Applications for appointment of Emergency Arbitrators ("EA") are lately gaining popularity among parties opting for institutional arbitration as well as international arbitration. The concept of EA has been brought by several arbitration institutions to address the need for emergency interim relief before a tribunal is constituted. If a party is in an emergency and requires a protective or any other interim order and it has an institutional arbitration clause in its contract, then it may make an application to the institution for appointment of an EA. In its application, it is required to explain the reasons and the justification for emergency relief.
PROVISIONS OF EA UNDER RULES AMONG DIFFERENT SETS OF ARBITRATION INSTITUTIONS
Arbitral institutions that have adopted expedited procedures including emergency arbitration proceedings ("EAP") include the ICC International Court of Arbitration ("ICC"); the Arbitration Institute of the Stockholm Chamber of Commerce ("SCC"); the Swiss Chambers' Arbitration Institution ("SCAI"); the China International Economic and Trade Arbitration Commission ("CIETAC") – Arbitration Institute of the China Chamber of International Commerce; the Singapore International Arbitration Centre ("SIAC"); the Hong Kong International Arbitration Centre ("HKIAC"); the Georgian International Arbitration Centre ("GIAC"); the International Centre for Dispute Resolution ("ICDR") of the American Arbitration Association (AAA); the Australian Centre for International Commercial Arbitration ("ACICA"); the German Arbitration Institute/Deutsche Institution für Schiedsgerichtsbarkeit e.V. ("DIS"); the Vienna International Arbitration Centre ("VIAC"); the Japan Commercial Arbitration Association ("JCAA"); the Russian Arbitration Centre at the Russian Institute of Modern Arbitration ("RAC"); the Asian International Arbitration Centre ("AIAC"); and the Lagos Chamber of Commerce International Arbitration Centre ("LACIAC"). The concept of EA was first introduced by the International Chamber of Commerce, International Court of Arbitration ("ICC")
EAP UNDER ICC RULES OF ARBITRATION
Article 29 of the ICC Rules of Arbitration provides for EA and states that a party that needs urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal may make an application for such measures. However, Article 29 of the ICC Rules does not apply to agreements entered into before the commencement of the said rules i.e. prior to January 1, 2012. For agreements that provide for ICC arbitration, entered into after January 1, 2012, Article 29 is applicable, unless expressly opted out in the agreement.
It is to be noted that Article 29 only allows interim and conservatory relief that cannot await the constitution of the Tribunal and does not contemplate or allow any kind of fast-track or summary proceedings on the merits. The EAP would precede the arbitral proceedings but will not substitute the said proceedings. The application has to be made prior to the transmission of the file to the arbitral tribunal and irrespective of whether the party making the application has already submitted its Request for Arbitration.
The EA's decision would take the form of an order and the parties have to undertake to comply with any order made by the EA. However, such order would not bind the arbitral tribunal with respect to any question, issue or dispute determined in the order. The Arbitral Tribunal once appointed subsequently, may modify, terminate or annul the order. The EAP uses the term 'arbitrator' to designate the EA who is called upon to adjudicate a request for interim measures. The EA does not act as a mediator or a settlement facilitator and although his mandate is similar. He is neither an adjudicator nor a referee but an arbitrator with a very specific and limited mandate. Further, unlike a normal arbitrator, the EA can only provide temporary relief but not decide the merits of the dispute.
Lastly, Article 29 does not preclude recourse to national courts under Article 28(2) in particular. In many circumstances, parties may prefer to apply to national courts for relief and not to use Article 29; especially in cases where the national courts in the relevant jurisdiction is open to applications for interim relief and where the court order cannot be directly enforced.
PROVISIONAL MEASURES TO PRESERVE THE SUBJECT MATTER OF THE DISPUTE
Article 28 of the ICC Rules of Arbitration discusses the provisional measures to preserve the subject matter of the dispute. While the state courts are generally equipped to grant provisional relief to parties, parties to international business transactions may be reluctant to refer matters to state courts to obtain such relief. There may exist a real or perceived lack of neutrality of state courts in some countries and/or the judicial functioning of these courts may not be guaranteed. There may also be an apprehension for reasons of confidentiality, and many other reasons that may deter a party in a given case from seeking interim relief before the state courts. Thus, where parties have agreed to arbitration, it was considered appropriate to provide them also with the possibility of provisional relief under the rules prior to the constitution of the Tribunal.
