Australia: Emergency arbitration: Asia-Pacific Institutional Rules - Overview & Comparative Table Guide

The use of emergency arbitration mechanisms has been increasing – at least statistically – for some time. However, take up is markedly different by jurisdiction and institution. Despite growing use, there continues to be a preference to seek urgent relief from the courts rather than through arbitral mechanisms. Arguably, more can be done to ensure greater confidence in emergency arbitral processes.

INSTITUTIONAL RULES V AD HOC LEGISLATIVE POSITION

This article focusses on the position under the institutional rules of: ACICA, HKIAC, SIAC, KLRCA, CIETAC and the ICC. We have developed a comparative table of these institutions' Emergency Arbitration provisions which you can download.

We note that interim relief is also often available under State-based legislative regimes for ad hoc arbitral hearings – for example in Australia under:

  • Section 17 of the harmonised state Commercial Arbitration Acts; and
  • the International Arbitration Act (1974) and Articles 9 and 17 of the Model Law.

GROWTH OF EMERGENCY ARBITRATION

Over the last decade the emergency arbitration mechanism has emerged as a useful tool for parties seeking rapid enforceable solutions, prior to final arbitral resolution. Emergency arbitration provides parties (to an appropriate arbitration agreement) the ability to seek rapid relief via an interim order, prior to commencing a standard arbitration. It is commonly referred to as pre-arbitral relief, as it is invariably the case that a full arbitration (in the sense of a Tribunal being established) will follow1.

For a standard arbitration, formation of the tribunal may take some time (in some cases up to several months). In contrast, most institutional arbitration rules require that the emergency arbitrator be appointed within one to two days from the date the application was received.

Emergency arbitrator provisions have featured in arbitral rules since 2006.2 Almost all institutions have now responded to market demand by refining their rules to ensure that they align with international best practice. While there are similarities between the rules – there are also marked differences. For example, most institutional rules set a deadline of 15 days for an emergency decision, while the ACICA rules mandate a decision within five business days.

Anecdotal evidence suggests that emergency arbitration mechanisms are being most effectively used in situations where there may be a dispute regarding the misuse of confidential information, intellectual property rights or related actions by third parties that impact the arbitral parties – all of which are often classified as cross-border emergencies. The mechanism is also used to provide comfort to parties who foresee the prompt dissipation of evidence or assets.

CURRENT STATISTICS AND CHALLENGES

The emergency arbitral mechanism is being utilised. However, despite active efforts to promote emergency arbitration as effective pre-arbitral relief, it has failed to gain uniform traction and acceptance (as compared to seeking relief through the courts). Parties appear to harbour residual concerns with several aspects of the process.

In terms of utilisation by selected jurisdictions/institutions:

  • Singapore International Arbitration Centre's (SIAC) latest statistics report 57 applications for an emergency arbitrator from July 2010 to March 2017.3 Of those applications, all were accepted, 24 were granted, another four were granted by consent, five were granted in part, 16 were rejected, and six applications were withdrawn. The result of two is unknown.
  • The Hong Kong International Arbitration Centre (HKIAC) published statistics report two applications in 2016 (both accepted).4 Mr James Ng (Counsel for HKIAC) has confirmed that since the 2013 HKIAC Administered Arbitration Rules containing the emergency arbitrator provisions came into force on 1 November 2013, HKIAC has received 10 emergency arbitrator applications (4 of which were filed this year).
  • The International Chamber of Commerce (ICC) has reported 615 cases to date, with 25 applications in 2016 – more than double the number of applications in 2015.6 Mr Abhinav Bhushan (Director, South East Asia, for the ICC) has confirmed that 2017 statistics have not yet been compiled but there have now been 62 Emergency Arbitrations.

The 2015 Queen Mary International Arbitration Survey (Survey) reported that:

  • the most important factor influencing the decision to proceed with an emergency arbitrator is the enforceability of interim decisions (79%).7
  • other reasons were cited, some of which include:
    • costs associated with the emergency relief (20%),
    • the seat of the arbitration (27%), and
    • the likelihood of success (40%).8
  • further, only 29% of Survey respondents would consider emergency arbitration over the traditional avenue of seeking urgent relief – domestic courts (46%9).10
  • 93% of Survey respondents were of the opinion that institutions ought to have emergency arbitrator provisions in their respective arbitration rules.11
  • when asked about the effectiveness of emergency arbitrators, a fairly event split was recorded by the survey – one-third rated it 'effective', the other third 'neutral', and the final-third 'not effective'.12

Cumulatively, these statistics suggest that parties are interested and willing to use emergency arbitration. However, there remains some reticence and a need to convince many that this mechanism is more – or at least equally as – effective as the traditional route through Courts.

