India: Status Of Emergency Arbitration In India: From The Perspective Of Domestic Arbitrations

As we are aware that per Section 2(d) of the Arbitration and Conciliation Act 1996 (hereinafter referred to as the 'Act') an "Arbitral tribunal" means a sole arbitrator or a panel of arbitrators. However, in the case of an arbitration is conducted under the rules of an institution providing for appointment of an emergency arbitrator, includes such emergency arbitrator.

In 2001, Government of India made a reference to the Law Commission to undertake a comprehensive review of the Act, in view of various shortcomings observed in the working of the Act.

Emergency Arbitration is rather a new development in the field of Arbitration, the Law Commission of India in its 246th Report had recommended its incorporation in the 2015 amendment of the Act. It was expected that the Arbitration and Conciliation (Amendment) Act, 2015[3] would embrace this global turn of tide and create provisions for appointment of Emergency Arbitrator. The Amendment of 2015, however, failed to incorporate the recommendation of the Law Commission and does not provide at all for Emergency Arbitration¹.

Although the provisions of Emergency Arbitrations is omitted from the amended Arbitration and Conciliation (Amendment) Act, a new move has emerged by way of which, arbitration institutions are trying to absorb the term "Emergency Arbitration" in their rules and are making simultaneous procedures thereof. By way of this Article, we shall be discussing the Indian arbitral institutions rules which are by large synonymous to the leading international arbitration institutional rules.

Some notable institutions with their respective regulations across the Globe have introduced provisions for appointment of emergency arbitrators. For instance, under the 2013 Hong Kong International Arbitration Centre (HKIAC) Rules, a party may seek emergency relief prior to the constitution of the arbitral tribunal. Such an application, if accepted by the parties, has to be decided in a time-bound manner by the HKIAC, following their rules. London Court of International Arbitration (LCIA), the International Chamber of Commerce (ICC) and the Singapore International Arbitration Centre (SIAC) also follow the same model². Along with these, the Stockholm Chamber of Commerce (SCC), the Swiss Chambers Arbitration Institution, the Mexico City National Chamber of Commerce (CANACO) and the Netherlands Arbitration Institute have opted for the provisions of Emergency Arbitrators.

Similar to injunctive relief provided under Section 9 and 17 of the Act, Emergency Arbitration, or Emergency Arbitrator (before the actual appointment of Arbitral Tribunal), requires the Arbitral Institution to be satisfied with two conditions, which the Applicant is to demonstrate -

1) Irreparable Damage if interim relief not granted; &

2) Applicant is likely succeed on merits on such a relief³.

Such arbitration is usually agreed to and arranged by the parties themselves without recourse to a Tribunal at the first instance. Once the Emergency Arbitrator is appointed, he may or may not grant the relief post which he becomes functus officio. It is relevant to note that periods set out for issuing the award as provided under the rules of the various institutions vary. For example, SIAC Rules provide that the emergency arbitrator must issue an award/order within 14 days of his appointment, while the ICC Rules provide 15 days. As per the Delhi International Arbitration Centre, Emergency Arbitration Rules, provides that upon receipt of the request by a Party for appointment of Emergency Arbitration, the Secretariat, with the consent of the Chairperson or the Sub-Committee appointed by the Chairperson shall appoint the Emergency Arbitrator within two days of making of such request (excluding non-business days). Any challenge to the appointment of the Emergency Arbitrator must be made within one business day of the communication by the Coordinator to the parties of the appointment of the Emergency Arbitrator and the circumstances disclosed. The Emergency Arbitrator so appointed shall schedule a hearing including the filing of pleadings and documents by the parties within two business days of his appointment. The Emergency Arbitrator shall provide a reasonable opportunity of being heard to all the parties before granting any urgent, interim or conservatory measures and proceed to make an order by giving reasons. The parties shall comply with any order made by the Emergency Arbitrator. The Emergency Arbitrator shall ensure that the entire process from the appointment of the Emergency Arbitrator to making the order shall be completed within seven (7) days.

While functioning, the Emergency Arbitrator enjoys all the powers of the Arbitrator, limited only by the interim relief sought and once the Arbitral Tribunal starts functioning, it may continue with/ modify or supersede the interim relief/ award⁴.

The need for such emergency arbitrations arise in situations when the tribunal is yet to be constituted and parties have no alternative but to turn to the Courts.

Similar to the UNCITRAL Model Law, the Indian Arbitration Act 1996 also conferred on the Courts the ability to order "interim measures" as it was granted to the arbitral tribunals. As per the Act, the ability to issue interim measures of protection is vested concurrently on both the domestic Courts and the arbitral tribunals under Section 9 and Section 17 of the Act, respectively.

