India: Appointment Of Emergency Arbitrator In India

Last Updated: 12 May 2017
Article by Kunal Kumar and Anshuman Ray

Most Read Contributor in India, July 2017

Appointment of Emergency Arbitrator: It is the procedure by which parties seeking for an urgent interim relief may appoint an arbitrator even before the constitution of the tribunal. In any arbitration there are instances where parties may want to protect their rights such as by freezing opposite parties assets in order to secure the amount claimed or any other relief similar in nature. The person seeking such appointment has to satisfy two elements:

1. The loss by the way of damages are irreparable by nature if the relief is not granted i.e. Periculum in mora

2. That the person seeking such relief is likely to succeed on merits i.e. Fumus boni Iuris

The emergency arbitration was first introduced in year 2006 by International Centre for Dispute Resolution (ICDR). Many other major arbitral such as LCIA (London Court for International Arbitration), SIAC (Singapore International Arbitration Centre), HKIAC (Honk kong International Arbitration Centre) and ICC (International Chamber of Commerce) thereafter have followed by inserting the provisions for appointing the emergency arbitrators. Very recently, SIAC has amended their rules, accordingly by which the President shall seek to appoint the arbitration within one day of the receipt by the Registrar of such application requested.1 Likewise, even Mumbai Centre for International Arbitration2 (MCIA) has adopted provision for the appointment of emergency arbitrator3 and the Delhi International Arbitrator Centre has also included the provision for the 'Emergency Arbitrator' and the appointment, procedure and time period for the same.

Further, most of the institutions have also put a time limit date within which the interim award is to be delivered. For example, under SIAC Rules 20164 and under MCIA Rules 20165, the award is to be made within 14 day from the date of appointment of the emergency arbitrator.

However, the concept of 'Emergency Arbitration' has not been so popular in India. Most of the Indian parties have chosen SIAC as the arbitral institutions and reportedly 9 out of 34 applications for the appointment of emergency arbitrator were in fact made by the Indian parties.6 Previously, the Indian arbitration rules and the laws were not so arbitration friendly but after the amendment of Arbitration & Conciliation Act, 1996 and the MCIA Rules 2016 India is gradually moving forward and adapting the international standards in commercial arbitration.

The first issue relating to the emergency arbitration was discussed in the case of HSBC PI Holding (Mauritius) Limited v. Avitel Post Studiouz Limited7 dated 22.01.2014 by the Bombay High Court. In the present case, the locus loci arbitri i.e. the seat of arbitration was Singapore i.e. outside India. The Petitioner had moved an application for the appointment of emergency arbitrator to seek interim measures. The emergency arbitrator had granted the interim measures and passed the award in favor of the Petitioner by freezing the accounts of the Respondents and required them to disclose their assets to HSBC Mauritius information. The Petitioner later moved an application under Section 9 before Bombay high Court to seek the same reliefs which was also granted by the Arbitral Tribunal. The Honorable High Court of Bombay held that since the party had moved an application under Section 9 of the Act and was not seeking to enforce the emergency award passed, the same could be granted by the Court. It is pertinent note that the judgment was delivered prior to the BALCO decision where it was held that the Indian Courts cannot entertain interim relief where the seat of arbitration is outside India.

On 07.10.2016, in the case of Raffles Design International India Private Limited & Ors. v. Educomp Professional Education Limited & Ors.,8 held by the Delhi High Court the issue of emergency arbitrator was again discussed. The seat of arbitration was Singapore. The interim relief was granted by the emergency arbitrator restraining the Respondent from taking any action that would deprive the rights of the Claimants in the agreement in respect of (a) Hiring and dismissal of employees in the society and (2) functioning and management of the society. Additionally, the Respondent was restrained from instigating the terminated employees of the Society. The same was also enforced by the High Court of the Republic of Singapore. Later, the party for whom the order was passed in favor sought interim relief under Section 9 of the new amended Arbitration & Conciliation Act, 2015 stating that the opposite party had been acting in contravention to the emergency award passed. It was held that:

"99. In the circumstances, the emergency award passed by the Arbitral Tribunal cannot be enforced under the Act and the only method for enforcing the same would be for the petitioner to file a suit.

100. However, in my view, a party seeking interim measures cannot be precluded from doing so only for the reason that it had obtained a similar order from an arbitral tribunal. Needless to state that the question whether the interim orders should be granted under section 9 of the Act or not would have to be considered by the Courts independent of the orders passed by the arbitral tribunal. Recourse to Section 9 of the Act is not available for the purpose of enforcing the orders of the arbitral tribunal; but that does not mean that the Court cannot independently apply its mind and grant interim relief in cases where it is warranted."

In above ratio decendi, it may be inferred that after the amendment of the Arbitration & Conciliation Act, 1996 the Court has the power to entertain and also interim relief even if the seat of arbitration is outside India.

The concept of 'Appointment of Emergency Arbitrator' in India is not new. Arbitral Centres such as Madras High Court Arbitration Centre and Delhi International Arbitration Centre had introduced appointment of emergency arbitration in their rules long back. However, not many parties are aware that their interests can be protected even before the tribunal is constituted and such applications are not just limited to the courts

Footnotes

1 Schedule 1, Rule 3 of the SIAC Rules 2016

2 Established in 2016

3 Under Rule 14, MCIA Rules 2016

4 Schedule 1, Rule 9 of the SIAC Rules 2016

5 Under Rule 14.6, MCIA Rules 2016

6 From July 2010 – 1 April, 2014: http://hsfnotes.com/arbitration/2014/04/01/siac-emergency-arbitrator-awardsa- speedier-route-to-interim-relief-before-the-indiancourts/

7 MANU/MH/0050/2014

8 MANU/DE/2754/2016

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