ABSTRACT

India's push towards a pro-arbitration regime seems to have come to a cross-road with respect to the concept of emergency arbitration. While the courts have cautiously attempted to inculcate and evolve the concept through judicial intervention, the legislature remains adamant on its exclusion from the present framework under the Arbitration and Conciliation Act, 1996. This paper analyses and critiques the judgements and institutional rules that embody the role and functioning of emergency arbitration in India, both for domestic seated arbitration and foreign seated arbitration. However, judicial intervention in the vacuum of legislative intent poses serious questions on the efficacy of enforcement and authority of an emergency arbitrator, especially in light of the existing conflict with pre-existing remedies available through domestic courts. This is aggravated by the lack of uniformity in our institution's rules concerning essential features such as determining seat of emergency arbitration, claiming parallel relief in domestic courts as well as the scope and powers of emergency arbitrator and the process of emergency arbitration. Hence, this paper focuses on exposing the present lacunae post the Amazon v. Future judgement and improving the present framework and brining uniformity in the institutional rules. It also calls for urgent legislative intervention to codify emergency arbitration by amending the Act, if India is truly to stand amongst its peers in the realm of arbitration.

I. INTRODUCTION

The new kid on the block in India's budding arbitration regime is the powerful tool of emergency arbitration. While it may have been called arbitration's Achilles heel1, the Indian judiciary has begun taking a liking to it, but there remain many questions surrounding its efficacy, recognition, enforcement, and its place in India's legislative framework (or lack thereof). Party autonomy, and speedy redressal are sacrosanct to arbitration and for years arbitration was ill-equipped to grant urgent interim relief forcing parties back to the very domestic courts they sought to avoid.2 Emergency arbitration was brought to remedy this having evolved from the 'Pre-Arbitration Referee' developed by the ICC back in the 1990's.3

The concept provides for an alternative to the already burdened domestic courts to seek emergency interim relief that is so urgent it must be granted before an Arbitration Tribunal can be constituted based on merit. The Constitution of Tribunals can be a time-consuming process and hence, emergency arbitration fulfills the principles of fumus boni iuris and periculum in mora to justify its basis and to protect and prevent further loss to either party.4 The parties per agreement through the assent of the arbitral institutions' rules legitimize the proceedings and the appointment of the emergency arbitrator. These arbitration institutions are key players and stakeholders in promoting and standardizing the rules pertaining to emergency arbitration as an opt-out mechanism for parties. Its inclusion of the mechanism provides parties the choice to by agreement not be bound by the rules and provisions of emergency arbitration.5 This mechanism prevents frivolous challenges by parties to wriggle out of the rules set out in an agreement by claiming that the provision for emergency arbitration is distinct and should be provided as an opt-in mechanism.6

In the event urgent interim relief is required and an application for an emergency arbitrator is sent to the arbitration institution, an emergency arbitrator is then appointed, and an emergency award/order is rendered usually under 10 days from date of application.7 This order however, does not decide the dispute between the parties conclusively and the Tribunal once formed will take over the dispute and can review the orders passed by the emergency arbitrator.

This paper analyzes the efficacy of emergency arbitration through the lens of pertinent issues from an Indian perspective such as recognition of emergency arbitrator, the status of its orders passed and the standard of review of these orders by the Tribunal along with concerns surrounding enforcement and recognition of both domestic and foreign orders passed by an emergency arbitrator. These issues are the topic of much deliberation. If India is to stand at par with its international counterparts and succeed in the pro-arbitration stance and approach, these issues will need to be solved by developing a strong legislative framework for emergency arbitration in India.

II. EMERGENCY ARBITRATION – REGULATED BY RULES

It was back in 2006 when we first witnessed an institution introduce emergency arbitration as a concept in the ICDR rules.8 Following suit over the course of the next eight or so years, institutions such as the International Chambers of Commerce, the London Court of International Arbitration ("LCIA")9, Singapore International Arbitration Centre ("SIAC")10 and Hong Kong International Arbitration Centre ("HKIC").11 Indian Institutions too, began inculcating emergency arbitration provisions within its rules. The Mumbai Centre for International Arbitration ("MCIA")12, The New Delhi International Arbitration Centre ("NDIAC") etc.13 are among those to have included provisions governing the application for emergency arbitration in their rules.

