In International Commercial Arbitration proceedings, while the Arbitral Tribunal is being constituted, there arise among parties to the dispute, matters which require immediate resolution. In such circumstances, parties exercise the option to appoint an Emergency Arbitrator if the Institutional Rules permit. Once appointed the Emergency Arbitrator is appointed to award urgent interim measures which are binding on the parties in the same way that an arbitral award would be, till the time the Tribunal is constituted. This is known as Emergency Arbitration.
It is an interim, emergency relief that an aggrieved party can seek before the constitution of an Arbitral Tribunal if thecircumstances so warrant and if the balance of convenience is in favour of the Claimant. Once the Arbitral Tribunal is constituted, the work of the Emergency Arbitrator is over and the Emergency Award can be upheld, altered, revoked or extended by the Tribunal.
Usually, these interim reliefs include freezing of assets or accounts of one of the parties or the attachment of a property. More important than the particulars of the relief sought however, is the element of urgency. It is a relief which is required immediately, as soon as the dispute between the parties first arises. The element of urgency lends to the understanding that the non-granting of such relief will cause irreparable damage and loss to the party seeking the relief.
The International Centre for Dispute Resolution (ICDR) introduced the provision for Emergency Relief in 2006. Under the ICDR provisions, a party can apply for emergency protective measures to safeguard its claim by writing for the same to the Administrator by specifying the particulars of the relief sought and the reasons for its urgent need.
Following suit, a number of international arbitral institutions have also incorporated the provision of emergency arbitration in their rules, including the International Chamber of Commerce, the London Court of International Arbitration, the Singapore International Arbitration Centre, and the Hong Kong International Arbitration Centre, among others.
With the enactment of the Arbitration and Conciliation Act, 1996 (“Act”) in India, laws relating to domestic arbitration, international commercial arbitration and enforcement of foreign awards were consolidated. Part II of the Act deals with the enforcement of foreign arbitral awards, subject to certain conditions.
In 2015, the Act was amended by the Arbitration & Conciliation (Amendment) Act, 2015 in order to bring the existing laws more in line with the UNCITRAL Model Rules and the provisions of the New York Convention. These amendments were based on the recommendations made by the 246th Law Commission Report submitted in August 2014. Certain welcome amendments include the amended section 17(2) according to which interim orders passed by an Arbitral Tribunal are deemed to be orders of the Court. In comparison, the Act is still silent on Emergency Arbitration.
The Law Commission Report had suggested the following amendment of Section 2 of the Act to incorporate Emergency Arbitration –
In sub-section (1), clause (d), after the words “…panel of arbitrators” 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;”
[NOTE: This amendment is to ensure that institutional rules such as the SIAC Arbitration Rules which provide for an emergency arbitrator are given statutory recognition in India.]”
The Note under the proposed amendment is explanatory of the purpose of such an inclusion. For reasons unknown to the public, however, this was not added to the 2015 Act and therefore, there is no statutory recognition of Emergency Arbitration under the present Arbitration laws in India.
However, many arbitral institutes in India did adopt provisions for Emergency Arbitration as a part of their rules. As a result, currently in India, Emergency Arbitration is provided by the following arbitral institutions-
Enforcement of Foreign Emergency Arbitral Awards in India
Owing to the lack of statutory provision for emergency arbitration, the Courts in India in recent judgments have held that foreign emergency arbitral awards cannot be enforced in India.
In HSBC PI Holdings (Mauritius) Ltd. v.Avitel Post Studioz Ltd. & Ors. the High Court at Bombay held that – “The grant of interim mandatory injunction must not amount to grant of pre trial decree. Such relief is essentially an equitable relief and discretion in that regard has to be exercised in light of facts and circumstances of each case.”
However, in a more recent judgment of the Delhi High Court in Raffles Design International India Pvt. Ltd. & Ors. Vs. Educomp Professional Education Ltd. & Ors it was held 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, an emergency award cannot be enforced as it is under the current provisions of the Act, but, Section 9 of the Act would apply to foreign seated arbitrations; however, an aggrieved party can move the court to grant interim measures in line with the emergency award under Section 9 of the Act.These interim measures provided by the Court award the emergency relief sought for by the aggrieved party and also encompass certain benefits because orders made under this section are immediately enforceable as orders of the Court, unless they are altered or revoked by the Tribunal after its constitution, and more importantly, under this section, the court also has the power to pass orders against a third party.
Therefore, with the dynamically evolving legal discourse in India as well as the growing understanding of arbitration as a crucial method of dispute resolution, it is a matter of time before emergency and expedited forms of arbitration are made a statutory reality in India as well – it has already developed a presence in arbitral institutes in India. For the time being, however, interim measures awarded by the Court under section 9 of the Indian Arbitration Act aim to provide a quick, effective, easily enforceable and fair alternative to Emergency Arbitration
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