Arbitration is a very structured and streamlined mode of dispute resolution. Parties by resorting to this mode of dispute resolution try to resolve their disputes. The arbitration is commenced as per the Arbitration Agreement read with the law applicable to the Arbitration Agreement and the arbitral proceedings are conducted as per the curial law specified therein or as agreed upon between the parties. There may be situations when based on the facts and circumstances of the matter, it may not be possible for the parties to wait for the Arbitral Tribunal to be constituted and may need to protect their assets or evidence and prevent it from getting tampered or lost. In such situations, Emergency Arbitration comes into picture. Such an Emergency Arbitration is resorted to by the parties themselves as mutually agreed and arranged, without any recourse to the Arbitral Tribunal. In simple words, the Emergency Arbitration comes into picture when there is no arbitral tribunal in place. An Emergency Arbitrator is capable of granting interim measures or conservatory relief only for a stipulated period of time.
On the international front, the concept of Emergency Arbitration has been dealt with under almost all the institutional rules, some of them are as follows:
a. The ICC Rules of Arbitration which entered into force on January 1, 2021 deals with Emergency Arbitration under Article 29; and
b. The Arbitration Rules of Singapore International Arbitration Centre (SIAC Rules) (6th Edition dated August 1, 2016) contains the detailed provisions concerning Emergency Arbitrator under Schedule I of these Rules. The definition of award given under Rule 1.3 includes the award of an Emergency Arbitrator as well.
Jurisprudence in India on Emergency Arbitration
In India, the Law Commission in its 246th Report suggested statutory recognition to the concept of an ‘emergency arbitrator’ by amending the definition of an ‘arbitral tribunal’ under Section 2(d) of the Arbitration and Conciliation Act, 1996. The Amendment of 2015, however, failed to incorporate the recommendation of the Law Commission and does not provide for Emergency Arbitration at all. However, efforts are being made to evolve the jurisprudence related to Emergency Arbitration, which is clearly evident from the following rules framed:
a. The Delhi International Arbitration Centre (DIAC) (Arbitration Proceedings) Rules,
2018 has Part E which deals with Emergency Arbitration and Interim Relief. Rule 14 of these DIAC Rules deals with Emergency Arbitration;
b. Chandigarh Arbitration Centre (CAC) Rules, 2018 (an initiative of the High Court of Punjab and Haryana) has Part VI, Rule 14 dealing with Emergency Arbitration;
c. The Arbitration Rules of the Mumbai Centre for International Arbitration (MCIA Rules 2nd Edition, 15 January 2017) under Rule 14 deals with Emergency Arbitration; and
d. The Rules of Domestic Commercial Arbitration and Conciliation of Indian Council of Arbitration (as amended on and with effect from April 1, 2016) deals with Emergency Arbitration under Rule 57.
Analysis of matter ‘Amazon.Com NV Investment Holdings LLC vs. Future Retail Ltd. and Others’
In India, there is no clear statutory provision under the Arbitration and Conciliation Act, 1996 (as amended till date) related to emergency arbitration. The courts in India however, indirectly tried to enforce Emergency Arbitral Award and the best example is Amazon vs. Future Retail matter. Therefore, Indian courts have acted in furtherance to pro arbitration spirit. The Hon’ble Supreme Court of India held that an award of Emergency Arbitrator is enforceable in India.
The Apex Court dealt with two issues mainly – (a) whether an award delivered by an
Emergency Arbitrator under an institutional arbitration is an Order under Section 17(1) of the Arbitration and Conciliation Act, 1996 (as amended till date), and (b) whether an appeal can be filed against an Order of enforcement of an Emergency Arbitrator’s Order made under Section 17(2) of the aforesaid Act.
The Hon’ble Supreme Court of India observed as follows:
1. Section 17 and 9 of the aforesaid Act enables the parties to apply for interim reliefs before the Tribunal and court, respectively. The Supreme Court held that, Sections 9(3) and 17 form part of the same scheme, and that the ‘Tribunal’ spoken of in Section 9(3) would be like the Tribunal spoken of in Section 17(1), thereby including an Emergency Arbitrator appointed under institutional rules.
2. Section 37 of the Arbitration and Conciliation Act, 1996 provides an exhaustive, self-contained code for appeals from orders made under the Arbitration Act. The Supreme Court held that Section 37 provides for appeals only from orders made by an arbitral tribunal granting or refusing to grant interim measures under Section 17(1), but not against orders made by an Indian Court under Section 17(2) of the Arbitration Act for the enforcement of a tribunal's interim order. Therefore, the Supreme Court held that an appeal against an order enforcing an emergency award under Section 17(2) would not be maintainable.
3. The Supreme Court of India has ruled that an award made by an Emergency Arbitrator under the SIAC Arbitration Rules is enforceable under the Arbitration and Conciliation Act 1996 (as amended till date) and that no appeal would lie against a court order enforcing such emergency awards. This ruling brings the Indian approach in line with international practice favouring the recognition and enforcement of emergency awards.
4. The Supreme Court observed that an order made by an emergency arbitrator under the SIAC Rules is covered under Section 17(1) and is therefore, enforceable under Section 17(2) of the Arbitration Act. The Supreme Court also noted that the legislative history of Section 17(2) favours a pro enforcement approach for emergency awards in India-seated arbitrations.
Emergency Arbitration- A Boon in Indian Scenario
Emergency Arbitration has many merits, which are encapsulated below:
1. The party seeking the urgent relief from the Emergency Arbitral Tribunal makes an
endeavour to keep its application, submissions and the relief sought as simple as possible to get the relief sought;
2. Parties may prefer Emergency Arbitration rather than seeking a remedy from the courts on account of the subject matter expertise required in intricate technical matters and the speedy process;
3. Parties are able to save huge costs involved in the arbitration process;
4. Parties comply with the order of the Emergency Arbitrator because such emergency arbitration is conducted as per the procedure agreed upon by the parties and is an offshoot of party autonomy, which is one of the pillars of arbitration in India; and
5. In Indian scenario, it will help in reducing the judicial burden. In the light of the Indian scenario, Emergency Arbitration provisions in the rules of various arbitration centres of different high courts in India is a blessing in disguise. The scheme of the Arbitration and Conciliation Act, 1996 (as amended till date) does not contain any express provision barring Emergency Arbitration. It has pro arbitration approach.
The Hon’ble Supreme Court's decision in Amazon v. Future Retail matter gives legitimacy to an emergency award made under the rules of SIAC by treating it at par with an interim order made by an arbitral tribunal seated in India. The decision paves the way for an emergency arbitration award in an India-seated arbitration to be enforced by Indian courts in the same way as if it were a decree of an Indian court. In addition, the order for enforcement of such emergency award would be final and non-appealable. Additionally, the Emergency Arbitration also in many cases develops the maturity amongst the parties to settle, which results in commercial advantage and win- win situation for the parties. It will also help in saving the precious judicial time. While Emergency Arbitration is indeed a turning point for the worldwide scenario, India still awaits full statutory recognition to the same. Emergency Arbitration is the need of the hour which works in the interest of both the parties.