Most domestic institutions via their rules delineate the scope and powers of an emergency arbitrator and also speak to the appointment of arbitrator, timeline for award, parallel relief and appeal etc. However, these rules are not uniform across all institutions.14 The Mumbai Centre for International Arbitration (MCIA), the Madras High Court Arbitration Rules (MHCAC), and the New Delhi International Arbitration Centre (NDIAC) for example makes no mention of procedure for determination of seat of arbitration. The MHCAC also do not specify that an emergency arbitrator must state reasons for order. Provisions governing availability of parallel relief is absent both in the MHCAC and the Bangalore International Mediation and Arbitration Centre (BIMACC). The Indian Council for Arbitration (ICA) rules possesses several shortcomings. Apart from those mentioned above the extended timelines of 14 days for payment of fees and appointment of arbitrator is extremely long and defeats its very purpose.15 Further, there is no mandate for disclosure of impartiality or provision to challenge the same. Across the board, the institutional setup is largely unregulated and unstandardized. Acceptance of emergency arbitration will face issues in the face of poor framing of the rules and will become a hindrance to obtaining urgent relief through emergency arbitration and the same should be rectified through systematic institutional changes across the board.

III. INDIA'S (LACK OF) LEGISLATIVE FRAMEWORK ON EMERGENCY ARBITRATION

Novel creations such as emergency arbitration are best suited to be adopted through a structured legislative framework. While some jurisdictions such as Hong Kong16, New Zealand17 have been more forthcoming in this endeavor of inculcating and adopting through legislation the inclusion of the concept of emergency arbitration, India has not been one of them. Much of the loopholes and issues arising stem from the lack of a codified framework.

The Arbitration and Conciliation Act, 1996 ("Act") makes no mention of emergency arbitration or emergency arbitrator as a means of adopting urgent relief. In fact, the Law Commission in its 246th Report back in 2014 did propose an amendment to Section 2(1)(d) of the Act to include emergency arbitrator within the definition of arbitral tribunal.18 However, this suggestion was not embraced in 2015 Amendment Act leading to the assumption that emergency arbitration was to be rejected in India. This line of thinking was furthered hammered down when the High-Level Committee in 2017 once again suggested to implement the proposal of the Law Commission but this too went unheard as no changes were seen in the 2019 Amendment Act.19 This leads to serious questions surrounding the authority of the emergency arbitrator and the validity of orders passed. In absence of any legislative framework, the courts in India fueled the debate and discussion surrounding the use and enforcement emergency arbitration orders supported by the rules developed by arbitration centers both globally and in India.

IV. JUDICIAL INTERPRETATION OF EMERGENCY ARBITRATION IN INDIA

  1. India seated Arbitration.

Emergency arbitration seated in India gained significance at the end of 2021 in Amazon.com Investment Holdings LLC ("Amazon") v. Future Retail Limited & Ors. ("Future Group").20 As a background, arbitration was initiated by Amazon under the SIAC rules against a dispute relating to investments made by them in Future Group and certain actions taken in relation to that. Emergency relief was sought and an apllicatio0n for emergency arbitration was made. The seat for arbitration under the agreement was New Delhi. An emergency award was passed against Future Group in October 2020 which Future Group denied to follow claiming the award to be a nullity under the Arbitration and Conciliation Act, 1996 ("Act")

Aggrieved by the same, Amazon filed an an application under Section 17(2) of the Arbitration Act before the Delhi High Court, seeking enforcement of the interim award passed by the Emergency Arbitrator. The case eventually was appealed by Amazon to the Supreme Court. In determining enforcement of the emergency award, the Supreme Court had to look; Firstly, at whether an emergency arbitrator is a tribunal as per the provisions of the Arbitration Act and secondly, whether the emergency award constituted and order per the provisions of Section 17(1) of the Act.

  1. Emergency Arbitrator – A Tribunal?

Future Group argued that emergency arbitrators do not come under the Act's definition of an arbitral tribunal, and as a result, section 17(1), which is only applicable during arbitration proceedings, could not be invoked in this case. The court specifically included emergency arbitrators within the purview of Section 17 by relying on the phrase "unless the context otherwise requires" and applying a proper reading of Section 2(1)(d) read with Sections 2(6) and 2(8) of the Act (1). Referring to Section 21 of the Act and Rule 3.3 of the SIAC Rules, which make clear that arbitral proceedings begin upon receipt of notice of arbitration, supported this claim. Because emergency arbitration proceedings can only begin after receiving notice, they fall under the definition of "during arbitral proceedings."

