The Law Commission of India in 2014 issued the 246th report, which recommended various amendments to the Arbitration and Conciliation Act (“Act”), 1996. One of these recommendations was the incorporation of ‘Emergency Arbitration’ in the arbitral tribunal. However, the said recommendation was not included in the 2015 Amendment Act, leading to the assumption that the government rejected the concept of emergency arbitration.
Emergency Arbitration is similar to normal arbitration as it gives an alternate way to get disputes resolved outside the court without any trial. However, the only major difference is that it seeks to provide quick interim relief to the parties. Use of the word “Emergency,” which, as the word itself suggests, helps make urgent use of arbitration, as the case may be.
EMERGENCY ARBITRATION IN INDIA: A Landmark Ruling
The relief given by arbitration in India is similar to the concept of ad-interim injunction given under Section 37 of the Specific Relief Act, 1963[1], and regulated by the Code of Civil Procedure, 1908. Wherein these provisions provide temporary relief to the parties until the matter is heard on its merits. This relief in the Arbitration and Conciliation Act is written under Section 17. The whole procedure of Emergency Arbitration in India was explained in the case of Amazon.com Investment Holdings LLC (“Amazon”) Vs. Future Retail Limited & Ors. (“Future Group”).[2]
According to this case law, Amazon sought to make some investments in the Future Group and did it, but in the course of doing it, a dispute between Amazon and the Future Group arose. To resolve the dispute, both companies decided to sit for arbitration. For this purpose, they sought Emergency Arbitration and made an application. The arbitrator ordered the Future group to pay an emergency award. The Future Group refused to give the award and stated that the award was null under the Arbitration and Conciliation Act, of 1996. Amazon filed an application against the same under section 17(2) of the Arbitration Act in the High Court, Delhi. Consequently, the case was sent to the Supreme Court. Looking at the case, the Supreme Court gave some guidelines on the process of Emergency Arbitration and its award.
The Future Group argued that the Act does not consist of Emergency Arbitrators. The court briefly explained section 17(1) of the Act and said that the section includes emergency arbitrators in the phrase “unless the context otherwise requires.” The court pointed out that the scope of the section is much wider, including the provision for emergency arbitrators. The section also states “during arbitral proceedings,” where the arbitral proceedings cannot start without giving advance notice, and as in the case, this guideline was followed. Moreover, every provision in Section 2(1)(d), 2(6), 2(8) of the Act, and Section 21 and Rule 3.3 of the SIAC rules were followed during the arbitration process, which means that there was no discordance with the arbitration process.
In the context of arbitral awards, there is no present legislation that gives clarity on what an arbitral award is. It is only explained by the Indian courts that an award is a compromise that either settles the whole or a part of the disagreement between the parties. In this case, the Supreme Court said that an emergency award does not fully resolve the issue but gives a mere interim relief as an order, and this order could be challenged in the appropriate tribunal.
But this is not the case with foreign arbitration; the New York District Court was back in 2013 and said that “to maintain status quo and the decision arrived by the emergency arbitrator is final and binding.[3] ” Coming back to India, an amendment came in the year 2015, which brought Section 17 of the Act in equivalence to Section 9 and stated that any order made by any arbitral tribunal will be enforceable same as if given by a court. In furtherance of this, the court in Amazon Vs Future Group said that the appeal of emergency awards will be the same as the other standards of review.
Order 39 Rule 4 of the Civil Procedure Code stated that an interim order can only be challenged if the circumstances of the case are changed, and enforcing that order would lead to injustice. Hence, the same will be applied in the case of awards by emergency arbitration.
This judgment stands as a landmark judgment for the emergency arbitration process in India. It cleared out all the confusion about the Emergency Arbitration process and its awards’ provisions concerning the Arbitration and Conciliation Act and other provisions in other legislations.
Some of the major Institutions that included the provisions of Emergency Arbitration in their Rules are –
- Delhi International Arbitration Center (DAC) – Included the word “Emergency Arbitrator” under section – 18A and explained the provisions for the appointment of the arbitrator.
- Court of Arbitration of the International Chambers of Commerce-India – Included the provisions of Emergency Arbitration under Article 29 of “Arbitration and ADR Rules.”[4]
- International Commercial Arbitration (ICA) – Included provisions of both Emergency Arbitration and Emergency Arbitrators under section 33 & 36(3).
- Madras Court of Arbitration Center (MHCAC) – Included provisions of both Emergency Arbitration and Emergency Arbitrators under Part IV, Section 20.
- Mumbai Center for Arbitration (Rules) 2016 – Included provisions of both Emergency Arbitration and Emergency Arbitrators under section 3.
