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Abstract
“Despite being a game-changer for the provision of urgent interim relief worldwide, emergency arbitration has yet to gain traction in many countries, including India. In order to give the parties the chance to seek interim relief before the arbitral tribunal is established, several arbitral institutions have begun to include regulations governing emergency arbitrations. This is done with consideration for the needs of parties who may need immediate interim relief, the granting of which may have a significant impact on how the arbitral procedures turn out. It is crucial to remember that there are still a lot of arbitral institutions out there that do not offer emergency arbitration, forcing parties to ask their national courts for such relief. By objectively contrasting the granting of urgent relief by an emergency arbitrator and the national courts on a number of relevant grounds, this essay aims to show how advantageous emergency arbitration is for parties. By offering a comparative examination of the emergency arbitration rules of several Indian and international arbitration institutions, this research paper delves deeply into the practical side of emergency arbitration while examining its validity and evolution in India and how the concept got recognised by the Supreme Court of India. An attempt is made to clarify and investigate the different legal roadblocks surrounding emergency arbitration in India, including enforcement and recognition of the relief given, and then offer solutions for the
same.”
Introduction: Grant of Interim Measures and A Preface to Emergency Arbitration
In modern legal systems, the opportunity to seek protections to preserve the status quo and avoid exacerbating the conflict is virtually always highlighted in both arbitration and litigation. In this vein, interim measures address an epistemological fact given that human agents take time to make decisions; it is unrealistic to expect a court or tribunal to provide a verdict or award instantly upon being seized of a dispute. When properly defined, interim measures are decrees, awards, or rulings made to shield one or both parties from harm prior to the start of or during the course of arbitration procedures. A factual or legal status is “intended to be preserved so as to safeguard rights, the recognition of which is sought from the tribunal having jurisdiction as to the substance of the case” when interim measures are implemented. Either different jurisdictions have defined the standards to be used in determining whether such measures are to be granted, or the relevant court or tribunal’s jurisprudence has evolved to include the standards to be applied. Sections 9 and 17 of the Arbitration and Conciliation Act, 1996 (the “Act”) give national courts and arbitral tribunals, respectively, the authority to grant interim reliefs to one or both of the parties to the dispute within the context of Indian law. It is evident from a straightforward reading of the pertinent rules that arbitral tribunals are only able to provide parties with temporary relief while the arbitral procedures are ongoing. Therefore, in the event that the party needs any kind of interim remedy prior to the arbitral tribunal’s formation, it must go to the national court that has jurisdiction over the dispute’s subject matter. This is where the idea of emergency arbitration becomes extremely important. In the past, before the arbitral tribunal was established, a party seeking immediate relief at the beginning of the arbitration could only turn to the national courts. But since many arbitral organizations have just lately included emergency arbitration clauses in their guidelines, parties looking for temporary relief may instead elect to use emergency arbitrators—or in some cases, may even be required to do so. By its very essence, arbitration is based on consent. It still functions as the agreed-upon method of resolving disputes between the parties without going to court. Therefore, the purpose of this paper is to address certain practical considerations that the parties should consider before deciding which venue to use to issue interim measures.
“Emergency Arbitrators vs. Courts
For the purposes of granting interim relief prior to the constitution of the arbitral tribunal, there is an overlap of jurisdiction between the national courts of the concerned jurisdiction and emergency arbitrators. A party seeking urgent relief can either approach the court or seek the appointment of an emergency arbitrator. This section of the article evaluates the extent to which emergency arbitration can prove to be a substitute to obtaining urgent relief from national courts, by comparing both the options on various relevant factors.”
- Privacy : Confidentiality is sometimes vital for the parties engaged in the dispute to preserve connections and commercial secrets. Maintaining confidentiality could be more crucial to prevent presumptions about the case’s merits. Arbitrations are often secret and confidential proceedings, and the records, pleadings, and transcripts involved with them are rarely made public, in contrast to ordinary litigation and its docket. Because of this, a party may decide to file an application for temporary relief with an emergency arbitrator as opposed to the national court, where the proceedings are open to the public.
