitled to an order for the payment to it of the sum deposited by the Respondent with the [state court] pursuant to the Consent Order. That sum represents a relatively modest proportion of the total sum claimed by the Claimant in the arbitration. Since the deposit was made in the sum of . . ., it seems to me that it is appropriate that this interim award should order the payment of that sum.

31. In reaching this conclusion, the tribunal wishes to make two things clear. First, it is unimpressed in this context by the Claimant's submissions relating to the Respondent's conduct in the arbitration and has not taken into account the criticisms made of it. Second, in ordering an interim payment as I do, I express no view on the definitive merits of the Respondent's allegations as they may be advanced at the arbitration hearing.

Security

32. This leads to the question whether, in the exercise of the tribunal's discretion under Article 23(1) of the Rules, I should order "appropriate security" by the Claimant. The Claimant submits that security should not be ordered on the grounds that it has extremely good prospects of obtaining a final award for at least [the deposited amount] and so the Respondent will not be prejudiced by the absence of any security for that sum; that it is a very substantial multinational company with significant assets; and that a final award is likely to be made within the next four months or so.

33. On the other hand, the Respondent submits that I should order appropriate security on the grounds that it has a substantial defence which will in every likelihood succeed; that in view of the fact that a final award is likely to be made within the next few months there is no necessity for any interim award; that since the deposit with the [state court] is invested on short-term deposit no prejudice will be caused to the Claimant by the absence of an interim order; and that in view of the Claimant's financial strength-which the Respondent does not challenge-a payment now to it rather than at the time of the final award will make no difference.

34. In my judgment, it is not appropriate in the present case for me to order the Claimant to furnish security. As I have already indicated, without expressing any definitive view on the ultimate outcome of the arbitration, the Respondent has not established on this application a sufficient evidential basis for its allegations to enable me to conclude that its defences or counterclaim "will in every likelihood succeed". The Claimant is accepted to be a substantial company and there is no reason to doubt that, if it fails by the final award to recover the sum of [the deposited amount], it will return the same to the Respondent. The other arguments advanced by the Respondent go not to the question whether the tribunal should order appropriate security but whether it is appropriate in the present case to make an interim award. In my judgment, for the reasons already given, it is.'