Role of Emergency Arbitration to reduce Judicial Interference in India By: Shivam Jasra

The Author, Shivam Jasra is an Advocate practising in Supreme Court and Delhi High Court. He has recently completed his LLM  from King's College London in International Dispute Resolution.

The idea of emergency arbitration was established with an objective of providing “urgent pro tem or conservatory measures” to a party to a dispute who cannot await the creation of the arbitral tribunal.[1] It is important for parties to obtain immediate interim measures at the beginning of the dispute to either preserve their position or “prevent the other side from continuing the breach in question” up till the final resolution of dispute.

As stated already, courts in most of the jurisdictions have a concurrent authority to render interim relief in support of arbitration, however, approaching courts may make the parties lose the benefits of arbitration that is efficiency and confidentiality. Parties may consider using “emergency arbitrator proceedings” for a number of different reasons rather than getting the relief from domestic courts.

The state courts can be perceived as slow, inexperienced and biased, which for sure can convince a party that their best interests lie in independent and experienced international arbitrator.[2] Therefore, many parties adopt to seek interim relief from the arbitral tribunal itself to avoid the delayed court procedures.[3]

The difficulty that arises is that, the creation of the arbitral tribunal in most of the cases can take months for its formation. In response, many leading institutions such as ICDR, ICC, SIAC, SCC, LCIA have introduced “emergency arbitrator procedures” which aims to reduce the gap between arising of the dispute amongst the parties and formation of the arbitral tribunals.

Generally, the arbitral rules of the concerned institutions states that the decisions of emergency arbitrators are temporarily binding, which means that they can later be varied or suspended by the substantive tribunal when it is constituted. Some interim measures given by the emergency arbitrators expire after a certain period of time.

“International Centre of Dispute Resolution” (ICDR) was the first institution to adopt the emergency arbitrator provisions in 2006, which was further followed by “Stockholm Chambers of Commerce” (SCC) and “Singapore Arbitration Centre” (SIAC) in 2010.[4] Finally, International chamber of commerce (ICC) and London Court of International arbitration (LCIA) recognized these provisions in 2012.[5]

In India, the parties to the dispute who have opted for arbitration as a dispute settlement procedure are sometimes forced to go to the domestic courts for seeking interim measures when the dispute arises. An imminent need of interim relief is generally during the inception of the dispute, and at that time the tribunal is non-existent. Approaching the courts for interim measures before the formation of the arbitral tribunal is a common practice in India, however, it cannot be considered as the best practice as the whole motive of the arbitration regime is to avoid the rigours of the court system.[6]

“Amendment Act of 2015”, as already discussed, was enacted with an aim of “minimizing judicial intervention” in various sections of the act, however, the Act still does not elaborate much on the concern of addressing interim measures, where the intervention of court still prevails. It is needless to say that, if the Indian arbitration law fails to provide an opportunity to the parties to make use of the new provisions of the emergency arbitrators, the parties will have no other option but to knock the doors of the court of law for immediate relief which is contrary to the seminal objective of the 2015 Amendment Act.

The Law Commission of India in their report[7] suggested the legislature that the amendment act should make necessary changes to give a lawful recognition to the “concept of emergency arbitrator”. The commission intended to bring this amendment in “Section 2 of the Act” which defines an “arbitral tribunal” as a “sole arbitrator and a panel of arbitrators”.

The change that the Law Commission put forward was to broaden the definition of “arbitral tribunal” so that it will include the provisions of the appointment of emergency arbitrators and also accord legislative sanction to rules of different institutions in India that recognizes the concept of “Emergency arbitrator”.[8] However, the suggestion was not incorporated in the 2015 amendment.

Since the “Indian Arbitration Act” failed to adopt the amendment pertinent to “emergency arbitration”, which was suggested by the Law Commission, the domestic courts often have to deal with urgent interim relief applications. The High Court of Bombay in a recent case[9] issued an order for interim measures which was similar to the award of the emergency arbitrator. The case involved “an arbitration agreement, where the parties reserved their right to seek interim measures from the Indian courts”. The parties however resorted to the emergency arbitrator seated in Singapore, where a favorable order was given to the party who desire to enforce it in India. The Bombay High Court upheld the order, which shows that there is an opportunity for legislative amendments to recognize the emergency arbitrator awards in India.[10]

Even the High Court of Delhi in “Raffles Design International Private Limited v Educomp Professional Education”[11], upheld the emergency arbitrator’s decision seated in Singapore and granted interim measures in sync with the decisions of the arbitrators. Both the High Courts of Bombay and Delhi can be considered as torch bearers with the intention of adding the provisions of emergency arbitrators in the Indian arbitration act.[12]

Even when the “Indian Arbitration Act” fails to give recognition to the concept of “emergency arbitration” and the suggestions made by the law commission were excluded from the amended Arbitration Act, a new trend has been observed in India, where different arbitral institutions were seem to absorb the provisions of emergency arbitration. The Indian arbitral institutions have tried to draft rules for emergency arbitration which are mostly identical to the leading arbitral institution in the world. The major arbitral institution “Delhi International Arbitration Centre” (DIAC) has included the provision of emergency arbitration under “Section 14”,[13] which is further followed by “the appointments, procedure, time period and powers of an emergency arbitrator.”

The Indian legislature should bring in new amendments in the Indian Arbitration Act, 2015 with updated provisions for “emergency arbitrators”, which could actually be a game changer for limiting judicial intervention in arbitration prior to the formation of the arbitral tribunal. To further the scheme of the arbitration regime, the legislature earlier allowed the arbitral tribunal wide powers to award interim measures during the arbitral proceedings and after the rendering of the award. However, till now, no provisions have been made for granting interim relief prior to the formation of arbitral tribunal and inclusion of these provisions can be very pivotal for development of Indian arbitral regime.

The arbitration regime is founded on the principle of “party autonomy” which gives the parties the power to select their set of rules and procedures to settle their dispute and to exclude that their matters would not be govern by courts but rather be solved by a private and consensual process. If the parties are forced to go to the courts for interim measures because of the non-existence of the arbitral tribunal at the origin of the dispute, it will be a grave violation of the principle of “party autonomy” and the scheme of the arbitration regime.

The other possible way to limit judicial intervention “before the commencement of arbitral proceedings” is to promote “institutional arbitration” in India. The Law Commission of India has recognized that “the spread of institutional arbitration in India has not kick-started yet and most of the parties opt for ad-hoc arbitration, however, they want to encourage the practice of institutional arbitration to make India a pro-arbitration jurisdiction”.[14] The arbitral Institutions such as ‘DIAC’ and ‘MCIA’[15] have already incorporated the provisions for “emergency arbitrators”. If the parties will accept institutional and not ad-hoc arbitration, they will have an option to limit the court interference because of the developed procedures and rules of the institutions.

References:

[1] Sweta Madhu and Kanika Tandon, ‘Emergency Arbitration In India’ (Singhania And Partners, 2017) <https://singhania.in/emergency-arbitration-in-india/> accessed 12 august 2019.

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