By not giving the EA the possibility to grant provisional relief in the form of an interim Award, a marked difference exists with the provisional relief a Tribunal can grant pursuant to Article 28(2) of the ICC Rules of Arbitration; it can either be in the form of an Award or of an Order. However, unlike the ICC, other arbitral institutionshave given the EA the power to issue either an award or an order
TIMELINES FOR EAP UNDER ICC RULES OF ARBITRATION
The EAP provides for a timeline of 18 days from the day of filing the application with the Secretariat until the notification of the order by the EA.
PROVISION OF EA IN INDIA
In order to recognize emergency arbitrations, the 246th Report of the Law Commission1 with respect to the amendments to the Arbitration and Conciliation Act, 1996, proposed an amendment to Section 2(d) of the Act. The amendment sought to add "and, in the case of an arbitration conducted under the rules of an institution providing for appointment of an emergency arbitrator, includes such emergency arbitrator" in the definition of the 'arbitral tribunal'. The proposed amendment read as under:
"Section 2(d): 'Arbitral tribunal' means a sole arbitrator or a panel of arbitrators and, in the case of an arbitration conducted under the rules of an institution providing for appointment of arbitrator, includes such emergency arbitrator."
This amendment was proposed to ensure that institutional arbitration rules such as the ICC Rules of Arbitration or SIAC Arbitration Rules or any other rule which provide for an appointment of an emergency arbitrator are given statutory recognition in India. Although it was expected that the Arbitration and Conciliation (Amendment) Act, 20152 would recognize and accept the concept of EAP and create provisions for appointment of EA, the proposed amendment was rejected. The Amendment of 2015, failed to incorporate the recommendation of the Law Commission and the Arbitration and Conciliation Act, 1996 continues to not provide for appointment of EA.
However, notwithstanding the rejection of the proposed amendment, arbitration institutions in India such as Delhi International Arbitration Centre ("DAC"), Court of Arbitration of the International Chambers of Commerce-India, International Commercial Arbitration ("ICA"), Madras High Court Arbitration Center ("MHCAC"), Mumbai Center for International Arbitration ("MCIA") have incorporated provisions in relation to EAP.
However, while the provisions of EAP are similar to Section 9 of the Arbitration and Conciliation Act, 1996, they provisions are generally not related. Except the difference in the timeline for obtaining an interim order, EAP and proceedings under Section 9 of the Arbitration and Conciliation Act, 1996 are similar in substance. In either, parties cannot seek final determination of the dispute in merits and can only obtain a preliminary order protecting the subject matter of the dispute, which can be modified, altered or upheld by the Arbitral Tribunal. Judicial decisions pertaining to EA are rare in India. In the few cases regarding the EA Order, the courts have recognized and honored its validity.
In HSBC PI Holdings (Mauritius) Limited v. Avitel Post Studioz Limited and Ors.3 , the Claimant had sought for and obtained emergency orders from the EA under the SIAC Rules of Arbitration. The EA had granted emergency relief and ordered for freezing of bank accounts of the Respondent. The Claimant subsequently filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 in view of the order of the EA and the Bombay High Court upheld the order of the EA and directed to freeze the bank accounts. In Raffles Design International India Private
In Raffles Design International India Private Limited & Ors. v. Educomp Professional Education Limited & Ors4 , the Claimant resorted to EA seated in Singapore under the SIAC, wherein an interim order was passed by the EA. The Claimant enforced the EA order in the High Court of Singapore. The Claimant once again filed an application under the amended Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim reliefs alleging that the other party is acting in contravention to the orders passed in the EA award. The Court held that in such 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. However, the Court further observed that 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.
Therefore, in the event that a party fails to comply with the EA order, it may be enforceable in nature under the provisions of various national laws depending upon the discretion of national courts and national laws which may or may not include Emergency Arbitration provisions. Although, EA has been globally accepted by several Arbitration Institutions, India is yet to give a formal statutory recognition to EA awards.
1. The Law Commission's 246th Report dated August 5, 2014
2. The Arbitration and Conciliation (Amendment) Act, 2015 (No. 3 of 2016), dated 31.12.2015, w.e.f. 23.10.2015
3. Arbitration Petition No. 1062/2012 dated 22.01.2014
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