* Sarthak Srivastava
INTRODUCTION
Emergency arbitration is a concept in India that allows parties involved in a dispute to seek urgent interim relief from an arbitral tribunal before the commencement of formal arbitration proceedings. It provides a mechanism for parties to preserve their rights and interests, particularly in situations where time is of the essence.
In India, emergency arbitration is governed by the Arbitration and Conciliation Act, of 1996. Though, the Act does not expressly provide for Emergency Arbitration, it was contemplated that it would be introduced in the 2015 Amendment after the suggestions of the 246th Law Commission Report to introduce the coverage of Emergency Arbitration under Section 2(d) of the Act. However, the legislature did not deem it fit to introduce such a definition under Section 2(d) and the Act holds lacunae in the definition of Emergency Arbitration, at present. Despite such express recognition, the Hon’ble Supreme Court of India in Amazon .com NV Investment Holdings LLC v. FutureRetail Ltd. & Ors.i upheld the award passed by the Emergency Arbitrator and held that such arbitration proceedings seated in India are enforceable under Section 17(2) as an interim order of the tribunal under the Act. However, there still exists an ambiguity regarding the nature, orders and awards in Emergency Arbitration leaving room for further developments. The Act empowers parties to approach the arbitral tribunal for interim measures that are necessary to prevent imminent harm or to preserve the status quo pending the resolution of the dispute. These interim measures can include injunctions, asset freezes, or the preservation of evidence.
The process of emergency arbitration typically involves the appointment of an emergency arbitrator who is appointed by an institution or agreed upon by the parties and must act independently and impartially. The process further follows the filing by the requesting in a written application for such proceedings to the arbitral tribunal. The Emergency Arbitratorenjoys broad powers and is expected to deliver its decision in a matter of days.
The key advantage of emergency arbitration is its speed and efficiency. It allows parties to obtain urgent relief within a short timeframe, often within a matter of days, as compared to traditional court proceedings which can be time consuming and costly. Emergency arbitration also provides parties with a level of confidentiality, as the proceedings are not public.
Despite having several advantages, Emergency Arbitration comes with several challenges as well. The lack of recognition under Indian Law makes enforceability more complex in the context of different governments. Moreover, it is still in its infancy in India and a lot of developments are required in the domain of Emergency Arbitration for its proper enforcement. Furthermore, the appointment of the Emergency Arbitrator is not well-defined and such lack of a well-drafted appointment procedure despite it being an expedited procedure raises concerns regarding the independence and expertise of the arbitrator.
It is important to know that the interim relief granted through emergency arbitration is temporary and is subject to review by the main arbitral tribunal once it is constituted. The decision of the emergency arbitrator is binding on the parties and enforceable under the Arbitration and Conciliation Act, of 1996.
Urgent relief in arbitration proceedings is an essential aspect of the arbitration process, as it allows parties to seek interim measures to protect their rights and interests pending the final resolution of the dispute.
The urgency of such relief arises in situations where delay can cause irreparable harm to either of the parties involved. For instance, if a party breaches a contract and threatens to sell the assets that are the subject of the dispute, an urgent interlocutory measure can prevent the asset from being sold and preserve the status quo until the matter is resolved.
Thus, Emergency Arbitration holds an important position in the Arbitration domain under Indian disputes but the lack of recognition and enforceability provisions becomes a challenge for a proper Emergency Arbitration setup in India. Recent judicial developments have tilted towards upholding the enforceability of orders passed by the Emergency Arbitrator, but still, there are several complexities that need to be taken care of.
UNDERSTANDING EMERGENCY ARBITRATION
The purpose of emergency arbitration is to provide parties with an effective and expedited mechanism to protect their rights and interests in urgent situations to avoid imminent danger. In Raffles Design International India Pvt. Ltd.& Anr. v Educomp Professional Education Ltd.& Ors.,ii the dispute revolved around the termination of a JV Agreement, resulting in the immediate closure of several educational institutions and causing huge financial loss. This case portrays a clear example of the urgency element involved and a factor of irreparable harm which seeks an immediate remedy that was provided by Emergency Arbitration.
Emergency arbitration allows parties to obtain swift interim relief, typically within a matter of days, minimizing the potential consequences of delay. It offers a valuable tool that can help ensure the effectiveness and efficiency of the arbitral process, allowing parties to maintain the status quo and safeguard their positions until the dispute is resolved.
THE EMERGENCE OF EMERGENCY ARBITRATION IN INDIA
The evolution of emergency arbitration in India can be attributed to various factors, including the need to address time-sensitive and urgent matters that arise during the arbitration process. Recognizing the significance of emergency relief, Indian courts and institutions have gradually embraced and adopted emergency arbitration provisions.
