India: Enforcement Of Emergency Arbitration: The Indian Perspective

This article discusses the concept of emergency arbitration and its recognition and enforcement in India particularly in light of the Supreme Court judgment in Amazon.com NV Investment Holdings LLC v. Future Retail Limited & Ors which amongst others recognised the construct of emergency arbitration under the Arbitration & Conciliation Act,1996.

For several years, international arbitration was ill-equipped to grant urgent interim reliefs. Parties were, therefore, compelled to approach the very national courts they had chosen to avoid.¹ To address this, emergency arbitration was developed as a "pre-arbitration arbitration", enabling parties to seek urgent interim reliefs before the main arbitral tribunal was constituted.

Emergency arbitration may be traced back to 1990 when the International Chamber of Commerce's Pre-Arbitral Referee Procedure Rules² were introduced. These Rules created a specialised procedure for obtaining provisional measures from a 'referee', appointed solely for the purpose of issuing emergency reliefs prior to the constitution of the arbitral tribunal. In 2006, the UNCITRAL Model Law on International Commercial Arbitration, 1985 (UNCITRAL Model Law)³ was revised to incorporate the concept of provisional measures under Articles 9 and 17, which enabled courts and arbitral tribunals, respectively to grant interim reliefs. However, parties were not able to obtain urgent reliefs from arbitral tribunals until international⁴ and domestic arbitral institutions⁵ amended their rules to include the provision for emergency arbitration. In spite of such amendments having been made, parties continue to grapple with enforcing emergency arbitration awards.

Emergency Arbitration in India

In India, arbitration is governed by the Arbitration & Conciliation Act,1996 (Act). Part I of the Act (Sections 2 to 43) applies only to arbitrations seated in India except in certain circumstances.⁶ Part II of the Act applies to foreign awards and governs their enforcement in India.⁷

Emergency 'order' or Emergency 'award'?

The Act defines 'arbitral award' as including 'interim award'. Sections 44 and 53 of the Act define a 'foreign award' as an arbitral award on differences between persons arising out of legal relations considered as commercial under Indian law. However, neither definition expressly deals with emergency orders.

In 2014, the 246th Report of the Law Commission of India⁸ (246th Report), recommended that the Act be amended to include an emergency arbitrator within the definition of 'arbitral tribunal' under Section 2(1)(d) of the Act. Thereafter, in 2017, a High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India issued a report ⁹ (Srikrishna Report), suggesting that the definition of 'arbitral award' under the Act be amended to include 'emergency award' and specifically highlighted the uncertainty of enforcement of emergency arbitration awards in India. Unfortunately, Parliament did not implement any of these recommendations.

In this context it is relevant to note that while Section 31(6) of the Act provides that an arbitral tribunal may, at any time during the arbitral proceedings, make an interim award on any matter with respect to which it may make a final award, it does not define 'interim award' nor explain how it differs from an interim order under Sections 9 and 17 of the Act. This distinction is relevant to identify the appropriate recourse since interim awards and interim orders are challenged under Sections 34 and 37 of the Act, respectively.

Recognition of Indian-Seated Emergency Orders

Over the years, Indian courts have indirectly enforced emergency awards as orders under Section 17 of the Act. The most celebrated decision is the Supreme Court of India (Supreme Court) judgment in Amazon.com NV Investment Holdings LLC v. Future Retail Limited & Ors¹⁰ (Amazon- Future Retail) where the Supreme Court held that the term 'arbitral tribunal' in Section 17 of the Act included an emergency arbitrator. The Supreme Court also held that the Act is a complete code in itself, and, therefore, no appeal would lie from an order under Section 17(2) of the Act enforcing an emergency award.

Amazon had initiated emergency arbitration proceedings under the Singapore International Arbitration Centre (SIAC) rules seeking an injunction against Future Retail in relation to a disputed transaction, and obtained an interim award in its favour. Amazon filed an application under Section 17(2)¹¹ of the Act to enforce the emergency award in India. The Supreme Court held that an emergency award under the SIAC rules could be considered an order under Section 17(1) of the Act. For this purpose, the Supreme Court relied on the principle of party autonomy as explained in its previous rulings in Centrotrade Minerals and Metals Inc v. Hindustan Copper Ltd.¹², and Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc.¹³, (BALCO) – viz. that parties are free to choose any person or institution to determine disputes between them. The Court also held that there was no express or implied interdict on emergency arbitrators under the Act, and that Section 17(1) of the Act was wide enough to include emergency arbitration proceedings.