At the very least, it would seem that some effort should be directed to identification of the Survey respondents who fall into the 'neutral' third,13 and to get some understanding of what drove their response. This may help understand the 'lukewarm' response that was recorded in 2015.14 It's noted that the 2018 Queen Mary Survey does not include a specific section on emergency arbitration.15

As arbitration is an inherently confidential form of dispute resolution, it is difficult to obtain detailed and specific information regarding experiences arising from emergency arbitrations. Accordingly, the onus must primarily fall on arbitral institutions to further increase confidence as to the effectiveness of this mechanism, which may broadly involve publishing a greater number of comprehensive practice notes,[16] expanding on statistics, and running more practical events and conferences which simulate the step-by-step process involved in emergency arbitration.

Other challenges include institutions selecting a reliable pool of emergency arbitrators, who are aware of, and committed to, strict deadlines. There is no doubt that appointing an emergency arbitrator primarily because of availability (rather than suitability) poses a significant risk to growth in this area. One of the key competitive advantages of arbitration is the ability to have an arbitrator who is professional, efficient, and a reliable decision-maker – with focus and knowledge on the area on dispute. Having a wide pool of high calibre emergency arbitrators will inevitably lead to increased confidence among parties. According to ACICA's Secretary General, Ms Deborah Tomkinson, ACICA has over 40 experienced arbitrators who may be engaged as an emergency arbitrator at any time. All of these issues must also be considered alongside the need for increased diversity among arbitrators.

It is acknowledged that emergency arbitrators often struggle with two competing interests. The first is to ensure that the applicant's urgent situation is given due attention and care. This is to be balanced against procedural fairness afforded to the respondent, who must also be given a reasonable opportunity to present its case.17 This may also indicate why some parties are hesitant to adopt this mechanism, as the outcome is often unpredictable as it depends on the weight that the emergency arbitrator gives to each competing interest. However, this is not an issue that is unique to arbitration.

KEY CONSIDERATIONS FOR PARTIES

Emergency arbitration is a different process to a standard arbitration, as the central tenet is to obtain urgent relief. Many parties may still view emergency arbitrator provisions as a novelty, similar to other innovative arbitration developments such as joinder, consolidation, multi-party and multi-contract procedures, expedited procedure, and the summary dismissal of claims. Parties must carefully review the rules and timelines that apply, given the rapid nature of the process.

Parties who enter into contracts with an arbitration clause amenable to the application of emergency arbitral relief, must be aware of the significant speed at which these proceedings can commence, and how promptly the emergency arbitrator can deliver the order (approximately 5–15 days). Some emergency arbitrators follow the original timetable strictly, where any application for an extension will not be granted.

Any emergency interim measure ordered by an emergency arbitrator will be binding on the parties. However, it will not bind any subsequently appointed arbitral tribunal, as they are able to review, modify, terminate, or annul orders. Further, an order may cease to be binding if there is a failure to establish the arbitral tribunal within a certain period, usually 90 days.

If respondents fail to comply with the order, parties are able to seek recourse via courts, which support, and in many arbitration acts even explicitly acknowledge, emergency arbitrator rulings. For example, the Hong Kong Arbitration Ordinance provides that:

'any emergency relief granted, whether in or outside Hong Kong, by an emergency arbitrator...is enforceable in the same manner as an order or direction of the Court...'18

Similarly, the Singapore International Arbitration Act has expanded the definition of 'arbitral' tribunal to include an 'emergency arbitrator'.19 Parties should also carefully consider the specific rules relevant to their contract, as well as other issues such as the default seat of the arbitration, the deadline for an order, and application fees. The fee structures under the various rules are different and range from US$3500 to US$40,000. Such considerations will help clarify concerns regarding the speed, cost and general effectiveness of emergency arbitration.

