EMERGENCY ARBITRATION AND ITS TRYST WITH INDIA

The Indian Arbitration and Conciliation Act, 1996 does not recognize the phenomenon of Emergency Arbitration which is an urgent remedy for matters otherwise irreparable. However, the Courts have faced issues regarding the same and delivered judgments that have not been conclusive thus far.

The Arbitration and Conciliation Act of 1996 even after its amendment in 2015 does not give effect to or even recognize ‘Emergency Arbitration’. That is not to say that the phenomenon has not touched the Indian dispute resolution system which has time and again been faced with the dilemma. To pay heed to the same, the Law Commission in 2014 in its 246th report ‘Amendments to the Arbitration and Conciliation Act’ recommended that the definition of ‘Arbitral Tribunal’ under Section 2(1)(d) of the Act should be broadened so that emergency arbitrator is statutorily recognized in India. Unfortunately, the recommendation was not given effect in the subsequent amendments to the arbitration act. An aggrieved has an arbitration clause in its contracts, it has two remedies for an instantaneous relief. The parties can either apply for interim measures in the local courts or wait for the arbitral tribunal to be constituted. Emergency arbitration is an urgent measure where there is an imminent risk of irreparable damage.

In light of this, a number of institutions in India though have now introduced provisions that provide for some form of emergency relief, either through the appointment of an emergency arbitrator or through the expedited formation of the tribunal. This includes the Delhi International Arbitration Centre[1], the Madras High Court Arbitration Centre Rules 2014[2] as well as the Mumbai Centre for International Arbitration Rules 2016.[3]

Emergency Arbitration: Importance

There are considerable advantages of moving before an emergency arbitrator, as opposed to the Indian courts. One of the most prominent reasons remains the uncertainty of the timeframe for obtaining interim reliefs as in case of an emergency arbitrator, he/she is required to pass an award within a limited timeframe which in most cases in earlier than that of a regular interim measure. Further, orders of emergency arbitrators may be extremely helpful if the respondent has assets in jurisdictions where such orders are enforceable such as Singapore or Hong Kong.

Finally, and rather counter-intuitively, orders of emergency arbitrators may assist a party in obtaining relief from an Indian court under Section 9 of the Act.[4]

Emergency Arbitration: Shortcomings

So far, the concept of Emergency Arbitration looks too good to be true, however, it suffers from its own shortcomings. Indian courts under Section 9 of the Act can grant interim relief in support of arbitration and parties can approach courts for interim relief at any point before the constitution of the arbitral tribunal even in concern with third parties. While, Emergency arbitrators cannot grant relief against third parties.

Secondly, Indian courts can grant ex-parte orders in exceptional circumstances, emergency arbitrators, on the other hand, cannot grant relief on an ex-parte basis. That is because one of the central tenets of arbitration is that all parties be given equal opportunity to present their case. Lastly, what remains as the biggest thorn in the bush is that these awards are not enforceable under the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, 1958.

Even though the ICC Rules hold that “any party that needs urgent interim or conservatory measures that cannot wait the constitution of arbitral tribunal” can apply for appointment of Emergency Arbitrator, it clarifies that the arbitrator’s order shall not be binding on the arbitral tribunal with regard to any question, issue or dispute determined in the order. The tribunal may modify, terminate or annul the order or any modification thereto made by the emergency arbitrator.[5]

The Courts

In India, courts have been largely inconsistent on the subject. The two most prominent cases on the subject have analogous orders. In the case of Raffles Design International India Pvt Ltd & Anr. v. Educomp Professional Education Ltd. & Ors.[6], the Delhi High Court ruled against enforcing an emergency arbitration award under the Arbitration and Conciliation Act, 1996. However, it suggested that the parties could apply for interim measures under section 9 of the Act before Indian courts. On the contrary, Bombay High Court in the case of HSBC Pi Holdings (Mauritius) Ltd. v. Avitel Post Studioz Ltd. & Ors.[7], interim measures similar to an emergency arbitrator’s decision were ordered. India’s arbitration law is based on the UNCITRAL Model Law, and section 17 of the Arbitration and Conciliation Act, 1996 (drafted similarly to the Model Law’s Article 17H) discusses interim measures. Hence, this inconsistency in the approach of Indian courts does not find ground. In the absence of a legislative statement or a precedent from the Supreme Court of India, these two cases demonstrate the enforcement-related concerns and do not offer much help in future litigation.

Conclusion

The world is currently struggling with a global pandemic wherein courts across the country are shut down and arbitral tribunals are functioning through video-conferencing for urgent matters, it is an ideal situation to recognise the relevance of Emergency Arbitration for a quicker relief to the aggrieved. With the advantages numerated above, this form of arbitration will go a long way in tackling legal disputes which require urgent attention and will help in achieving the primary goal of Arbitration which was meant to be a quicker remedy.

[1] Part III of its Arbitration Rules includes “Emergency Arbitration”. Access here. [2] Part IV, Section 20 r/w Schedule A and Schedule D enumerate the provisions of EA and Emergency Arbitrator. Access here. [3] Sction 3 enumerates the provisions of Emergency Arbitrator. Access here. [4] Refer HSBC v. Avitel, 2014 SCC OnLine Bom 102; Raffles Design (2016) 234 DLT 349. (see below) [5] Access here.

[6] OMP(I) (Comm) 23/2015 [7]Arbitration Petition No 1062 of 2012