One of the key developments in this regard was the decision of the Indian Supreme Court in the case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.iii In this case, the Supreme Court specifically acknowledged the concept of interim measures and stated that it is compatible with Indian arbitration law. This landmark decision provided the necessary framework for the recognition of emergency arbitration in India.
Further, there have been several developments acknowledging the concept of Emergency Arbitration in India. In Raffles Design International India Pvt. Ltd.& Anr. v Educomp Professional Education Ltd.& Ors.,iv Delhi HC stated that parties had to take recourse to section 9 of the A&C Act as the order passed by the emergency arbitrator could not be enforced under section 17 of the A&C Act, as section 17 was not available in a foreign-seated arbitration. This was not because of the non-applicability of Emergency Arbitration in India rather on foreign seated arbitration regime. Further, in Ashwani Minda v U-Shin,v Delhi HC observed that a court shall not intervene if an emergency arbitrator has already been appointed. Moreover, the Court observed that the characteristics of an order passed by the Emergency Arbitrator are the same as an interim order passed by an arbitral tribunal. Institutions such as Delhi International Arbitration Centre (DIAC), the Mumbai Centre for International Arbitration (MCIA), and the International Centre for Alternative Dispute Resolution (ICADR) have all incorporated emergency arbitration provisions allow parties to seek urgent interim relief before the constitution of the arbitral tribunal, providing a more efficient and effective mechanism for addressing urgent interim relief before the constitution of the arbitral tribunal, providing a more efficient and effective mechanism for addressing urgent matters in Indian Arbitration.vi
Moreover, Indian Arbitration has taken a pro-arbitration approach when it comes to the enforcement of emergency arbitration awards. They have recognized and enforced emergency arbitration awards, treating them as interim measures that are capable of enforcement under the Indian Arbitration and Conciliation Act.vii
The recognition and adoption of emergency arbitration provisions by Indian arbitration institutions and the favourable approach of Indian courts signal a growing acceptance and understanding of the importance of emergency relief in arbitration proceedings. This development has not only provided parties with an efficient and effective means of obtaining urgent relief, but it has also enhanced India’s reputation as an arbitration-friendly jurisdiction.
Emergency Arbitration has now been recognized globally, by several institutions such as the Singapore International Arbitration Centre (SIAC), the Stockholm Chamber of Commerce (SCC), the Swiss Chambers Arbitration Institution (SCAI), the Mexico City National Chamber of Commerce (CANACO), and the Netherlands Arbitration Institute (NAI) all provide for both expedited formation of the tribunal as well as for the EA. But India still lacks legal recognition as the Act governing Arbitrations in India does not expressly provide for EA. Though rules under DIAC and MIAC have incorporated provisions for Emergency Arbitration, there is still a long way to go.
RECENT INVOLVEMENT OF EMERGENCY ARBITRATION IN INDIA
In recent years, there have been several notable cases in India where emergency arbitration has been utilized.
In the case of Amazon.com NV Investment Holdings LLC v. Future Retail Limited,viii one of India’s largest conglomerates. Amazon sought emergency arbitration to prevent Future Group from proceeding with a multi-billion dollar deal with Reliance Retail. Amazon claimed that the deal violated its pre-existing agreement with Future Group, and sought urgent relief to protect its rights. This case demonstrates the significance of emergency arbitration in contractual disputes, particularly in the retail sector.
Issue 1: Whether an "award" delivered by an Emergency Arbitrator under the SIAC Rules can be said to be an order under section 17(1) of the Arbitration Act?
The Supreme Court observed that party autonomy is paramount and hence when the parties had agreed to abide by SIACRules, then contesting such rules is irrelevant. Further, the SIAC Rules provide similar law as provided under Sections 9 and 17 of the Act, in the context of Emergency
Arbitration. Thus, the award passed by an Emergency Arbitrator can be considered as an interim order under section 17(1)of the Act.
Issue 2: Whether an Order passed by the High Court under Section 17(2) of the Arbitration Act for enforcement of an award passed by an Emergency Arbitrator is appealable?
The Supreme Court observed that orders passed under Section 17(1) are appealable under Section 37 of the Act, rendering orders passed under Section 17(2) as non-appealable.
Apart from the case, emergency arbitration has been prominently utilized in industries such as construction, infrastructure, and energy. Disputes in these sectors often involve complex contractual arrangements and time-sensitive projects. Emergency arbitration provides parties with a means to seek immediate relief to prevent irreparable harm or secure project completion.
In the construction industry, disputes frequently arise over issues such as payment delays, performance issues, or termination of contracts. Emergency arbitration allows parties to address these disputes promptly and ensure the continuity of construction projects.
In the infrastructure sector, emergency arbitration has been utilized in disputes related to project delays, cost overruns, and breach of contract issues. Given the long-term nature of infrastructure projects and the significant investments involved, parties seek emergency relief to mitigate potential financial losses and protect their interests.