- ORDERS AGAINST THIRD PARTY: Under specific conditions, there may be a need to seek interim relief against a third party who is not directly involved in the arbitration agreement. This situation may arise when it becomes necessary to safeguard the subject matter that is the subject of the dispute. In the context of shareholder litigation, there are instances where it becomes necessary to seek interim injunctions against a party who is not a signatory to the relevant agreements. This is done in order to prevent any detrimental corporate acts from being carried out.. Nevertheless, the jurisdiction of an arbitral tribunal is constrained within this framework as it lacks the authority to issue legally binding orders on other parties.
- EX-PARTE ORDERS: “Under some conditions, individuals may seek interim relief against a third party that is not directly involved in the arbitration agreement. This situation arises when it becomes imperative to safeguard the subject matter of the dispute. In the context of shareholder litigation, there are instances where it becomes necessary to seek interim injunctions against a party who is not a signatory to the relevant agreements. This is done in order to prevent any detrimental corporate acts from being carried out. Nevertheless, the jurisdiction of an arbitral tribunal is constrained within this framework, as it lacks the authority to issue legally binding orders on other parties.
- SWIFTNESS : Given that urgency is the foundation upon which the parties’ pursuit of interim reliefs is built, the issue of speed is a significant consideration that must be meticulously attended to by the parties involved. According to the ICC, the average duration of its emergency arbitrations is sixteen days. Similarly, the International Centre for Dispute Resolution (ICDR) claimed an average duration of fourteen days, while the Stockholm Chamber of Commerce (SCC) recorded a range of five to eight days for its emergency arbitrations. Therefore, it is typically seen that emergency arbitrators may give interim reliefs within a timeframe ranging from one week to two weeks, on average. In addition, it is important for the parties to take into account the duration required for implementing the interim award in the event of non-compliance by the opposing party.”
SCENARIO OF EMRGENCY ARBITRATION IN INDIA
The Indian Arbitration and Conciliation Act of 1996 does not include any provisions pertaining to the appointment of an emergency arbitrator or the issuance of emergency rulings or awards. The 246th Law Commission Report in 2014 focused on proposing revisions to the Arbitration and Conciliation Act of 1996 in order to formally acknowledge emergency arbitration within the statutory framework of India. The report put forth a suggested modification to Section 2(1)(d) of the Act. The numerical value provided by the user is 18.
The term “Arbitral Tribunal” refers to either a single arbitrator or a panel of arbitrators. In the event of an arbitration performed under the rules of this institution that allow for the appointment of an Emergency Arbitrator, the term also encompasses the Emergency Arbitrator.
Although there was an anticipation that the Arbitration and Conciliation (Amendment) Act, 2015 will adopt this suggestion and become one of the few advanced international jurisdictions to include these provisions, it ultimately did not. An additional opportunity emerged through the proposed amendments in 2018 within the Arbitration and Conciliation Amendment Bill, 2018. These amendments were developed based on the recommendations of a high-level committee aimed at evaluating the institutionalization of arbitration mechanisms in India and revitalizing the conventional arbitration practices.
Amazon.com Investment Holdings LLC (“Amazon”) v. Future Retail Limited & Ors.[1] (“Future Group”) : The Supreme Court stated that the emergency award is not a nullity, and is enforceable under Section 17 of the A&C Act. The Supreme Court’s analysis on the validity of an emergency award under the A&C Act can be placed under the following heads:
Parties have the autonomy to choose emergency arbitration: The Supreme Court observed that although the A&C Act does not explicitly mention “emergency award,” the provisions of the Act that allow parties to agree to arbitral institutional rules imply that parties possess the entitlement to utilize the emergency arbitration provisions outlined in the selected institutional
rules. In accordance with the provisions outlined in Section 2(6), Section 2(8), and Section 19(2) of the A&C Act, it is permissible for parties to (a) mutually consent to empower an arbitral institution with the authority to resolve disputes that may arise between them, (b) mutually agree to incorporate any arbitration rules into their arbitration agreement, and (c) mutually agree on the procedural framework to be adhered to by an arbitral tribunal during the course of its proceedings.
The Supreme Court acknowledged that the parties possess an irrevocable entitlement to exercise party autonomy when it comes to selecting institutional regulations, which may encompass the inclusion of emergency arbitrators. The user’s text is too short to be rewritten academically. According to the Supreme Court, it is important to note that parties, in exercising their right to party autonomy, do not circumvent any obligatory provision of the Arbitration and Conciliation Act (A&C Act). This is because the A&C Act does not contain any provision that prohibits parties from reaching an agreement on a set of rules that govern the appointment of an emergency arbitrator.
