Following the 2006 changes made to the UNICTRAL Model Law (Model Law) enabling arbitral tribunals to grant interim relief, a string of institutions in the arbitration space including Singapore International Arbitration Centre (SIAC) carried out changes to their rules to provide the remedy of emergency arbitration to parties. Other institutions having similar provisions include International Chamber of Commerce (ICC), International Centre for Dispute Resolution (ICDR), Hong Kong International Arbitration Centre (HKIAC) and the Stockholm Chamber of Commerce (SCC).
Consequently, parties executing arbitration agreements that choose to follow the rules of the aforesaid institutions also contract to the remedy of emergency arbitration under the rules.
However, have the legal regimes governing arbitrations in local jurisdictions where such emergency awards need to be enforced kept pace with the changes or do most still continue to provide for interim relief by courts or arbitration tribunals in usual course?
Where does that leave the contracting parties who have signed up to be governed by rules enabling the remedy of emergency arbitrations?
The recent emergency award passed by an emergency arbitrator under the SIAC rules following a plea filed by Amazon against Future Group and the open defiance of the emergency award by Future Group amplifies the inherent lack of enforceability of an emergency award in India as well.
Under Indian law, Section.17 of Part I of the Arbitration & Conciliation Act, 1996 (Act), which is not applicable to a foreign seated arbitration, provides for interim measures to be passed by arbitral tribunals unless otherwise expressly agreed by parties. Further, Section 9 of Part I of the Act provides for application for interim measures by parties to courts at any time before the enforcement of the arbitral award.
However, Part II of the Act which is applicable to foreign seated arbitrations does not have a similar provision thereby making foreign seated emergency awards un-enforceable under the Act except by way of filing a fresh suit before an Indian court. Thus, the provisions of Part II of the Act only provide for enforcement of final awards in cases of foreign seated arbitrations.
In this regard, it is pertinent to note the clear distinction made between a “Tribunal” and “Emergency Arbitrator” under the SIAC Rules as also the term “arbitral tribunal” used under the Act which strengthens the analogy that the Indian law only refers to the “Tribunal” as defined in the SIAC Rules and does not recognise an “Emergency Arbitrator”.
In the absence of clear provisions in the Act, judicial pronouncements on enforceability of foreign seated awards have been fragmented as well. While courts have recognised the emergency arbitrations i.e Steel Engineering (2019 Delhi High Court) on the one hand, they have also held orders of emergency arbitrators to be not enforceable under the Act i.e Raffles Design (2016 Delhi High Court).
Changes in the Act to overcome the challenges surrounding enforceability of emergency awards was also recommended by the Law Commission of India in its 246th report, The Law Commision recommended the definition of “arbitral tribunal” under Section 2(1)(d) of the Arbitration Act to be broadened to also include emergency arbitrator in order to ensure due recognition to emergency awards and to ensure the Act to be in sync with the rules of arbitration institutions in this regard. In fact, the recommendations of the Law Commission were again reiterated by the High-Level Committee set up to reviewing the institutionalization of arbitration mechanism in their Report dated 30 July 2017.
Numerous arbitration-friendly jurisdictions have allowed enforcement of emergency awards to enable recognition of rules of arbitration institutions and party autonomy.
Arbitration laws in Hong Kong and Singapore allow enforcement of emergency awards.
In England and the United States of America, Courts have given recognition to emergency awards and have also held that courts do not have the power to grant reliefs where the remedy of obtaining such reliefs from emergency arbitrators has already been agreed to between the parties under rues of arbitration institutions.
Therefore, despite the divergent judgments ad recommendations of the Law Commission & the High-Level Committee, challenges remain in the enforcement of foreign seated emergency awards in India.
The stated objective of firstly, making India a hub for international arbitration and secondly, the inherent commercial and confidentiality challenges in court driven interim relief mechanisms as opposed to ease of dispute resolution & confidentiality bound arbitration tribunals driven interim and urgent relief mechanisms, highlights the urgent need for the provisions of the Act to be made in sync with the rules of arbitration intuitions relating to emergency arbitrations and enforceability of foreign seated emergency awards in order to ensure the fulfilment of the underlying principle of party autonomy.
This article was originally published at https://www.axfait.com/post/enforcement-of-foreign-seated-emergency-awards-commercial-takeaways