Applicability of Emergency Arbitration in Domestic and International arbitration

Introduction

Emergency arbitration is a feature of the rules of all leading domestic and international arbitration institutions, both across Asia and elsewhere. Concept of emergency arbitration is considerably new and is likely to remain a permanent part of the international arbitration landscape.

Prior to the modern day emergency arbitration provisions, precursor emergency arbitration rules existed, such as the International Chamber of Commerce (‘ICC’, for short) Pre-Arbitral Referee procedure[1], as well as optional emergency arbitrator provisions in the rules of the American Arbitration Association.

The emergency arbitration rules implemented in the Stockholm Chamber of Commerce[2] may, however, be said to be the first instance of the modern form of emergency arbitration rules. Since these rules were promulgated, other leading arbitration institutions have followed suit, issuing comparable rules with a variety of refinements.

The Singapore International Arbitration Centre[3] was the first Asian institution to introduce emergency arbitration provisions in July 2010, making it an international leader in the number of cases handled.

What is Emergency Arbitration?

Emergency arbitration in the guise of an emergency relief is an upcoming concept in arbitration suitable for parties that cannot wait for the formation of the arbitral tribunal and is aimed to protect their assets and evidence, which may, otherwise, be altered or lost. The person seeking such appointment has to satisfy two elements-

1.Fumusboniiuris – Reasonable possibility that the requesting party will succeed on merits.

2.Periculum in mora– If the measure is not granted immediately, the loss would not and could not be compensated through damages.

Why Emergency Arbitration?

The ability of a party to obtain urgent interim relief is central to the success of any method of dispute resolution. In case of disputes that are subject to an arbitration agreement, until recently parties had only two options: either approach national courts for interim relief in support of the arbitration, or wait for the formation of the arbitral tribunal and then make an application for interim relief. The former would essentially require parties to initiate local proceedings before national courts (the avoidance of which may in fact have been the principal reason for choosing arbitration in the first place).

Some parties, therefore, prefer to seek interim measures within the arbitral process. A tribunal once appointed will also generally have wide powers, akin to those of a court, to grant interim relief. The difficulty that can arise is that in some instances the appointment of the substantive tribunal can take months, particularly if one party is obstructive or raises challenges to the nominated arbitrators.

In response, many leading arbitral institutions have introduced emergency arbitrator procedures which seek to close that gap by allowing parties, in situations of emergency, to obtain urgent arbitral relief before the substantive tribunal is formed.

UNCITRAL Model Law[4], Clause 17H provides for enforcement of interim awards and hence many countries which have similar provisions in their laws also recognize emergency arbitration awards under the category of interim international arbitration awards.

The award is enforceable like an order of the courts in jurisdictions that recognise emergency awards.

Emergency Arbitrator Procedure

Under emergency arbitrator procedures, a sole arbitrator is appointed by the arbitral institute on an expedited basis to determine applications for interim relief that cannot wait for the formation of the substantive tribunal.

Ad Hoc Tribunal

Under ICC rules[5] “any party that needs urgent interim or conservatory measures that cannot await the constitution of Arbitral Tribunal can apply for appointment of emergency arbitrator”. The same can be invoked before the institutions which provide for similar provisions.

The institution can set up an Ad hoc tribunal which is capable of granting interim measures or conservatory relief for a stipulated period of time on receipt of an application from the party to the institutional arbitration under contract and is in an emergency and requires a protective or any other interim order. The applicant is required to include in its application the reasons and the justification for emergency relief. The Ad hoc tribunal which has been constituted for a limited purpose and would immediately be dissolved, once the purpose is served or the said time frame in which such issues have to be decided, lapses.

International Arbitral institutions that have adopted emergency arbitrator mechanisms-

  • the International Chamber of Commerce (ICC)[6]
  • the Netherlands Arbitration Institute (NAI)[7]
  • the Swiss Chambers’ Arbitration Institute (SCAI)[8]
  • the Stockholm Chamber of Commerce (SCC)[9]
  • the International Centre for Dispute Resolution (ICDR)[10]
  • American Arbitration Association (AAA)[11]
  • the Hong Kong International Arbitration Centre (HKIAC)[12]
  • the Singapore International Arbitration Centre (SIAC)[13]
  • the China International Economic and Trade Arbitration Commission (CIETAC)[14]
  • the Australian Centre for International Commercial Arbitration (ACICA)[15]
  • the Japan Commercial Arbitration Association (JCAA)[16]
  • the Asian International Arbitration Centre (AIAC)[17]
  • the Lagos Chamber of Commerce International Arbitration Centre (LACIAC)[18]
  • the London Court of International Arbitration (LCIA)[19]
  • the Mexico City National Chamber of Commerce (CANACO)[20]

The following procedures, among others, must be adopted when a party chooses the emergency arbitration option:

1.Application in writing to the Registrar.

2.Filing of proof of serving such an application on the opposite party.

3.Payment of the fee, based on the schedule for each centre, where such arbitration is to be carried out with an implicit understanding that the application of emergency arbitration would be limited to signatories to the arbitration agreement or their successors.

Characteristics of Emergency arbitrator

The important characteristics of an emergency arbitrator are as follows:

1.Emergency arbitrator has powers to deal with only emergency relief applications;

2.Emergency arbitrator enjoys the same powers as the regular arbitral tribunal;

3.Emergency arbitrator must complete his work within 14 days;

4.Emergency arbitrator cannot continue after the formation of the arbitral tribunal;

5.Emergency arbitrator’s orders can be reviewed or altered by the arbitral tribunal;

6.Emergency arbitrator’s award can be challenged only where the seat of arbitration is located; and

7.Normally emergency arbitrator will not be a part of the arbitral tribunal.

