Table of Contents
Abstract
The concept of emergency arbitration is not a new one. It was first introduced in the year 2006. However, its effectiveness is something that has been a topic of debate since then. Many States lack jurisprudence over the concept, due to which the national courts deny the recognition and enforceability of an emergency award. India is one such state, which despite having judicial pronouncements over the matter, is still reluctant in enforcing an emergency arbitral award. Moreover, there are many other issues concerning the powers and authority of an emergency arbitrator, like its power to pass ex-parte orders or power to pass an award against any third party, which are something less known and talked about. The authors here have identified such rare issues and tried to address them in accordance with the ICC Rules of Arbitration since they are believed to be the very first Rules which talk about emergency arbitration.
Introduction
Arbitration has emerged as the most preferred form of dispute resolution around the globe. This popularity can be attributed to the party-friendly procedures adopted in the institutional rules and legislations. Emergency arbitration is one of the attractive features of arbitration. The origin of emergency arbitration can be traced to the ICC- Pre arbitral Referee Rules of 1990. Parties opt for emergency arbitration when they want relief and cannot wait for the institution of the arbitral tribunal. In an emergency arbitration, the party prays for interim relief to protect assets, evidence, and maintain the status quo when the tribunal is not in place.
Over the years, several institutions have included provisions for emergency arbitration in their Rules. The general practice followed is that an application for appointing an emergency arbitrator has to be made to the Institution, either with the arbitration notice or after the arbitration notice has been served. Once the arbitrator is appointed, the decision has to be given within “a suitable period of time,” which has to be understood case to case basis. It is crucial to note that the other party has to be informed of such proceedings and has to be given the opportunity to represent.
In this article, the authors have attempted to discuss in brief about emergency arbitration, recognition and enforcement of an emergency award in Indian Courts and will finally try to address certain issues which arise when it comes to emergency arbitration, followed by a Conclusion.
The Question of Recognition and Enforceability of Emergency Award- The Indian Scenario
The question of whether an emergency award is recognized and consequently enforceable in Indian courts has been a topic of debate since a long time. Despite several recommendations made by the Law Commission in its 246th Report to extend the ambit of the arbitral tribunal to include emergency arbitrators within its ambit, the subsequent amendments in the Arbitration and Conciliation Act of 2015 and 2019 failed to make such inclusion. This can be said to be a conscious decision of the legislature and shows the legislative intent.
Earlier, in the case of Raffles Design International India Private Ltd. & Ors. vs. Educomp Professional Education Limited & Ors, the Delhi High Court held that the concept of emergency is not recognized in India and falls outside the ambit of Arbitration and Conciliation Act and the only way to enforce such award is to file a suit in the concerned court.
If we talk about the current scenario of recognition of emergency awards in India, the very recent case of Amazon-Future Retail arbitration case is of great relevance. In this case, the seat of arbitration was New Delhi, India, governed by Part I of the Arbitration and Conciliation Act and as per the SIAC Rules. The SIAC Rules provide for interim relief either by an emergency arbitrator or to approach any judicial authority for the same. The Delhi High Court, relying on the principle of party autonomy, upheld that the parties are free to choose the forum of their choice, for interim relief. And held that merely because the Indian Arbitration and Conciliation Act does not recognize the concept of emergency arbitrator within the ambit of arbitral tribunal, does not invalidate the authority of such appointed emergency arbitrator.
Even though in India we do not have any legislative framework recognizing emergency arbitration, this decision of Amazon-Future can be said to have paved the way for enforcement of emergency arbitrator orders in India. Resultantly, it will help in providing quick relief to the party seeking interim reliefs.
Points of Concern/Issues
The authority and powers of an emergency arbitrator are not similar to those of a properly constituted arbitral tribunal. There are various issues and doubts that arise in the mind of readers and practitioners. Here the authors have tried to address some of them, which are as follows:
Are Emergency Arbitrators (EA) decisions binding?
It is a well-accepted fact that the decision rendered by the emergency arbitrator may take the form of either a procedural order or an award for that matter, but the real issue arises when it comes to the binding nature of such a decision. This question of ‘whether decision rendered by an emergency arbitrator is binding on the subsequent arbitral tribunal, which will deal with the merits of the dispute’ was highly debated. However the answer to this question is a yes not for the reason that the said emergency arbitrator is merely a contractual figure and not proper arbitrator per se, as required by various Legislative Acts concerning arbitration, but because the disputing parties, by exercising the principle of party autonomy, have allocated such arbitral tribunal (constituted subsequently) with the jurisdiction over interim reliefs.
