In a world where everyone is always in a rush, a world where quick fixes and easy results are desired a new legal remedy has emerged, Emergency Arbitration (EA). As the name suggests Emergency Arbitration is an upcoming concept for emergency reliefs ideally suited for someone who wants to protect their assets and evidence. Emergency Arbitration has been adopted all over the world in this decade as a delayed remedy more often than not renders the unaided and irreparable. Emergency Arbitration is an urgent measure where there is a minimum risk of irreparable damage. The ultimate goal of this remedy is to maintain a status quo during the awaiting of the dispute.
Introduction of Emergency Arbitration
Before the introduction of Emergency Arbitration parties undergoing international arbitration as a dispute resolution mechanism did not have any effective procedure to apply for interim relief. A party had to approach the national court of the opposite party to apply for an interim order; this process was complex and expensive. Hence a need for emergent and the rapid solving medium was the need of the hour. The International Center for Dispute Resolution (ICDR) introduced the concept of Emergency Arbitration. Emergency Arbitration was adopted by Singapore Arbitration Center (SIAC) for the first time in Asia.
Procedure for Emergency Arbitration
Who can apply for Emergency Arbitration?
Any party in an urgent need for an interim measure and cannot await the constitution of Arbitral Tribunal are eligible to appoint an Emergency Arbitrator. Only arbitral institutes can appoint Emergency Arbitrator.
Indian Arbitration Centers that have recognized Emergency Arbitration and provides a specific procedure for the same is as follows Indian Council of Arbitration (ICA), ICC India, Nani Palkhiwala Arbitration Center (NPAC), Delhi High Court Arbitration Center, Mumbai Center for International Arbitration (MCIA), Madras High Court Arbitration Center (MHCAC), Court of Arbitration of International Chambers of Commerce- India.
Powers under Emergency Arbitration
The exercises of Emergency Arbitration is similar to the functioning of an ad hoc tribunal that has been constituted for a specific purpose and dissolves on the completion of the said purpose. The Emergency Arbitration generally grants either interim measure or conservatory relief that only for a limited time.
The important characteristics of an arbitrator are as follows:
- Power to deal with only emergency relief application.
- Have the same powers as regular arbitral tribunal.
- To resolve the conflict within 14 days.
- Orders passed by the arbitrator can be reviewed or amended by arbitral tribunal.
Enforcement of Emergency arbitration in India
Indian Arbitration is governed by Arbitration and Conciliation Act, 1996 as there were no provisions related to Emergency Arbitration the Law Commission’s 246th Report[i] proposed an amendment to the said Act’s Section 2(d) which if amended would give statutory recognition to the appointment of an emergency arbitrator. An amendment in the Act was made in 2015[ii], but the amendment failed to adopt the Law Commission’s suggestion. As of now, the EA is governed by Section 17 of the Act which is temporary as well as unenforceable in nature. As stated by the SC in the case of M.D. Army welfare Housing Organization v. Sumangal Services Pvt. Ltd.[iii], Section 17 of the Act does not confer on arbitral tribunal to enforce the orders or any judicial enforcement for such orders.
In the case of BALCO v. Kaiser Aluminum Technical Services[iv], the Supreme Court restrained the power of the Court to grant interim relief in cases dealing with foreign seated arbitration. While due to the 2015 amendment the said power has been restored to the Indian Courts.
However, there have been a few judicial decisions that are in sync with the concept of Emergency Arbitration. In the case of HSBC Holding Mauritius Ltd. v. Avitel Post Studioz Ltd.[v], where the parties had undergone the EA proceedings in Singapore, the parties invoked the right to seek interim relief in front of the national Courts of India. The Court upheld the decision made by the emergency arbitrator.
Limitations in implementing Emergency Arbitration in India
Two key challenges arise in the implementation of Emergency Arbitration in India as of now those being:
First, what happens when a party does not abide by the order made by the Emergency Arbitrator? What is the course of action against the defaulting party? One remedy to this default is to sue the party for a breach of contract, but this nullifies the effect of the Emergency Arbitration as this course of action is neither a speedy remedy nor can it be enforced urgently.
Second, an interim order passed by the international Emergency Arbitrator is not enforceable in India. A safer option would be to pass an interim award rather than the interim order. The problem with this course of action is that the interim award is subject to 90 days waiting period[vi] which again nullifies the concept of EA.
In the case of Raffles Design International India Private Limited & Ors. v. Edu comp Professional Education Limited & Ors.[vii], the court held that an emergency arbitrator award cannot be enforced if the parties want to enforce the said award a separate suit must be filled.
Another disputation regarding EA was seen in the case of Antrix Corporation Pvt. Ltd. v. Devas Multimedia Pvt. Ltd.[viii], the Supreme Court ruled that an arbitration agreement cannot be enforced for constituting in another tribunal when one tribunal has already dealt with the existing matter. If this principle is followed the Rule of arbitration that governs emergency arbitration is inconsistent with the Law of Arbitration.
Arbitration in India is not only an easy legal remedy but a vital need to the
Indian legal system as in India a case sometimes takes decades on decades to be
resolved. Emergency Arbitration can provide easy and quick orders that do not
bleed the aggrieved party financially dry. This remedy can eliminate the hassle
of applying several forums all in a different jurisdiction to obtain single
instant relief. It is time-efficient for the parties as well as the judicial
system. Along with the above Emergency Arbitration also sets a behavioral
standard for the parties. EA in some parts of the world has evolved from being
an interim order to one which is final and enforceable; this has been adopted
by the New York Convention. In the case of Yahoo!
Inc. v. Microsoft Corporation[ix],
the court held that the order passed by the EA was in essence final. Emergency
arbitration is an easy and efficient way to reform the Indian Justice System,
the applicability and enforceability of Indian EA can be easily resolved with a
few tweaks in the current Act.
[i]Law Commission’s Report dated 5/8/2014
[ii]The Arbitration and Conciliation (Amendment) Act, 2015
[iii](2004) 9 SCC 619
[iv]9 SCC 552
[v]Arbitration Petition No. 1062/ 2012
[vi]Section 36 of Indian Arbitration and Conciliation Act, 1996
[vii](2016) 234 DLT 349
[viii]2014 (2) ARB LR 226 (SC)
[ix]13 CV 7237
ABOUT THE AUTHOR
Shivani Sethi, 3rd Year, BBA, LL.B (H), Banasthali Vidhyapeeth