India: Recognising Emergency Arbitrations In India: The Need Of The Hour?

Introduction

Emergency arbitrations are conducted in pursuance of an agreement between the disputants, often on short notice due to the scarcity of time and urgency of the relief sought. Parties prefer invoking provisions for emergency arbitration for seeking interim reliefs, which would prevent the frustration of the subject matter of the dispute. Emergency arbitration has gained prominence in the context of the Indian arbitral regime as the Amazon-Future group dispute made it to the headlines. The present article briefly discusses the important aspects of emergency arbitrations and their current status in India.

What is "emergency arbitration"?

The practice of emergency arbitrations was introduced by rules and legal provisions introduced by multiple arbitral institutions over the past decade and a half. Emergency arbitrations include brief and rapid hearings conducted by arbitral institutions for hearing matters which mandate an urgent interim relief. Such mechanism is often agreed on by the parties themselves, with no resort to a tribunal in the first instance. Given the brevity of the proceedings, procedural considerations in emergency arbitrations are kept at a minimum. The nature of reliefs sought by parties invoking emergency arbitrations typically revolve around taking interim measures to preserve the subject matter of the dispute.

There are many differences between emergency arbitrations and traditional arbitral proceedings. Firstly, emergency arbitrations demand proper coordination amongst all the key stakeholders and the arbitral institution's logistical support and attention. The idea is to ensure that the entire arbitral process is linear and smoothly conducted. Secondly, it is pertinent for an emergency arbitrator to have a clear diary during the days of emergency proceedings since the matters are of high priority. An emergency arbitrator's decision is deemed to be binding and enforceable in the same manner as other decisions or orders of provisional relief. In the same vein, interim relief granted by an emergency arbitrator would likewise be susceptible to being overturned on the same grounds as any other arbitral award.

The arbitral institutions in India and across the globe have introduced provisions for emergency arbitrations under their respective rules of procedure. The following bodies have special provisions dedicated to conducting emergency arbitrations or procedures similar to emergency arbitrations:

(i) Hong Kong International Arbitration Centre (HKIAC)¹

(ii) Netherlands Arbitration Institute (NAI)²

(iii) Singapore International Arbitration Centre (SIAC)³

(iv) International Chamber of Commerce (ICC)⁴

(v) Stockholm Chamber of Commerce (SCC)⁵

(vi) Swiss Chambers' Arbitration Institute (SCAI)⁶

( vii) American Arbitration Association (AAA)

(viii) Delhi International Arbitration Centre (DIAC)⁷

(ix) (Mumbai Centre for International Arbitration (MCIA)⁸

(x) Indian Council for Arbitration (ICA)⁹

(xi) Nani Palkhivala Arbitration Centre¹⁰

(xii) Madras High Court Arbitration Centre (MHCAC)¹¹

Key considerations while initiating an emergency arbitration

Once a party decides to commence an emergency arbitration, it must select what papers to file. More precisely put, the legal team is tasked with determining what all to file in terms of submissions, authority, documents, and witness testimony, based on the time available. This step of the process is a strategic point since it has severe implications on further proceedings. If the applicant submits insufficient evidence, they risk not explaining their case well enough to the emergency arbitrator, consequently hampering their chances of obtaining desired relief.

On the other hand, if they file an excessive volume of material, they may face two repercussions. First, the respondent may assert that it needs additional time to respond due to the voluminous evidence resulting in unwarranted extension of proceedings. Second, and more crucially, early reservations regarding the application's urgency may arise in the mind of the emergency arbitrator if they note the amount of time spent by the claimant on gathering the documents.

Emergency arbitration in India

The 246^th Law Commission Report had amongst its recommendations proposed an amendment to the definition of "arbitral tribunal". The Law Commission recommended that Section 2(1)(d) should be amended to read as follows: (d) "arbitral tribunal" means a sole arbitrator or a panel of arbitrator 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. The object of such amendment was stated to ensure that the institutional rules such as the SIAC Arbitration Rules, which provide for an emergency arbitrator, are given statutory recognition. However, the proposal was never given effect. Hence, presently, the Arbitration and Conciliation Act, 1996 (Arbitration Act) does not contain any provisions which recognise emergency arbitrations.

