EMERGENCY ARBITRATION: CONTEXT OF INDIA

Difficult times call for desperate measures.

Emergency arbitrations enable a party to approach the arbitration institution before the arbitration tribunal is constituted and seek interim reliefs. The efficacy of an Emergency Arbitration, invoked by a party, survives on a chariot of two wheels:

1. Fumus boni iuris- Reasonable possibility that the requesting party will succeed on merits;
2. Periculum in mora – if the measure is not granted immediately, the loss would not and could not be compensated by way of damages.

Since the amendment to the UNICTRAL Model Law (Model Law) in 2006 empowering arbitral tribunals to grant interim reliefs to parties, a number of arbitration institutions such as the International Centre for Dispute Resolution (ICDR), Stockholm Chamber of Commerce (SCC), International Chamber of Commerce (ICC), Singapore International Arbitration Centre (SIAC) and Hong Kong International Arbitration Centre (HKIAC) have amended their rules to provide parties with the remedy of emergency arbitration.

Arbitral institutions in India recognize emergency arbitration and have provided for specific procedure in that regard within their rules. The definition of the term “Award” as per the MCIA rules reads as: “Award” includes a partial or final award and an award of an Emergency Arbitrator.” Although institutions have recognised and incorporated the concept of Emergency Arbitration, however, unfortunately, the concept of emergency arbitration and award is absent in the Indian legislation. The definition of award under Section 2(c) of the Arbitration and Conciliation (Amendment) Act, 2015 even after the much appreciated amendments does not cover “emergency award” within its ambit and scope.

ENFORCEABILITY OF EMERGENCY ARBITRATIONS IN INDIA

In India, Section 9 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) provides that parties may apply for interim reliefs to the concerned court at any time before the enforcement of the arbitral award. It is relevant to state that under Part II of the Arbitration Act, which deals with enforcement of foreign arbitral awards, only final awards can be enforced before the courts in India and interim awards passed by in an emergency arbitration proceeding is not recognized.
However in 2014, the Law Commission of India did acknowledge this lacuna in its 246th report and recommended that the definition of “arbitral tribunal” under Section 2(1)(d) of the Arbitration Act ought to be widened to include emergency arbitrator so as to ensure that arbitration institution rules which provide for an emergency arbitrator are statutorily recognized in India. Unfortunately, the recommendation was not given effect in the subsequent amendments to the Arbitration Act.

INSTITUTIONAL INTIATIVE 

Although, the Indian arbitral institutions statutorily are not cogent enough (in realm of an expressly omitted provision), yet they have framed rules which are by large synonymous to the leading international arbitration institutional rules. Some notable institutions with their respective regulations are:

1. The Delhi International Arbitration Center (DAC4), of the Delhi High Court in Part III of its Arbitration Rules includes "Emergency Arbitration". Further Section 18A enumerates 'Emergency Arbitrator' and further explains the appointment, procedure, time period and powers of an Emergency Arbitrator.
2. Court of Arbitration of the International Chambers of Commerce-India, under Article 29 of the 'Arbitration and ADR Rules' r/w Appendix V enumerate the provisions of EA and Emergency Arbitrator.
3. International Commercial Arbitration (ICA), under Section 33 r/w Section 36(3) w.e.f 01.01.2014, enumerates the provisions of EA and Emergency Arbitrator.
4. Madras High Court Arbitration Center (MHCAC) Rules, 2014, under Part IV, Section 20 r/w Schedule A and Schedule D enumerate the provisions of EA and Emergency Arbitrator.
5. Mumbai Center for International Arbitration (Rules) 2016, under Section 3 w.e.f 15.June.2016 enumerates the provisions of EA and Emergency Arbitrator.

STANCE OF COURTS

Even though, no court in India has got an opportunity to directly test the validity of an Emergency Arbitrator award or enforcement application for enforcing an emergency arbitrator award, they dealt with applications filed under S.9 of the Act, based on the emergency arbitrator awards. The following are the cases in which Emergency Arbitrator awards have been passed and parties did not seek for enforcement of the emergency arbitrator award but the Foreign party filed an application under S.9 of the Act and sought interim relief from Indian Courts.
The first two orders were passed by High Court of Bombay on 22nd January 2014 (Post BALCO and Pre-2015 Amendment) in HSBC PI Holdings Mauritius Limited Vs Avitel Post Studioz Ltd., (2014) SCC Online 102 & 2015 SCC Online 6352. In the said case the arbitration clause provided for an international arbitration seated in India but specifically allowed the parties to approach Indian Courts seeking interim orders under S.9 of the Arbitration and Conciliation Act,1996. As per the Arbitration clause Singapore International Arbitration Centre (SIAC) was designated to administer the arbitration seated at Singapore. Hence the Petitioner approached SIAC seeking to appoint an Emergency Arbitrator and the said emergency arbitrator also passed an interim award in favour of the petitioner. Since neither emergency arbitration award nor any other type of interim award can be enforced in India, under S.48 of the Act, the petitioner without seeking enforcement, sought for a similar order under S.9 of the Act. The High Court of Bombay passed an interim order directing the respondent to not to withdraw USD 60 million from its account. In this case, High Court never had an opportunity to test either the validity or enforceability of an emergency arbitration award, since the petitioner filed a S.9 application before the court seeking interim relief. 

The second Case was decided by the High Court of Delhi on 7th October 2016, which is reported as Raffles India International Private Limited Vs Educomp Professional education Limited 2016 SCC Online Del 5521 & (2016) 234 DLT 349. In this case, also parties did not try to enforce the emergency arbitrator award in India, they filed an application under S.9 under the 2015 Amended Act. The Court while referring to the emergency arbitration award, held that the Indian Arbitration and Conciliation Act,1996 Pari materia does not have any provision similar to Article 17(H) of the UNCITRAL model law, which provided for the enforcement of the interim award passed in a foreign seat. Hence it held that the emergency arbitrator award cannot be enforced as it is and parties must file a separate suit seeking to enforce the emergency arbitrator award. It further held that S.17 of the Act is applicable only for interim arbitration awards passed from an Indian seat.

Conclusive remarks: As understood from the text hereinabove, Indian jurisprudence does not provide any legal backing to the to enforcement of awards passed in emergency arbitrations in foreign seats. However, there is a interpretational advantage here. Emergency awards passed in an Indian seat shall be enforceable in India. Therefore, foreign parties should go for interim orders from Indian courts, rather than enforcing emergency awards against Indian parties. And, Indian parties can directly go ahead for emergency arbitrations if the other party is a signatory of New York convention. 

In a post-COVID-19 scenario, where courts across the country are shut down and arbitral tribunals are functioning through video-conferencing for urgent matters, the convenience of emergency arbitration can no longer be understated. The High Level Committee to Review the Institutionalization of Arbitration Mechanism in India, chaired by Retd. Justice B.N. Krishna observed that considering the international practice of allowing enforcement of emergency awards, India should take steps to allow enforcement of emergency awards under the Arbitration Act. [Report dated 30 July 2017].

Thus, the time is now ripe for consideration of recognition to emergency arbitration under the Arbitration Act.

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