Indian Scenario

Law commissions report

The law commission’s 246th report[21] on amendments to the Arbitration and Conciliation Act, 1996, proposed an amendment to section 2(1)(d) to broaden the definition of ‘arbitral tribunal’ and to include an emergency arbitrator appointed under any institutional rules in order to recognise emergency arbitrations and give statutory recognition to Singapore International Arbitration Centre rules or ICC rules or any other rules which provides for an appointment of an emergency arbitrator.

However, the Amendment Act of 2015[22] and 2019[23] failed to incorporate the recommendations of the Law Commission and did not provide at all for emergency arbitration.

Steps taken by Indian Institutions towards Emergency Arbitration

Notwithstanding the fact that the concept of emergency arbitration and its award is absent in the Indian legislation, the arbitration institutions in India such as Mumbai Centre for International Arbitration (MCIA)[24],  NaniPalkhivala Arbitration Centre (NPAC)[25], Indian Council of Arbitration (ICA)[26], Delhi International Arbitration Centre (DIAC)[27], Indian Institute of Arbitration & Mediation (IIAM)[28], Madras High Court Arbitration Centre (MHCAC)[29] and like, recognize emergency arbitration and have provided for specific procedure in that regard within their rules.

Enforcement in India

Domestic Awards

An interim award passed by the Arbitral tribunal, seated in India is enforceable, in accordance with section 2(c) of the Arbitration Act[30], as an arbitral award includes an interim award as well. An interim order that is passed by the arbitral tribunal, shall be binding as an order of the court, in accordance with section 17 of the Arbitration Act since after the 2015 amendment, hence domestic interim awards are enforceable.

Foreign seat Awards

The enforcement of a foreign seat award in India is highly unlikely as enforcement of such awards would be governed by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 and shall only be recognised under part II of the Act[31]. Article 17H of UNCITRAL Model Law[32] specifies that an interim measure issued by an arbitral tribunal would be recognised as binding and can be enforced upon an application to competent court, irrespective of the country in which the award was issued. The award is enforceable like an order of the courts in jurisdictions that recognise emergency awards. However, the Arbitration Act[33] doesn’t contain the provisions regarding the same so an emergency arbitration award passed by a foreign seat is not enforceable in India and an application under section 9 of the Act[34]is probably the only recourse left for the parties to seek interim measures of protection in India.

Conclusion

Emergency arbitration has become an essential component of international commercial arbitration. Number of application for emergency arbitration in various institutions remain on the rise and parties continue to opt for emergency arbitration proceedings as opposed to interim relief from national courts for reasons of confidentiality, time and cost-effectiveness. The major issue revolving around the awards passed by the emergency arbitrator pertains to the enforceability of such awards by domestic courts in states which have not yet provided for provisions relating to emergency arbitration in their domestic legislatures. It seems that the only definite way to secure the enforceability of the emergency arbitration is to provide an express provision in national legislation. Various states ought to follow the steps taken by the likes of Singapore, Hong Kong, New Zealand and enact in their respective domestic legislatures the provisions which recognize the legitimacy of emergency arbitration and their award.

 

Disclaimer:

The information contained in this document is intended for informational purposes only and does not constitute legal opinion, advice or any advertisement. This document is not intended to address the circumstances of any particular individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a particular situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances

[1] ICC pre arbitral referee rules

[2]SCC Rules (2010), Expedited Rules and Appendix II.

[3] SIAC Rules(2010), article 29

[4]  The UNCITRAL Model law on international commercial Arbitration 1985

[5] Article 29(1) of ICC rules

[6]ICC Rules (2012), Article 29(1) and Appendix II.

[7]NAI Rules (2010) Articles 42a and 42b.

[8]Swiss Rules (2012), Articles 42–43

[9]SCC Rules (2010), Expedited Rules and Appendix II.

[10] ICDR rules 6, 24, 34, 38, 39

[11] AAA rules, rule 38

[12]HKIAC Administered Arbitration Rules (2008) Article.38.

[13] Article 29, Appendix V or its rules

[14] CIETAC rules, article 23, 77, Appendix III

[15] ACICA rules, section 1 rule 5, 33, 44, Appendix A, schedule 1

[16] JCAA rules, Chapter V

[17] AIAC rules, Part I rule 4, rule 8, Schedule II, Schedule III

[18] LACIAC rules, section III rule 33, section V annexure VI

[19] LCIA rules(2014) article 9

[20]CANACO Rules (2008), Articles 36 and 50.

[21]The Law Commission’s 246th Report dated 05.08.2014.

[22]The Arbitration and Conciliation (Amendment) Act, 2015 (No. 3 of 2016), w.r.e.f. 23.10.2015.

[23]The Arbitration and Conciliation (Amendment) Act, 2019 (No. 33 of 2019), w.e.f. 09.08.2019.

[24]Mumbai Centre for International Arbitration (Rules) 2016, Section 3, rule 14

[25] Rule 20A

[26] Rule 57b

[27] part III of its arbitration rules, section 18A

[28] Rule 9, Part III schedule 1

[29] Part IV of its rules, section 20 r/w schedule A and schedule D

[30]Supra note 23

[31]ibid

[32]Supra note 4

[33]Supra note 23

[34]Ibid.

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