  1. The Award – Order Dilemma

The second question is a little more complex. While in common parlance, the ruling of an emergency arbitrator is known as an emergency award, but legally speaking this is not the case and must be interpreted keeping the concept of award and surrounding factors in mind. Given the lack of legislative clarity on what constitutes award, Courts in India have interpreted an award that finally determines a part or whole of the dispute between parties to an arbitration. From this perspective, an emergency award does not decide an issue between parties in finality and merely grants an interim order as relief. This relief is revisited once again when the merit Tribunal is constituted which can either uphold or overrule the order. Hence, should the relief granted find status as an award?

Foreign jurisdictions have grappled with this question as well. The district court of New York back in 2013 deciding the issue of vacating an emergency award ruled that for the purpose of maintaining status quo and the decision arrived by the emergency arbitrator is final and binding.21 The District Court held that as the parties agreed to submit their dispute to emergency arbitration and pre-empts any law that limits its enforceability. This judgement was in consonance with the New York Convention, specifically Article 1(2) which defines arbitral awards as those awards made by arbitral bodies to which parties have submitted. This is in contrast to the district court in San Diego that ruled as per the interpretation of the New York Convention that decisions by an emergency arbitrator are not final and binding.22 If party autonomy is significant in arbitration, then which judgement is the approach to be followed. This question is imperative from an enforcement perspective when a party refuses to comply with an award by an emergency arbitrator. The solution to this dilemma should be addressed through legislative attention.

However, until the legislature intervenes, finality of an emergency award is closely linked to the standards by which it should be reviewed for vacating it. General rule is to follow the standard employed by seat courts.23 So far as India is concerned the 2015 Amendment brought Section 17 in parity with Section 9 of the Act holding that orders made by a tribunal or of same footing and are enforceable as orders made by a court. The Amazon judgment clarified that this extends to emergency arbitrations as well entailing them to same standards of review. On a reading of Order XXXIX Rule 4 it becomes clear that vacating an interim order is warranted only under changed circumstances where enforcing the order becomes unworkable or unnecessary.24Hence, merit Tribunals constituted must adopt a similar standard when reviewing an award by an emergency arbitrator. Affording a strong standard of review will grant authority to the emergency arbitrator and their award.

  1. Foreign seated Arbitration

Courts in India faced with the lacunae surrounding emergency arbitration and the enforcement of orders by emergency arbitrators walked a fine line between maintaining the sanctity of emergency arbitration while still driving home the basis that domestic court's jurisdiction cannot be ousted. In doing so, courts through various judgments have unintentionally created conundrums in enforceability that open up a pandora's box of issues.

This can be evidenced from the judgements in HSBC v. Avitel25 and Raffles Design International India Private Limited & Ors. v. Educomp Professional Education Limited & Ors26wherein, in Section 9 cases brought after the emergency arbitration, the Bombay High Court and Delhi High Court, respectively, awarded parties relief similar to that provided in the by the emergency arbitrator. But in the Raffles Design case under which the emergency arbitrator issued an interim order directing Educomp to make certain payments to Raffles Design. Educomp challenged the emergency arbitrator's jurisdiction and the validity of the order. The Delhi High Court noted that the plea for interim relief would be taken into consideration by the court under Section 9 regardless of the emergency award. In accordance with the emergency arbitrator's ruling, the Delhi High Court declined to award interim reliefs under Section 9 of the Act in the case of Ashwani Minda v. U-Shin Ltd.27 One of the reasons the interim relief was denied was that it was not permissible for a party to use the Section 9 route to make a second attempt after failing to obtain interim relief in emergency arbitration.

The courts through these judgements may have attempted to walk a fine line, however if this is to be the case, does this not simply defeat the purpose of emergency arbitration in the first place and exaggerate the problem it sought to cure. These judgements pertained to foreign seated arbitration with is interesting to see that it runs contrary to the judgement in BALCO which came later and excluded Indian Courts from granting interim relief in foreign seated arbitration.28

V. EMERGENCY AWARDS, SECTION 9, AND SECTION 17 IN LIGHT OF THE AMAZON RULING

The ruling in the Amazon judgement though noteworthy in promoting a pro-arbitration approach in India at least for India seated arbitration leaves us with a pertinent question. Now that an emergency arbitrator award has been held to be on the same lines of an arbitral tribunal's orders under Section 17 in granting emergency interim relief and enforceable in the same manner as an order of a court. An emergency arbitrator for all intents and purposes is an arbitral tribunal for the purposes of Section 17 of the Act. A parallel reading of the 2015 Amendment to the Arbitration Act, through Section 9(3) made it so that a party cannot approach a court under Section 9 of the Arbitration Act, once an arbitral tribunal has been constituted.