GLOBAL EXPANSION OF EMERGENCY ARBITRATION
It was first in 2006 that the concept of Emergency Arbitration was witnessed when an institution introduced emergency arbitration in the ICDR rules.[5] ICDR allows parties and arbitrators to carry out arbitration however they want it. Consequently, in the year 2012, the International Chamber of Commerce (“ICC”) agreed and adopted the provisions of emergency arbitration as given by the ICDR. Over a few years, various other institutions like the Singapore International Arbitration Centre (“SIAC”), the London Court of International Arbitration (“LCIA”), and the Hong Kong International Arbitration Centre (“HKIC”)[6] introduced provisions for emergency arbitration in their rules.
The provisions added in the ICC rules stated that an emergency arbitrator can be appointed if the need for urgent intern relief arises. But it also states that in this case, the need for relief should be urgent, and the parties could not wait for the long process of Arbitration.[7] This establishes a means to secure the rights of the party as the dispute resolution process advances.
As pointed out by Gary Born:
“At the same time, these Rules all require very prompt and professional action by the arbitral institution and emergency arbitrator, which imposes burdens and risks on the institution, and thus, the parties. Despite this, unless practical application in coming years is to the contrary, these approaches appear to be sensible steps towards improving the arbitral process.”[8]
ADVANTAGES OF EMERGENCY ARBITRATION
- It provides instant relief to the parties, who cannot wait for the long process of normal arbitration. It provides relief to parties within days compared to the several weeks or even months in normal arbitration.
- It eradicates the need to approach courts in various jurisdictions to resolve the issue; instead, it provides relief under one roof.
- The process of Emergency Arbitration ensures that the proceedings and disputes are confidential.
DISADVANTAGES OF EMERGENCY ARBITRATION
- The concept of emergency arbitration is a relatively new concept and not much legislation protecting the interests of the parties has been made in this regard.
- The intern injunction given under this arbitration is binding till an arbitral tribunal is constituted for the same.
- There is no specific provision for the consequence of non-compliance of the arbitration award under emergency arbitration. Article 29(2) only requires parties to comply with the decision and gives no repercussions for non-compliance. The only relief for non-compliance available is by filing in court, and this process defeats the purpose of emergency in arbitration.
CONCLUSION: The Growing Impact of Emergency Arbitration
In this ever-changing world, the relatively new concept of Emergency Arbitration has emerged as a significant legal discussion. The government’s omission of the proposed amendment to implement the provision of Emergency Arbitration sparked speculations about the government’s instance in this matter, but the judgment of the Supreme Court in the case of Amazon.com Investment Holdings LLC Vs. Future Retail Limited & Ors. laid a set of comprehensive guidelines telling about the role and work of Emergency Arbitrators within the existing legal framework.
This decision to explain the guidelines from within the present legislation, as making a new act would have taken much time. So, the Supreme Court walked through the sections of the Arbitration and Conciliation Act and gave light to the provisions of Emergency Arbitrators in the act.
Internationally, the concept of Emergency Arbitration is expanding rapidly, with notable institutions like SIAC, LCIA, HKIC, Delhi International Arbitration Center, and more adopting Emergency arbitration in their rules, indicating that this arbitration will be very prevalent in the coming times as it offers swift relief to parties as compared to traditional arbitration. However, seeing the aspect that it has the potential to grow exponentially, there is a need to make comprehensive legislation on the topic focusing on the various possible repercussions of the same.
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[1] Madhya Pradesh Civil Judge Exam MP PCSJ 2012 – LawMint. https://lawmint.com/judicial-services/madhya-pradesh-civil-judge-exam-mp-pcsj-2012/
[2] Sean Taffy McDonald (2023). Emergency Arbitration: A New Piece In India’s Arbitration Arsenal? [online] Mondaq.com.
[3] Yahoo! Inc. v. Microsoft Corporation, United States District Court, Southern District of New York, 13 CV 7237, October 21, 2013
[4] Emergency Arbitration in India – Concept and Beginning. https://singhania.in/blog/emergency-arbitration-in-india-concept-and-beginning
[5] ICDR International Arbitration Rules, 2014, Art. 6.
[6] Murthy, Raghavendra. “Why Can’t We Be FRANDs?: Anti-Suit Injunctions, International Comity, and International Commercial Arbitration in Standard-Essential Patent Litigation.” Vanderbilt Law Review, vol. 75, no. 5, 2022, pp. 1609-1648.
[7] azb. (2022). The Emergency Arbitrator in India – Status and Enforceability – azb. [online].
[8] Emergency Arbitration — Its Advantages, Challenges and Legal Status in India | SCC Blog. https://www.scconline.com/blog/post/2022/03/26/emergency-arbitration/
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This article is written and submitted by Himanshu Prashar during his course of internship at B&B Associates LLP. Himanshu is a 2nd-year B.B.A.LL.B (hons) student at Symbiosis Law School, Noida.