Apart from this, it must be noted that an emergency measure granted by an emergency arbitrator, appointed as a substitute to the arbitral tribunal, ceases to operate once such arbitrator becomes functus officio (mandate of such arbitrator has expired). The reason for the same could be that the grounds on which such emergency measure was granted like, the possibility of irreparable harm or urgency are no longer available.
Now coming to the question of whether such emergency reliefs are binding upon the parties, the ICC rules prescribes that parties to such emergency arbitration undertake to comply with the decision rendered by such emergency arbitrator. However the Rules (Appendix V, Article 6(6) ICC Rules) also provides that the Orders issued by emergency arbitrators ends to be binding on the parties in numerous situations including the situation when the emergency arbitrator proceedings are terminated by virtue of the applicant’s failure to timely submit a Request for Arbitration or when the ICC Court of Arbitration accepts a challenge to the emergency arbitrator, etc.
Whether an Emergency Arbitrator (EA) can grant emergency measure ex-parte?
Ex-parte decisions simply refer to a decision wherein the judge decides the case without requiring the presence of both or all the parties or without hearing one of the parties. The question often arises as to whether such decisions can be granted by an emergency arbitrator. The current position as per ICC Rules is that a true ex-parte order, whereby the Respondent is not given any opportunity of being heard, or without giving him (the Respondent) due notice of such emergency arbitration and where the emergency arbitrator issues a final emergency award, is not allowed and it is something beyond the powers of an emergency arbitrator.
This conclusion can be derived from Article 1 (5) of Appendix V of the ICC Emergency Arbitration Provisions, which provides that after receiving the application for emergency arbitration, the President of Court, if satisfied that EAs provisions are applicable, then the Secretariat is required to send a copy of the said application along with the documents annexed therewith, to the Responding partyas well. This provision ensures that no emergency arbitration proceedings can begin without notifying the Respondent and thus leaving no scope for emergency arbitrators to pass ex-parte orders.
Whether an Emergency Arbitrator can grant an interim relief against a third party?
Arbitration is a result of party autonomy and the arbitral tribunal derives its power from parties’ agreement to empower it. The jurisdiction of an arbitral tribunal is limited only to those parties who have consented to submit their disputes to such tribunal. Thus, no arbitral tribunal can bind third parties with its decision. And since emergency arbitrators are considered to be a substitute for arbitral tribunal till the time latter is not constituted, we can conclude that Emergency Arbitrators also lack authority to bind third parties.
Jurisdictional challenges to the Emergency Arbitrations are a point of concern. An emergency arbitrator is empowered to make a prima facie assessment of jurisdictional requirements and not a detailed one, as that is something to be done by the proper arbitral tribunal. There are certain situations where there is a prima facie lack of jurisdiction of the emergency arbitrator which includes injunctions/ reliefs prohibiting third parties, like banks, companies, etc. from carrying out certain actions. Apart from this, the Task Force in 2019 concluded that the Emergency Arbitrators’ provisions are designed to reduce the jurisdictional challenges that would delay the proceedings, resulting in frustrating the whole purpose of emergency arbitration, and opined that reducing EA provisions only to the signatories or parties for that matter, could be one way to reduce the risk of a jurisdictional challenge. Thus, we can conclude that Emergency Arbitrators cannot bind third parties with their decisions.
Conclusion
The field of arbitration is constantly developing and provisions of pre-relief before the constitution of an arbitral tribunal is a necessary step in the growth of international arbitration. Even though there is much confusion regarding the recognition of emergency arbitration and enforceability of emergency awards in India (due to lack of precedence), still this concept of emergency arbitration can be crucial considering the benefits of emergency arbitration.
It has been observed that people usually tend to comply with the orders granted by emergency arbitrators, probably because the losing party believes that the proper arbitral tribunal might not look kindly on its non-compliance with the emergency order and may affect the final order. Another plus point of recognizing emergency arbitration in India could be that it can assists parties in obtaining relief from courts under Section 9 of the Arbitration Act of 1996, help in decongesting courts which are already overloaded with thousands of pending case and finally will aid in promoting institutional arbitration in India (currently people are reluctant in opting for Indian arbitration institutions).
Finally, after listing out certain benefits of emergency arbitration, I would like to conclude that the observation of the 246th Law Commission Report requiring including emergency arbitrators within the ambit of the arbitral tribunal shall be given effect to and a proper full-fledged legislation shall be passed consisting provisions relating to the emergency arbitrator.
Tags: Emergency Arbitration, Party Autonomy, Ex-Parte, Third Party.
This article is authored by Vartika Jain and Pratiksha Sengar, students at Institute of Law Nirma University.