With this contrast, it would be difficult to ascertain if Indian courts continue to entertain applications under Section 9 of the Act when parties have opted to be governed by emergency arbitration, an arbitrator for which is usually appointed within 1-3 days.29 Obtaining a timely and effective relief will remain the basis for entertaining applications as courts look to set a self - imposed bar on themselves. A natural extension of this self-imposed bar will be whether Section 9 applications can be entertained when a party's interim relief is denied. This aspect will no doubt be tested in the near future.

If a self-imposed bar is not imposed by courts, India will likely see a duality of approaches basis enforcement leading to confusion and ambiguity. Despite the judgement sanctifying the authority of an emergency arbitrator and its award, there is already an argument that postulates that parties in India are likely to respect a court order rather than an order under Section 9 by an emergency arbitrator.30 Hence, they argue that if party require enforcement in multiple jurisdictions the Emergency award may be invoked and in case enforcement is only in India the section 9 application may be more prudent. This defeats the very purpose of emergency arbitration and runs contrary to its presence in agreements and the assent to the rules of the arbitration institution.

VI. THE WAY FORWARD

The Amazon ruling is a big step for Indian arbitration and will play a significant role in promoting India seated arbitration by upholding party autonomy in invoking emergency arbitration as a means of speedy redressal towards granting interim relief. But the judgement can only go so far in identifying the lacunae that persists and plug the issues. This will no doubt require legislative intervention sooner than later. Being a relatively nascent phenomenon emergency arbitration sanctified solely through judicial pronouncements will as this paper has vehemently argued for, require legislative framework to address the following issues to remove ambiguity and improve enforcement.

  1. Emergency arbitrator must be included in the definition of arbitral tribunal by amending its definition within the Act.
  2. Reconciling courts authority to grant interim relief in consonance with relief granted by emergency arbitrators.
  3. Allow enforcement of emergency awards passed in foreign seated arbitration.

VII. CONCLUSION AND SUGGESTION

In the pro-arbitration environment that India is presently striving for, the Amazon – Future judgement is the first major stride went a long way to securing emergency arbitration as an effective alternative to courts in granting urgent relief to parties. It has cemented party autonomy as a core tenet in invoking emergency arbitration when in conflict with approaching domestic courts. Emergency arbitrator has the potential to be a powerful tool in India's arsenal, one that could promote arbitration, reduce burden on courts and protect party interests through its use. However, the legislature and judiciary appear to be in conflict on its inclusion and it still unclear how it will come to fit in India's arbitration framework. The longer India appears to reside in indecisiveness, greater ambiguity is likely to creep in affecting its acceptance. Any change is likely to bring disruption. Adapting to disruption will promote growth and innovation. The first step to adapting is to identify the existing issues and recommend changes. The author looks to do just that by making the following recommendations through this concluding section.

  1. Firstly, the judgement made no impact on foreign seated arbitration. While no doubt emergency arbitration is an alternative and not a substitute to courts for relief. The very purpose of emergency arbitration is defeated in foreign seated arbitration as parties will still need to pursue the Section 9 route where the award by the emergency arbitrator will simply act as persuasive value and depend on the court to enforce the same and grant interim relief on the lines of the emergency arbitrator. Hence, the way forward is to not rely on judicial intervention or discretion but through legislative change in the language of the Act to extend the scope of Section 17.

  2. Secondly, and a fundamentally greater problem is that the premise of enforcement of the award is very strong on paper but the same does not translate to the real world. Despite clothing tribunals with the power of civil courts with respect to orders passed under Section 17, the authority of enforcement is lacking under the Tribunal (a creature of statute) in cases when a party does not comply with an emergency award. This will continue to remain a pitfall in the Indian regime as we resort back to courts for enforcement in events of non-compliance. The legislature must include a provision in the Act to enforce compliance similar to the lines of Article 17H of the UNCITRAL Model Law on International Commercial Arbitration, 1985.31

  3. The institutional rules in the absence of legislative framework will play a key role regulating emergency arbitration in India. However, the current rules framed under various institutions lack uniformity with regard to key features regarding the power of the emergency arbitrator, determining seat of arbitration and parallel relief in domestic courts etc. These features are fundamental and while a completely homogenized application of the rules may not be possible due to jurisdictional circumstances, we must aim towards achieving a basic level of uniformity within our institutions.