The energy sector, including oil and gas, power and renewables, has also witnessed the utilization of emergency arbitration. Disputes in this sector often revolve around issues. Emergency arbitration enables parties to secure interim relief to safeguard their commercial interests and ensure the uninterrupted provision of essential services.
EFFECTIVENESS OF EMERGENCY ARBITRATION IN INDIA
Emergency arbitration is an effective mechanism where immediate action is needed to prevent irreparable harm and preserve the status quo. It offers several benefits, including speedy resolution of disputes and the ability to protect parties from suffering irreversible damage.
One of the main advantages of emergency arbitration is its ability to quickly resolve urgent disputes. Unlike regular arbitration can be initiated promptly, allowing parties to obtain interim relief within a short timeframe. This is particularly valuable in cases where time is of the essence, such as disputes involving an imminent breach of contract or the potential destruction of evidence.
In urgent situations, maintaining the existing state affairs is critical to prevent irreparable harm. Emergency arbitrators can grant interim measures, such as injunctions or asset freezes that preserve the status quo until a final resolution can be reached through regular arbitration proceedings or litigation. This helps to avoid irreversible damage, such as dissipation of assets or the destruction of evidence that may impact the final outcome of the dispute.ix
CHALLENGES AND LIMITATIONS OF EMERGENCY ARBITRATION IN INDIA
While emergency arbitration offers numerous advantages, parties may face certain challenges when opting for this mechanism. These challenges include difficulties in enforcing emergency arbitral awards in certain jurisdictions, potential limitations on the availability of emergency relief, and concerns regarding the balance between speed and due process.
One significant challenge that parties may encounter is the enforcement of emergency arbitral awards in domestic courts. For example, in India, the enforceability of emergency awards in domestic courts is not explicitly provided in the Arbitration and Conciliation Act, 1996 this lack of clarity regarding the enforcement of emergency awards could pose challenges for parties seeking immediate relief through emergency arbitration.x
Furthermore, the availability of emergency relief may be limited in certain jurisdictions. Parties may face obstacles in obtaining interim measures to preserve the status quo or prevent irreparable harm.
Another concern in emergency arbitration is striking a balance between speed and due process. While the primary objective of emergency arbitration is to offer swift resolution to urgent disputes, parties must also be afforded a reasonable opportunity to present their case and adequately respond to the claim made against them. Speed should not come at the expense of the due process rights. Therefore, it is important for emergency arbitrators to ensure that the parties have a fair and meaningful opportunity to be heard and the arbitral proceedings maintain the necessary procedural safeguards.
REGULATORY FRAMEWORK AND INSTITUTIONAL SUPPORT FOR EMERGENCY ARBITRATION IN INDIA
In India, the regulatory framework governing emergency arbitration is primarily provided by the Arbitration and Conciliation Act, 1996, as amended in 2015.
Under the Act, emergency Arbitration is recognized as a valid mechanism for parties seeking interim relief. Section 9 of the Act defines an “interim measure” as any temporary relief sought by a party before the arbitral tribunal has been constituted.
In addition to the legislative framework, major arbitral institutions in India, such as the Mumbai Centre for International Arbitration (MCIA), the Delhi International Arbitration Centre (DIAC), and the International Centre for Alternative Dispute Resolution (ICADR), have formulated rules and guidelines to regulate emergency arbitration proceedings.
The MCIA Rules provide for emergency arbitration, allowing parties to seek interim relief before the tribunal is constituted. The DIAC, through its guidelines on emergency arbitration, provides detailed instructions on initiating the emergency arbitration process and appointing an emergency arbitration mechanism.
It is important to note that while the legislative framework and institutional rules provide guidance for emergency arbitration, there have been no specific changes or updates in India directly impacting emergency arbitration proceedings. For instance in Raffles Design International India Pvt. Ltd. v. Educomp Professional Education Ltd.,xi TheDelhi HC observed that the Act does not provide any provision which explicitly provides for enforcing interim orders passed by a foreign seated arbitral tribunal. Thus, the order passed by the Emergency Arbitrator in the instant case was due to no provision providing enforceability of foreign seated interim orders. However, the court opined that an Indian Court can adjudicate such proceedings and pass interim orders under section 9 that might be similar in context to Emergency Arbitration.
Moreover, in Avitel Post Studioz Ltd. v. HSBS PI Holdings (Mauritius) Ltd.xii The Bombay HC granted the same interim reliefs as passed by an Emergency Arbitrator. The Court held, “merely because, in the present case such emergency or interim awards have been made by the Arbitral Tribunal at Singapore, that would make no difference, particularly when it comes to the determination of the jurisdiction of the Indian Courts to grant interim measures by resort to section 9 of theAct.”