Finally, it is noted that parties may be able to opt-out by mutual agreement or agree to another pre-arbitral procedure associated with the granting of conservatory or interim measures. Emergency arbitrator provisions do not prevent a party from seeking similar interim relief from a competent court or judiciary authority.20

IS EMERGENCY ARBITRATION SUITABLE TO YOUR DISPUTES?

The use of emergency arbitration mechanisms, and arbitration in general, can be more complex than parties may realise, as arbitral institutions take different approaches in their respective rules. Accordingly, it is important that parties seek specific legal advice regarding their unique situation as emergency arbitrator provisions may not always be applicable, or serve their interests or particular dispute resolution strategy.

The earlier parties turn their minds to the right approach for their transaction or issue, the more likely that they will traverse an appropriate path. The Corrs Chambers Westgarth International Arbitration practice group has prepared an Asia Pacific Guide on Emergency Arbitrator Provisions (2017–18), covering the following rules:

  1. ACICA (2016)
  2. HKIAC (2013)
  3. SIAC (2016)
  4. KLRCA (2017)
  5. CIETAC (2015)
  6. ICC (2017)

Click the 'Download' button above to view our comparative table of these institutions' Emergency Arbitration provisions.

Footnotes

1 Most rules mandate that a full arbitral Tribunal must be established within 90 days of any Emergency relief – or the interim decision is rendered non-binding.

2 International Centre for Dispute Resolution Arbitration Rules, see https://www.adr.org/sites/default/files/Summary%20of%20Changes%20for%20the%20International%20Dispute%20Resolution%20Procedures%20May%2001%2C%202006.pdf.

3 http://www.siac.org.sg/2014-11-03-13-33-43/facts-figures/statistics.

4 http://www.hkiac.org/about-us/statistics.

5 Abhinav Bhushan

6 https://iccwbo.org/media-wall/news-speeches/full-2016-icc-dispute-resolution-statistics-published-court-bulletin/.

7 White & Case, Queen Mary University of London & SIA School of International Arbitration, '2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, 28.

8 Ibid.

9 White & Case, Queen Mary University of London & SIA School of International Arbitration, '2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, 3, 24.

10 Ibid 27. Note that 26% were undecided.

11 White & Case, Queen Mary University of London & SIA School of International Arbitration, '2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, 3, 24.

12 Ibid 25, 27.

13 White & Case, Queen Mary University of London & SIA School of International Arbitration, '2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, 25, 27.

14 Ibid 27.

15 http://www.arbitration.qmul.ac.uk/docs/200163.pdf.

16 The ICC currently includes a section on Emergency Arbitrator provisions in a practice note: ICC, Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration, Part V, 30 October 2017. The ICC also has also published an Emergency Arbitrator Order Checklist to ensure that the process is as efficient and thorough as possible, see
https://cdn.iccwbo.org/content/uploads/sites/3/2016/03/ICC-Emergency-Arbitrator-Order-Checklist-ENGLISH-version.pdf. Another useful publication is the ICC Emergency Arbitrator Statement of Acceptance, Availability, Impartiality and Independence, see
https://cdn.iccwbo.org/content/uploads/sites/3/2016/11/ICC-Emergency-Arbitrator-Statement-of-Acceptance-Availability-Impartiality-ENGLISH-1.pdf.

17 See eg, Article 5.2, Appendix V, ICC 2017 Arbitration and 2014 Mediation Rules, https://iccwbo.org/publication/arbitration-rules-and-mediation-rules/.

18 Section 22B, Part 3A, Arbitration Ordinance (Cap. 609), see https://www.elegislation.gov.hk/hk/cap609?p0=1&p1=1.

19 Section 2, Part II, International Arbitration Act (Chapter 143A), see http://statutes.agc.gov.sg/aol/download/0/0/pdf/binaryFile/pdfFile.pdf?CompId:c0f5c2e1-685c-41b3-8ad4-0533466f6d3f.

20 Article 29.7, ICC 2017 Arbitration and 2014 Mediation Rules, https://iccwbo.org/publication/arbitration-rules-and-mediation-rules/. See also Article 7.1, Schedule 1, ACICA 2016 Arbitration Rules, https://acica.org.au/acica-rules-2016/.

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.

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