‘Arbitral tribunal’ under the A&C Act includes an ‘emergency arbitrator’: The Court proceeded to analyse whether the definition of “arbitral tribunal” as outlined in Section 2(1)(d) should restrict the application of Section 17(1) solely to an arbitral tribunal capable of providing conclusive remedies through an interim or final award, excluding an emergency arbitrator who issues an emergency award.
According to Section 2(1)(d) of the A&C Act, the term ‘arbitral tribunal’ is defined as either a single arbitrator or a group of arbitrators. The Supreme Court observed that the inclusion of a
“emergency arbitrator” is not encompassed within the term of ‘arbitral tribunal’ as stated in Section 2(1)(d) of the Arbitration and Conciliation Act.The number 6. Nevertheless, it is indicated that Section 1 commences with the phrase “unless the context otherwise requires.” Upon examination of Section 2(1)(a), which encompasses all forms of arbitration, regardless of whether they are administered by a permanent arbitral institution, as well as Sections 2(6) and 2(8), which allow for the inclusion of rules from arbitral institutions, it becomes evident that interim orders issued by emergency arbitrators under the rules of an arbitral institution would fall under the scope and framework of orders issued by a ‘arbitral tribunal’ as stipulated in Section 17(1).
Consequently, the Court determined that in cases involving Section 17(1), the term “arbitral tribunal” encompasses an Emergency Arbitrator when institutional rules are applicable, unless the context of Section 17 indicates otherwise. This context pertains to interim remedies that are issued by arbitrators.
Recommendation of the 246th Law Commission Report: The recommendation put forth in the 246th Law Commission Report proposed an amendment to the existing definition of ‘arbitral tribunal’ to encompass the inclusion of an emergency arbitrator. The Supreme Court observed that the failure of the Indian Parliament to implement a recommendation from a Law Commission Report does not automatically imply that the suggestion made by the Law Commission cannot be considered in the construction of the statute.
Emergency arbitration occurs ‘during arbitral proceedings’: The availability of remedy under Section 17 of the Arbitration and Conciliation Act is limited to the duration of the arbitral procedures. According to FRL, it can be argued that Section 17 of the relevant legislation pertains exclusively to interim reliefs that are available throughout the course of the arbitral proceedings, specifically after the arbitral tribunal has been established. Therefore, it can be concluded that Section 17 of the A&C Act does not encompass emergency arbitration conducted before the commencement of arbitral proceedings or the establishment of the arbitral panel. Given that a party has the option to seek redress under Section 17 “during the arbitral proceedings,” it follows that the authority of a tribunal to give such redress encompasses the authority that an emergency arbitrator may use shortly after the commencement of the arbitral proceedings. The numerical value provided by the user is 9. Moreover, the Supreme Court has asserted that the term ‘arbitral procedures’ as mentioned in Section 17 is not constrained by any specific meaning, hence encompassing proceedings conducted before an emergency arbitrator.
“The Supreme Court hence observed that the issuance of an emergency award serves various purposes, such as alleviating the burden on the judicial system and providing immediate temporary relief to deserving parties in urgent instances. Given the A&C Act’s recognition of party autonomy and absence of any explicit prohibition against the appointment of an emergency arbitrator, the Supreme Court has determined that an award issued by an emergency arbitrator, which possesses the same characteristics as an order issued by a fully constituted arbitral tribunal, is encompassed within the institutional rules that the parties have mutually agreed upon. Consequently, the aforementioned statement is appropriately encompassed within the purview of Section 17(1) of the A&C Act. Furthermore, the Court asserted that a party that has previously consented to the regulations of an institution cannot subsequently contend that it is not obligated to abide by a decision made by an emergency arbitrator. These orders possess validity and are issued in accordance with Section 17(1) of the A&C Act.”