The doctrine of party autonomy

Whether or not a party should opt for emergency arbitrations is a matter of procedure. Even if the present statutory regime does not expressly recognise emergency arbitrations, they should still be valid and binding upon parties in India. The rationale behind the validity of emergency arbitrations lies in the fact that party autonomy is the brooding and guiding spirit in arbitrations.¹² The doctrine of party autonomy essentially affords the parties at dispute the freedom of choice to decide how upon the modalities of the arbitration, including its procedure. This means that if the parties elect a particular procedure in the arbitration agreement, it generally has to be resorted to. An emergency arbitration is conducted to attain swift interim relief in consideration of fairness and equity. Further, parties have the option of electing the rules of many of the arbitral institutions mentioned above, which have distinct procedures for emergency arbitrations.

The Amazon-Future dispute: rekindling the debate on emergency arbitrations

The Amazon-Future dispute concerns Future Group's retail asset transfer to Reliance worth USD 3.38 billion. Amazon claimed that the disputed transaction violated the Shareholders Agreement (SHA) between Amazon and the promoters of the Future Group. However, Future Group unequivocally denied any wrongdoing and instead has accused Amazon of interfering with the transaction improperly and without justification. The emergency arbitrator halted the multibillion-dollar transaction under the SIAC Rules, thereby allowing Amazon the interim relief it claimed. The challenge in the Indian context pertained to the enforceability of the interim order, given that the current structure of the Arbitration Act does not expressly recognise the legality of emergency arbitrator's interim orders.

In its judgment dated 18 March 2021, the Delhi High Court (High Court) at the outset referred to Section 2(8) of the Arbitration Act, which provides that where the parties have authorised an institution to decide the matter, the agreement shall include the arbitration rules of that institution. By virtue of Section 2(8) of the Arbitration Act, the High Court opined that the Rules of the SIAC stood incorporated in the parties' arbitration agreement. By incorporating the Rules of SIAC into the arbitration agreement, the parties had also agreed to the provisions relating to emergency arbitration.

Thus, the High Court ruled that the current scheme of the Arbitration Act was sufficient to recognise the emergency arbitrations, and there was no necessity for an amendment in this regard. The High Court concluded that the emergency arbitrator was an arbitrator for all intents and purposes. Further, the order of the emergency arbitrator was held to be an order under Section 17(1) enforceable as an order of this Court under Section 17(2) of the Arbitration Act.

Presently, the matter is pending for the Hon'ble Supreme Court of India. Hence, it would be essential to see how the Apex Court decides upon the validity of emergency arbitrations and orders passed therein.

Conclusion

The conundrum surrounding the validity of the emergency arbitrations seems not to have resolved even though the Indian arbitration regime is a firm proponent of party autonomy. In our opinion, emergency arbitrations must be accorded statutory recognition since it is fundamental to the doctrine of party autonomy that the disputants are allowed to set out their own procedure. The Indian courts need to embrace principles of modern arbitral jurisprudence with open arms to transform India into a global hotspot for international commercial arbitrations. As witnessed above, emergency arbitrations are a common phenomenon not only in foreign arbitral institutions but also in the bodies located in India. While the challenge in the Amazon-Future dispute is pending before the Supreme Court of India, we expect that the controversies revolving around the enforcement of emergency arbitral awards would be put to rest in near future.

* The author would like to acknowledge the research and assistance rendered by Harshvardhan Korada, a student of Amity Law School, Delhi.

Footnotes

1. Schedule 4, 2018 HKIAC Administered Arbitration Rules. Read more, here.

2. Rule 9, NAI Arbitration Rules, 2015. Read more here. The NAI Rules clarify that since "summary arbitral proceedings significantly and predominantly accommodate the need for an expedited decision or relief, the Arbitration Rules have no separate provisions governing "expedited arbitration".

3. Schedule 1, SIAC Rules 6th Edition. Read more, here. The International Arbitration Act of Singapore recognises emergency arbitrations by defining an arbitral tribunal as, "a sole arbitrator or a panel of arbitrators or a permanent arbitral institution, and includes an emergency arbitrator appointed pursuant to the rules of arbitration agreed to or adopted by the parties including the rules of arbitration of an institution or organisation."

4. Article 29, ICC Rules of Arbitration.

5. Appendix II, Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce.

6. Article 6, International Rules of the Arbitration Court of the SCAI.

7. Part E, DIAC (Arbitration Proceedings) Rules 2018.

8. Rule 14, MCIA Rules 2016.

9. Rule 57(b), ICA Rules of Domestic Commercial Arbitration 2016.

10. Rule 20A, Nani Palkhivala Arbitration Centre's Rules to Regulate Arbitration.

11. Part IV, Madras High Court Arbitration Center (MHCAC) Rules, 2014.

12. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., 2016 4 SCC 126; Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd., 2017 2 SCC 228; Union of India v. U.P. State Bridge Corporation Ltd., 2015 2 SCC 52.