An arbitral tribunal's discretion regarding interim measures is upheld unless proven arbitrary, with recommended security for user assets following a cyber-attack, despite force majeure claims.

JUDGMENT :

SOMASEKHAR SUNDARESAN, J.

Context and Factual Background:

1. The captioned Petitions filed under Section 37 of the Arbitration and Conciliation Act, 1996 (“the Act”) challenging the decision of the Learned Arbitral Tribunal contained in two orders passed under Section 17 of the Act dated December 16, 2024 and March 12, 2025 (collectively, “Impugned Order”). The Learned Arbitral Tribunal has directed that certain specified amounts be secured by way of provision of a bank guarantee or deposit in escrow as a measure of preservation of the subject matter of the arbitration agreement.

2. It would be necessary to have a brief overview of the facts involved. The Petitioner, Zanmai Labs Private Limited (“Zanmai”) provides services connected with a trading platform called WazirX (“WazirX Platform”). Zanmai is a subsidiary of a company incorporated in Singapore, called Zettai Pte Ltd., Singapore (“Zettai”). Zanmai is founded by one Mr. Nishchal Shetty who is also a deponent of affidavits filed in Courts in Singapore on behalf of Zettai in a scheme of arrangement sought to be propounded by Zettai, which is stated to have implications for the matter at hand.

3. The two Respondents are Bitcipher Labs LLP (“Bitcipher”) in Commercial Arbitration Petition (L) No.11646 of 2025 and Nextgendev Solutions Pvt. Ltd. (“Nextgendev”) in Commercial Arbitration Petition (L) No.11975 of 2025. Bitcipher is a virtual digital asset service provider and enables access to trading on the WazirX platform for its respective clients through the contractual framework between Bitcipher and Zanmai. Bitcipher operates under the trade name, called Coin Switch and is registered as a broker on the WazirX platform.

4. All through the proceedings, including in the arbitral proceedings held so far, it is common ground that reference to the particulars relating Bitcipher would be adequate, since it would be dispositive of the issues arising in the Petition relating to Next gendev as well.

5. Bitcipher moved a sum of Rs.5 crores into a bank account held by Zanmai with the State Bank of India for purposes of its trading exposure on the WazirX Platform. However, it shortly learnt that balances to its credit on the WazirX Platform were shown as “pending” on the WazirX dashboard. Shortly thereafter, Zanmai imposed a bunch of restrictions on access of users to their assets on the WazirX Platform including restrictions on withdrawals of balances, citing a significant cyber-attack, which had taken place on July 18, 2024 on the multi signature wallets operated for transacting and holding of virtual digital assets. Assets of brokers and their clients, denominated in any currency or cyber tokens faced withdrawal restrictions. These restrictions lie at the heart of the dispute between the parties.

6. The crypto asset that was compromised by the cyber-attack is said to be the ‘ERC-20’ token, one of the supported crypto assets on which trading and holding was supported on the WazirX Platform. ERC-20 constituted about 40.5% of Bitcipher’s assets holding on the WazirX Platform at the relevant time. Zanmai invoked the force majeure clause in the agreement between the parties, which records security breaches and cyber-attacks as one of the illustrative types of force majeure conditions that fall are outside the scope and control of any party. The theft of ERC-20 assets is said to have had an impact of approximately USD 235 million.

7. Zanmai has been prop