EMERGENCY ARBITRATOR PROVISIONS IN INTERNATIONAL INSTITUTIONAL RULES : COMPARATIVE ANALYSIS
Emergency arbitrator regulations differ differently across different arbitral institutions, but they share the common characteristic that emergency arbitrators are chosen before the arbitral tribunal is constituted and have the authority to make decisions solely regarding the granting of immediate relief. At this juncture, the individuals in question lack the requisite authority or jurisdiction to make determinations on any substantial matters relevant to the conflict. Once the arbitral tribunal has been established, the emergency arbitrator’s authority is terminated, and the decision rendered by the emergency arbitrator can subsequently be reviewed, altered, or annulled by the arbitral tribunal. In 2006, the International Centre for Dispute Resolution (ICDR), which serves as the international division of the American Arbitral Association (AAA), became the pioneering organization to establish protocols for emergency arbitration.
“The introduction of such procedures was implemented by the SCC in its amended regulations that were unveiled on January 1, 2010. On July 1, 2010, the Singapore International Arbitration Centre (SIAC) became the inaugural Asian arbitral institution to implement these procedures. Subsequently, these procedures were included into the regulations of many institutions, including the ICC in 2012, HKIAC in 2013, and LCIA in 2014. Emergency arbitration processes have become widely prevalent in the regulatory framework of arbitration institutes across several locations, including Stockholm, Singapore, London, Kigali, Zurich, and Beijing. In the Indian context, some arbitral institutions, including the Mumbai Centre for International Arbitration (MCIA) and the Delhi International Arbitration Centre (DIAC), have incorporated provisions in their rules to facilitate the appointment of an emergency arbitrator.”
“Countries such as the United States, Brazil, Argentina, and Chile persist in demonstrating uncertain attitudes to the aforementioned inquiries, since they are influenced by the fluctuating rulings of their own courts. Therefore, it can be observed that they do not explicitly endorse the free choice model or the court-subsidiarity model, but rather exhibit adaptability based on the specific circumstances of the disagreement.”
Under the free choice approach, courts and tribunals have the ability to give interim reliefs concurrently. However, it is important to note that both courts and tribunals hold equal authority when it comes to evaluating requests for interim relief, and neither takes precedence over the other. Germany has implemented the free choice method, which is based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law. This approach was initially approved in 1985 and subsequently updated in 2006. Under this framework, both courts and arbitral tribunals in Germany have been granted the authority to provide interim reliefs. Nevertheless, there is a lack of definitive hierarchy between these two forums, as the involved parties possess the autonomy to select any forum of their preference.
In contrast, certain jurisdictions, namely England, Hong Kong, Singapore, and Zimbabwe, adopt a court-subsidiarity approach. Under this approach, the authority to grant interim measures is shared between courts and tribunals. However, courts are assigned a subordinate role, establishing a hierarchical relationship between courts and tribunals. It is logical to conclude that in arbitration proceedings, the parties should initially seek temporary remedies from the arbitral tribunal. Only in cases where the measures required go beyond the jurisdiction of the tribunal, or if the tribunal is unwilling or unable to take action, should the parties turn to the court.
In the context of India, there exists a unique scenario where both of the aforementioned approaches become prominent, with their prevalence depending on the specific stage of the arbitral process. For example, following the amendment made to the Act in 2015, India has implemented the court-subsidiarity approach. Under this approach, parties involved in arbitration are required to seek interim reliefs from the arbitral tribunal. Only in situations where this remedy proves to be ineffective, parties may resort to filing an application before the courts under Section 9 of the Act. In all other circumstances, India adheres to the principle of free choice when awarding interim measures.
Implementing restrictions on the court’s authority to grant temporary remedies and prioritizing the arbitral tribunal as the initial recourse appears to be a more effective strategy for reducing the number of applications submitted to the court.
Furthermore, due to the varying range of measures prescribed by courts and arbitral tribunals in India, the potential consequences of conflicts between the two entities are minimal.
After observing the varying allocation of authority to grant interim measures in different jurisdictions worldwide, it is crucial to analyze the enforceability of decisions, orders, or awards made by emergency arbitrators in comparison to the enforceability of interim measures granted by national courts.
Enforceability of Arbitral Awards arising out of Emergency Arbitrations
The enforceability of interim reliefs issued by emergency arbitrators is mostly contingent upon the national laws of the country in which enforcement is sought. As previously stated, emergency arbitration is not acknowledged in India, and the present circumstances indicate that interim remedies issued by an emergency arbitrator in arbitrations, whether performed within or outside India and governed by institutional regulations, are not legally enforceable under the applicable legislation.