With respect to the powers of the Court to grant interim reliefs, the legislature has made provisions to preclude parties from unnecessarily seeking intervention of the Court (under Section 9) to grant interim measures. For instance, once the tribunal is constituted, a party shall not seek interim relief from the Court, unless the tribunal is unable to grant an efficacious remedy (Section 17). The amendment to Section 9 provides that a party may make an Application before a Court for interim measures and that the arbitral proceedings must commence within 90 days from the making of the order or within a time specified by the Court. It further provides that the Court shall not entertain an application for interim measures unless it finds that circumstances exist which may not render the remedy provided under Section 17 efficacious. This section, therefore, limits interference by the Courts and empowers the Arbitral Tribunal. Furthermore, Section 17 has been amended to empower the Arbitral Tribunal to grant all kinds of interim measures which the Court is empowered to grant under Section 9 and such an order is enforceable in the same manner as if it is an order of the Court. Therefore, the Emergency Arbitrator enjoys all the powers of the Arbitrator as if it is an order that has been passed under Section 17 of the Act.

The essence of Emergency Arbitrations can also be observed from the arbitration institutions which are trying to absorb the term "Emergency Arbitration", viz.

1. The Delhi International Arbitration Center (DAC), 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' read with
3. International Commercial Arbitration (ICA), under Section 33 and Section 36(3), enumerates the provisions of Emergency Arbitrations and Emergency Arbitrator.
4. Madras High Court Arbitration Center (MHCAC) Rules, 2014, under Part IV, Section 20 read with the Schedule A and Schedule D enumerate the provisions of Emergency Arbitrations and Emergency Arbitrator.
5. Mumbai Center for International Arbitration (Rules) 2016, under Section 3 enumerates the provisions of Emergency Arbitrations and Emergency Arbitrator.

Enforcement of the Award of Emergency Arbitration is another issue of concern, with very less judicial precedents on the same. In HSBC PI Holdings (Mauritius) Ltd. vs. Avitel Post Studioz Ltd & Ors.⁵, the Hon'ble Bombay High Court, and later in Raffles Design International India Private Limited & Ors. vs. Educomp Professional Education Limited & Ors⁶ the Hon'ble Delhi High Court respectively, have granted interim reliefs in light of the orders passed by the Emergency Arbitrators.

A question now arises as to what happens if a party flouts the order of the Emergency Arbitrator, both in a domestic and in a foreign seated arbitration, what is the recourse to the other party?

Qua domestic Award passed by Emergency Arbitrator, it must be borne in mind that as per section 2(c) of the Act, an arbitral award includes an interim award as well. Therefore, any interim award given by the emergency arbitrator would have been enforceable in India as if it was an interim award passed by the arbitrator under Section 17 of the Act. For instance, the Delhi (International) Arbitration Centre vide Rule 14.8 states that the Emergency Arbitrator shall have the power to order any interim relief that he deems necessary. An order of the Emergency Arbitrator shall be made in writing, with a brief statement of reasons. An order or award of an Emergency Arbitrator shall be enforceable in the manner as provided in the Act. Also, the Mumbai Centre for International Arbitration (MCIA) Rules lay down the provisions for emergency arbitration. Rule 14.7 in very simple terms puts the controversy of whether an interim measure is in the nature of an 'order' or an 'award' to rest. It states that any interim relief ordered by the emergency arbitrator can be in the form of an 'order' or an 'award' which will be binding on the parties just like an interim measure ordered by a Tribunal.

Qua award passed by Emergency Arbitrator in foreign seated arbitration, the answer lies in Raffles Design Case⁷, wherein the Respondent acted in contravention of the Emergency Award. The Petitioner therefore filed an application before the Delhi High Court, under section 9 of the Act, seeking interim reliefs similar to what had been granted under the Interim Emergency Award. The issue which arose (amongst others) in this case was whether the Petitioner can approach the Delhi High Court for interim reliefs, considering it has already obtained an emergency award from the arbitral tribunal? The Hon'ble Delhi High Court held that a party is not precluded from seeking interim measures from a Court merely because it obtained a similar order from an arbitral tribunal. It further held that the Court, in considering a petition under Section 9, should not be influenced by the orders of the arbitral tribunal. In this context, the Court also observed that the Act does not contain any provisions for enforcement of an emergency/ interim award issued in a foreign seated arbitration, and therefore, an emergency award was unenforceable in India. Therefore, an application under section 9 is probably the only recourse left for the parties to seek interim measures of protection in India, for foreign seated arbitrations. Similar view was taken by the Hon'ble Bombay High Court in HSBC PI Holdings (Mauritius)⁸.

Though the term Emergency Arbitrations or Emergency Arbitrator have been ousted from the Act, however, the Indian Arbitration Law works on the principle of party autonomy and in this regard even the arbitral institutions in India have recognized the same concepts, which is gaining much needed acceptance from the Courts. However, Emergency Arbitrations is a way to limit judicial intervention and decongest the Courts, before the commencement of arbitral proceedings, which in turn can promote institutional arbitrations in India. This arrangement has been recognized by the Court in India, as discussed above. As such its inclusion in the Act would be a much-needed breather to the Courts which has large number of pending cases mounting over them.

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