While the Amazon-Future Retail decision is no doubt a significant step forward towards recognising emergency arbitration, it is not an authoritative precedent on the enforceability of foreign-seated emergency orders as Amazon was attempting to enforce a Delhi-seated emergency order, i.e., though the administering institution was SIAC, the arbitral tribunal was seated in Delhi.

Foreign-Seated Emergency Orders Remain in Limbo

As stated above, the enforcement of foreign awards in India is governed by Part II of the Act.

The terms 'arbitral awards' and 'foreign awards', as defined in the New York Convention and the Geneva Convention, and Sections 44 and 53 of the Act, respectively, are broad enough to include a decision passed by an emergency arbitral tribunal. The real challenge is that, unlike a domestic award, a foreign award is not a decree until an Indian court determines that it fulfils the conditions set forth in Sections 48¹⁴ and 57¹⁵ of the Act.

There is also a lack of consensus in the international community regarding the nature of emergency arbitral tribunals' decisions and whether they are 'orders' or 'awards'. Some argue that interim measures such as emergency arbitration do not resolve any substantive dispute between the parties with finality and thus cannot be represented as an 'award' under Article V(1)(e) of the New York Convention and Article 1(2)(d) of the Geneva Convention. These Conventions state that the recognition and enforcement of an award may be refused if it can be demonstrated that the award has not become binding and final in nature. On the other hand, it has been argued that both Conventions are primarily intended to ensure the certainty and effectiveness of arbitration agreements and their resolution, and that because neither provides an exhaustive definition of an 'arbitral award', interpreters should refrain from imposing limits on the definition.

Parties have, therefore, sought recourse to Section 9 of the Act which provides for interim measures by the court prior to invocation of the arbitration, during the arbitral process and post the award¹⁶ to enforce foreign-seated emergency awards. The first case where parties sought enforcement of foreign-seated emergency orders under Section 9 of the Act was pronounced by the Bombay High Court in HSBC PI Holdings (Mauritius) Ltd. v. Avitel Post Studioz Ltd. & Ors.¹⁷ where the applicant who had procured a favourable emergency arbitration decision in a Singapore-seated SIAC arbitration approached the Court under Section 9 of the Act. The Court held that the applicant was "...entitled to invoke Section 9 for interim measures..."¹⁸ as the arbitration agreement specifically excluded the applicability of Part I, except for Section 9 of the Act. The applicant was, therefore, granted interim reliefs in line with the emergency arbitration decision.

Significantly, in BALCO, a 5-judge bench of the Supreme Court held that since Section 9 of the Act fell in Part I, Indian courts lacked jurisdiction to grant interim measures when the seat of arbitration was outside India. However, the Bombay High Court did not apply the ratio of the Supreme Court's judgment, BALCO since it was not applicable to arbitration agreement entered into between the parties prior to its pronouncement, i.e., on 6 September 2012.

In 2015, the Parliament inserted a proviso to Section 2(2) of the Act and, subject to a contract to the contrary between the parties, extended the application of Section 9 to an arbitration agreement and an award made under Part II of the Act.

In 2016, however, the Delhi High Court took a contrary view in Raffles Design International India Private Limited & Ors. v. Educomp Professional Education Limited & Ors.¹⁹ where the Court held that, in the absence of any provisions pari materia to Article 17H²⁰ of the UNCITRAL Model Law which expressly provided for enforcement of interim measures, an emergency order arising from an arbitration seated outside India could not be enforced under Section 9 the Act. The only way to enforce it, according to the Delhi High Court, was to file a suit or a petition under Section 9 of the Act; although, in the latter case, the court would have to examine the request for interim relief independent of the emergency order.

Concluding Comments

These decisions clearly depict the difference in the approach of Indian courts in respect of recourse to Section 9 of the Act. The enforceability of foreign-seated emergency orders, therefore, remains uncertain. More recently, the Delhi High Court in Ashwani Minda v. U-Shin Limited²¹ held that after invoking emergency arbitration a party could not seek interim reliefs under Section 9 of the Act after failing to obtain the same interim relief from the arbitrator. More recently, in Shanghai Electric Group Co, Ltd. v. Reliance Infrastructure Ltd.²², the Delhi High Court held that a party may enforce a foreign emergency award under Section 9 of the Act.

Therefore, there is an apparent legislative lacuna under Indian law with respect to emergency arbitration proceedings, particularly, the enforcement of foreign-seated emergency arbitration.

The uncertainty surrounding emergency arbitration proceedings may, perhaps, be addressed by implementing the recommendations of the 246th Report and the Srikrishna Report by granting statutory recognition to emergency arbitration. This would permit the enforcement of decisions of emergency arbitral tribunals in Indian-seated emergency arbitrations and would be consistent with the Supreme Court's decision in Amazon-Future Retail. It would also help achieve the intended goal of making India a hub of international commercial arbitration.