However, it is worth mentioning that the Arbitration and Conciliation Act, 2019, introduces various amendments aimed at promoting institutional arbitration, providing more transparency and expediting the arbitration process, which indirectly impacts emergency arbitration proceedings as well.
The Arbitration and Conciliation Act, as amended in 2015, allows parties to seek interim relief before the constitution of the full arbitration panel. Major arbitral institutions in India have also established rules and guidelines specifically addressing emergency arbitration, and recent amendments in the arbitration law indirectly promote and support the emergency arbitration mechanism.xiii
FUTURE PROSPECTS AND RECOMMENDATIONS
Emergency arbitration is a nascent concept in India, with its first introduction in the 2015 amendment to the Arbitration and Conciliation Act, 1996. Despite its novelty, it has gained popularity as a faster and more efficient dispute resolution mechanism compared to traditional methods.
The future of emergency arbitration in India looks bright as more parties opt for this form of dispute resolution. However, certain areas need attention to improve the emergency arbitration process, it is paramount to ensure greater clarity in the Indian arbitration laws concerning emergency arbitration. This will help the parties to be aware of the nuances of the emergency arbitration process and choose it as a viable option for resolving disputes.
One possible solution to address the potential challenges and obstacles in the emergency arbitration process is to establish an institutionalized emergency arbitration process. This would require the enactment of the laws and regulations that specifically address the logistics and procedural issues involved in carrying out emergency arbitrations. This would also improve the credibility of the emergency arbitration process as a valid dispute resolution mechanism in India.
Another recommendation could be to use technology to streamline the emergency arbitration process. This includes the implementation of an online emergency arbitration platform that offers remote hearings, document sharing, and communication between the parties and arbitrators. The platform could provide real-time document sharing and a virtual hearing system that eliminates the need for the physical presence of the parties thus reducing costs and avoiding procedural delays.
Emergency arbitration in India has immense potential as a fast and efficient form of dispute resolution. By enacting new laws, and regulations, and investing in technology to streamline the process, it will be possible to address existing challenges, reinforce its advantages and maximize its potential.
CONCLUSION
In conclusion, emergency arbitration has emerged as a critical mechanism globally where there is imminent harm and huge financial loss, and to rectify such obnoxious scenarios, Emergency Arbitration is the tool. Though the legislative wisdom in India has not legally recognized the concept but the judicature wing has acknowledged this thriving tool. The mechanism, characterized by its speed, efficiency, and confidentiality, has become a game-changer in the Indian dispute resolution landscape.
The evolution of emergency arbitration in India can be seen strengthening its roots from various judicial pronouncements. The founding stone was laid down in the famous case of Bharat Aluminium Co. v. Kaiser Aluminium Technical ServicesInc.,xiv wherein interim order was acknowledged. In the case of Raffles Design,xv the Court did not deny the enforceability of Emergency Arbitration as a whole but observed that foreign seated award of an EA is not enforceable. Furthermore, in Amazon vs. Future Group case,xvi the Supreme Court specifically acknowledged the concept of Emergency Arbitration and observed that its award can be enforceable under Section 17(1) of the Act, as similar to an interim order Furthermore, institutional recognition to EA has also been awarded, like MCIA, DIAC, and ICADR, haveadopted rules and guidelines to regulate emergency arbitration proceedings, enhancing its accessibility and credibility. Emergency arbitration has proven to be a vital tool in preserving the status quo, preventing irreparable harm, andprotecting parties’ interests in these cases.
However, challenges persist, including the enforcement of emergency arbitral awards and the need to strike a balance between speed and due process. To further enhance the effectiveness of emergency arbitration in India, it is essential to address these challenges and streamline the process. Additionally, there is no provision regarding appointment of Emergency Arbitrator, and there is a settled principle of law, i.e. justice hurried is justice buried. Therefore, it is important to exercise such appointment with caution as it imparts trust among the parties.
Looking ahead, the future of emergency arbitration in India is promising. Clarity in arbitration laws concerningemergency arbitration, coupled with institutionalized processes and technological advancements can foster its growth and ensure that parties continue to benefit from efficiency and expediency. Maintaining a panel of Emergency Arbitrators along-with a focused wing for Emergency Arbitration within existing Arbitral Tribunals can provide for a swift and focused solution to time-sensitive disputes. Moreover, utilizing technological resources such as video-conferencing to ensure attendance and further use of AI can help in contract analysis and case management. These steps can further improve a lot in Emergency Arbitration domain as it will help surely impact increasing speed and efficiency while reducing cost involved in procedures. As India’s dispute resolution landscape evolves, emergency arbitration will likely play an increasingly pivotal role in safeguarding parties rights and interests in situations requiring imminent help.
* Sarthak Srivastava is a Fifth-year (B.A.LL.B) student at Lloyd Law College, Greater Noida. Email – srivastavasarthak2207@gmail.com
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