Furthermore, it should be noted that the parties who have successfully acquired immediate remedies in an arbitration conducted outside of India are unable to enforce those rulings or judgments inside the jurisdiction of India. The absence of provisions in the Act for the execution of interim relief granted by a foreign-seated arbitral tribunal is the reason for this. In the present scenario, the involved parties are obligated to seek redress in the Indian courts by submitting an application under section 9 of the Act. This is due to the fact that section 9 is applicable to arbitrations conducted in foreign jurisdictions. The purpose of this application is to request interim relief that is comparable to the relief previously granted by the foreign-seated arbitral tribunal or emergency arbitrator. The Bombay High Court, in the matter of Avitel[2], issued a judgment granting the identical remedy sought in a petition filed under Section 9 of the Act, which was based on the same cause of action that was presented before the emergency arbitrator.
Despite the provision of relief under Section 9 of the Act, the Court has made it clear that this provision cannot be used to enforce orders issued by the arbitral tribunal. However, this does not imply that the court is incapable of independently assessing the situation and granting interim relief when deemed necessary.
The Delhi High Court, in the case of Raffles Design[3], issued an interim judgment that mirrored the ruling obtained by the emergency arbitrator of the Singapore International Arbitration Centre (SIAC). However, it explicitly stated that an emergency award from an arbitration located in a foreign jurisdiction cannot be implemented in India under the relevant legislation.
Therefore, in the absence of any legislative provision or a definitive ruling from the highest court, the parties must seek a resolution to address this gap and facilitate the implementation of the remedy awarded by an emergency arbitrator located outside of India. It is evident that the parties are faced with the possibility of indirectly implementing the interim relief granted in India, which was issued through an arbitration conducted in a foreign jurisdiction, by submitting an application under section 9 of the relevant legislation.
However The Hon’ble Supreme Court of India recognised the concept of Emergency Arbitration even though it had no statutory recognition in the Arbitration & Conciliation Act, 1996, as discussed above
Conclusion
“The proposed amendment to Section 2(1) (d) of the Act, as suggested by the Law Commission of India, aimed to align Indian arbitration law with the prevailing international practice of enforcing emergency awards through legislative modification. The issue is more widespread in arbitrations held in foreign jurisdictions, as emergency orders issued in domestic jurisdictions can still be executed according to the revised Section 17(2) of the Act. However, in order to ensure the implementation of emergency awards issued in arbitrations held in foreign jurisdictions, it is necessary to include a provision akin to section 17 of the Act inside Part II of the Act. The absence of explicit provisions addressing the problems surrounding emergency arbitration in both the 2015 Act modifications and the 2018 Arbitration and Conciliation Amendment Bill has left parties currently without clear advice on how to approach emergency arbitration, if they choose to do so. Nevertheless, it is important to acknowledge that if Indian arbitration law were to adopt emergency arbitration, the inclusive language used to describe interim measures granted by tribunals should be replaced with a more descriptive list, similar to the approach taken in the English Arbitration Act of 1996.”
“Given that the notion of emergency arbitration is in its early stages, it is evident that it is not devoid of challenges. It is anticipated that the inclusion of provisions addressing emergency arbitration in Indian legislation will be promoted in the near future, thanks to the presence of multiple arbitration institutions offering emergency arbitration services and the government’s emphasis on institutional arbitration, as exemplified by the Arbitration Amendment Bill, 2018.
The same has also been clarified by the Hon’ble Supreme Court in the Amazon case as analysed above, thereby giving legal recognition to the concept of Emergency Arbitration in India.”
Name – Kumari Neha
College – Amity University Madhya Pradesh
[1] Amazon.com Investment Holdings LLC (“Amazon”) v. Future Retail Limited & Ors. (2022) 1 SCC 209
[2] Avitel Post Studioz Limited and Others v. HSBCPI Holdings 2020 SCC OnLine SC 656
[3] Raffles Design International India Pvt. Ltd. & Anr. v. Educomp Professional Education Ltd.& Ors 2016 SCC OnLine Del 5521
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