For foreign-seated emergency arbitrations, the proviso to Section 2(2) of the Act can be amended to extend the application of Section 17 of the Act (interim measures ordered by arbitral tribunals) to Part II of the Act. This would be in consonance with Articles 17H and 17I of the UNCITRAL Model Law which recognise and enforce interim orders passed by foreign-seated arbitral tribunals. This would also end the debate as to whether an emergency arbitration decision should be an 'award' under the New York and Geneva Conventions – i.e., final and binding – to enable enforcement under Part II of the Act.

Pending legislative action, there are nevertheless indirect ways to enforce the decisions of emergency arbitrators. In the case of Indian-seated emergency arbitration, parties can either apply for an interim order under Section 17(2) of the Act for the emergency order to be enforced under provisions of the Code of Civil Procedure, 1908 (CPC) akin to an order by a court; or initiate contempt proceedings under Section 27(5) of the Act against the party refusing to comply with the decision of the emergency arbitrator. Parties seeking enforcement of foreign-seated emergency arbitration can: (i) file a petition for interim measures under Section 9 of the Act, unless the applicability of Section 9 has been expressly excluded by the parties; (ii) where Section 9 of the Act has been expressly excluded, file a civil suit under the relevant provisions of CPC seeking the same reliefs that are the subject matter of the emergency arbitration; or (iii) file contempt proceedings under Section 27(5) of the Act which is also applicable to Part II of the Act. However, the reality remains that emergency arbitration needs urgent legislative attention.

Footnotes

1. Gary B. Born, International Commercial Arbitration, Third Edition, Kluwer Law International, 2021, Page 2601

2. International Chamber of Commerce, Rules for a Pre-Arbitral Referee Procedures, 1990 (available at: https://iccwbo.org/publication/rules-pre-arbitral-referee-procedure last accessed on 27 June 2022 at 1800 hrs IST)

3. Available at: (https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/19-09955_e_ebook.pdf) last accessed on 27 June 2022 at 1800 hrs IST

4. Major international arbitration institutions, such as the International Centre for Dispute Resolution, the Stockholm Chamber of Commerce, the Singapore International Arbitration Centre, and the Hong Kong International Arbitration Centre, have included an emergency arbitration mechanism in their arbitration rules, unless otherwise agreed by the parties

5. Rule 14 of Mumbai Centre for International Arbitration Rules; Part E of Delhi International Arbitration Centre Rules; Rule 57 of Indian Council of Arbitration Rules; Part IV of Madras High Court Arbitration Centre Rules; Rule 20 (A) of Nani Palkhivala Arbitration Centre Rules; Rule 35 of Bangalore International Mediation, Arbitration and Conciliation Centre Rules; and Rule 9 of Indian Institute of Arbitration and Mediation Rules provide for emergency arbitration

6. The proviso to Section 2(2) of the Act provides that, subject to an agreement to the contrary, Section 9 (interim measure of protection by courts), Section 27 (court's assistance in taking evidence), Section 37(1)(a) (appeal from an order refusing to enforce an arbitration agreement) and Section 37(3) (no right of a second appeal) of sthe Act would also apply to international commercial arbitrations, even if the place of arbitration is outside India and the arbitral award is enforceable under Part II of the Act

7. Awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York Convention) and the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 (Geneva Convention) arising out of legal relationships and of commercial nature are enforceable under Part II of the Act

8. The Law Commission's 246th Report dated 5 August 2014 (available at: https://lawcommissionofindia.nic.in/reports/report246.pdf last accessed on 13 May 2022 at 1800 hrs IST)

9. The High Level Committee, Report of the High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India dated 30 July 2017 (available at: https://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf last accessed on 13 May 2022 at 1815 hrs IST)

10. (2022) 1 SCC 209

11. For enforcement of the interim measures ordered by the arbitral tribunal

12. (2017) 2 SCC 228

13. (2016) 4 SCC 126

14. Section 48 of the Act provides for conditions for enforcement of foreign awards under the New York Convention

15. Section 57 of the Act provides for conditions for enforcement of foreign awards under the Geneva Convention

16. But prior to enforcement by the successful party under Section 36 of the Act

17. 2014 SCC OnLine Bom 102

18. Ibid at paragraph 89

19. (2016) 234 DLT 349

20. Article 17H of the UNCITRAL Model Law states that an interim measure shall be recognised as binding, unless otherwise stated by the tribunal. It may be enforced upon application to a competent court irrespective of the country in which it was issued

21. 2020 SCC OnLine Del 721

22. 2022 SCC OnLine Del 2112

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