Footnotes

1. Martin Davies, Court ordered Interim measures in aid of International Commercial Arbitration, 17 AM, Rev. Int. Arb. 299, 300 (2006).

2. Report of the ICC Commission on Arbitration and ADR Task Force on Emergency Arbitrator Proceedings, Emergency Arbitrator Proceedings, (April, 2019)

3. Raja Bose & Ian Meredith, Emergency Arbitration Procedures: A Comparative Analysis, Int. Arbitr. Law Rev 186, 187 (2012).

4. Singhania and Partners, Emergency Arbitration In India: Concept And Beginning, Mondaq (2021)
 https://www.mondaq.com/advicecentre/content/3958/Emergency-Arbitration-In-India-Concept-And-Beginning

5. Abhinav Gupta, Sriroopa Neogi, Emergency Arbitration in India: A Critical Appraisal of the Institutional Framework, NUJS Law Review, 14 NUJS L. Rev. 4 (2021)

6. Maxi Scherer, Expedited Formation of the Arbitral Tribunal, Emergency Arbitrator and Expedited Replacement of Arbitrators in ARBITRATING UNDER THE 2020 LCIA RULES: A USER'S GUIDE, 17 (Kluwer Law International, 2021).

7. Shaneen Parikh, et al, The developing compass of emergency arbitration in India, International Bar Association (Jun. 3, 2021)
https://www.ibanet.org/emergency-arb-india

8. ICDR International Arbitration Rules, 2014, Art. 6.

9. LCIA Arbitration Rules, in force as of 1 Oct. 2014, Art. 9B

10. SIAC Arbitration Rules, in force as of 1 Aug. 2016, R. 30, Sch. 1

11. HKIAC Administered Arbitration Rules, in force as of 1 Nov. 2018, Art. 23, Sch. 4

12. Mumbai Centre for International Arbitration Rules, 2016, R. 14

13. Delhi International Arbitration Centre (Arbitral Proceedings) Rules, 2018, R. 14

14. Abhinav Gupta, Sriroopa Neogi, Emergency Arbitration in India: A Critical Appraisal of the Institutional Framework, NUJS Law Review, 14 NUJS L. Rev. 4 (2021)

15. The ICA's Rules of Domestic Commercial Arbitration, 2016, Rule 57(b)(c).

16. Hong Kong Arbitration Ordinance, S. 22

17. New Zealand Arbitration Act, S. 2(1)

18. Law Commission of India, Report No. 246, Amendments to the Arbitration and Conciliation Act, 1996 (Aug. 2014)

19. Report of the High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India

20. Amazon.com NV Investment Holdings LLC v. Future Retail Limited and Ors. 2021 SCC OnLine SC 557 (Supreme Court of India)

21. Yahoo! Inc. v. Microsoft Corporation, United States District Court, Southern District of New York, 13 CV 7237, October 21, 2013

22. Chinmax Medical Systems Inc., v. Alere San Diego, Inc., Southern District of California, Case No. 10cv2467 WQH (NLS), May 27, 2011.

23. Vijayendra Pratap Singh. Abhisar Vidyarthi, Applicable Standard of Review for Vacation of Emergency Arbitral Awards, Oxford Business Law Blog (Mar. 1, 2022)
https://blogs.law.ox.ac.uk/business-law-blog/blog/2022/03/applicable-standard-review-vacation-emergency-arbitral-awards

24. Code of Civil Procedure, 1908, Order 39. R 4

25. Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC OnLine SC 656

26. Raffles Design International India Private Limited & Ors. v. Educomp Professional Education Limited & Ors 2016 SCC Online Del 5521

27. Ashwani Minda v. U-Shin Ltd 2020 SCC Online Del 721

28. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc 2011 SCC OnLine SC 1436

29. 9B(9.6), LCIA Rules; Paragraph 2, Schedule 1, SIAC Rules; Article 2, Appendix V, ICC Rules

30. Ayush Agarwala, [The Viewpoint] Emergency arbitration: An Indian perspective, Bar and Bench. (Aug. 30, 2022)
https://www.barandbench.com/law-firms/view-point/emergency-arbitrations-an-indian-perspective

31. UNCITRAL Model Law on International Commercial Arbitration 1985

Sean is a student of Narsee Monjee Institute of Management Studies, Bengaluru and Winner of the Finalist Prize of the 9th Ed. of Arb Excel Essay Writing Competition.

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