As a measure to provide urgent interim relief, the concept of emergency arbitration has evolved in the field of arbitration. Almost all the international arbitration centres such as International Chamber of Commerce (ICC), Singapore International Arbitration Centre (SIAC) and Hong Kong International Arbitration Centre (HKIAC) as well as arbitration centres closer home such as Delhi International Arbitration Centre (DIAC), Mumbai Centre for International Arbitration (MCIA) and others have introduced the provision for emergency arbitrator for seeking interim relief in case of exceptional urgency.
Even though many arbitration institutions have recognised and incorporated the concept of Emergency Arbitration and the awards granted by the emergency arbitrator, however, India still does not recognise this concept and so far has not recognized emergency awards. This relief is available to parties by approaching courts under Section 9 of the Arbitration & Conciliation Act, 1996 (‘A&C Act’). The definition of award under Section 2(c) of the A&C Act does not include the provision for “emergency award” within its ambit and scope. The absence of the said provision has also been said to be a conscious decision of the legislature, which, in all its wisdom did not include the same in the amendments of 2015 and 2019 to the A&C Act, despite the recommendation of the Law Commission in its 246th Report to expand the definition of an ‘arbitral tribunal’ under Section 2(d) to include the concept of ‘emergency arbitrator’. Despite the same, such an inclusion was not made in the subsequent amendments to the A&C Act.
However, the recent decision of the Delhi High Court in the dispute between Future Group and Amazon has sought to clarify the position on emergency arbitrator and emergency award in India. Although the judgments passed in the concurrent cases are pending challenge in appeal before the Delhi High Court, we will encapsulate the position of law discussed therein.
Who Is An Emergency Arbitrator?
The role of emergency arbitrator comes into effect in a situation where prior to constitution of an arbitral tribunal, a party seeks to obtain an urgent interim relief. Under the A&C Act, the said power rests with the Court under Section 9 of the said A&C Act. However, as stated above, a number of arbitration centres have made provisions for the said relief to a party, without approaching the Court, through an emergency arbitrator, prior to constitution of an Arbitral Tribunal in terms of the arbitration agreement.
Position Before The Future Group – Amazon Dispute:
Under the New York Convention, 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, the interim/provisional/interlocutory orders of foreign-seated arbitral tribunals, including Emergency Awards are not recognized. The New York Convention requires an award to be final and binding as a precondition to its recognition and enforcement. Further, it also prevents enforcement of an award which has been passed without an opportunity to the other party to present its case. In light of this, the most commonly suggested analysis is that Emergency Awards are not by themselves enforceable in case of international arbitrations. Under the A&C Act, the enforceability of emergency award is likely to be attempted by way of filing a suit for interim measures from court in line with the emergency award made by the emergency arbitrator.
The Delhi High Court in a case filed by Raffles Design International India Private Limited against Educomp Professional Education Limited (‘Raffles Case’) had held that the emergency award passed by the Arbitral Tribunal cannot be enforced under the A&C Act and the only method for enforcing the same would be for a party to file a suit. The Court thus, held that the award passed by the emergency arbitrator does not fall in the scope of A&C Act. However, in the Raffles Case, the Court was dealing with an emergency award passed in a foreign seated arbitration.
Position Post The Future Group – Amazon Dispute:
For a long time, the legal position regarding the validity and sanctity of the emergency arbitration was unclear and vague. But recently, the Delhi High Court in a suit filed by Future Retail Limited (‘FRL’) primarily against Amazon.com Investments Holdings LLC (‘Amazon’) as the contesting party (‘FRL – Amazon Suit’), has held that the Emergency Arbitrator in an arbitration governed by Part I of the A&C Act prima facie is not a coram non judice and the consequential Emergency Award is not invalid on this account.
While confirming the aforesaid legal position, the court observed that, “The Courts of India have for long recognized the legal position that in an International Commercial Arbitration, there are three sets of law that may apply, i.e. proper law of the contract; proper law of the arbitration agreement/lex arbitri; and proper law of the conduct of arbitration/lex fori/curial law”.
In the present case, the arbitration between FRL, Future Coupons Private Limited (‘FCPL’) and Amazon, is an International Commercial Arbitration seated in New Delhi, India and governed by Part I of the A&C Act, however, conducted in accordance with SIAC Rules, thus making SIAC rules, the procedural law.
It has been mentioned by the Delhi High Court in the FRL – Amazon Suit that the Indian law of arbitration allows the parties to choose a procedural law different from the proper law. The SIAC Rules provide an option to the aggrieved party to either approach the emergency arbitrator for interim relief, or to approach a judicial authority for the same, prior to the constitution of the Arbitral Tribunal. In such circumstances, the Delhi High Court concluded that the SIAC Rules do not take away the substantive right of the parties to approach the Courts in India for interim relief.
Reiterating that party autonomy was the backbone of arbitration, the Court upheld the sanctity of the arbitration agreement entered between the parties and observed that “The parties had with open eyes left it for themselves, to choose between availing interim reliefs from the emergency arbitrator on the one hand, or the Courts under Section 9 of the A&C Act on the other hand. Thus, Amazon has exercised its choice of the forum for interim relief as per the arbitration agreement between the parties. Nothing in the A&C Act prohibits the parties from doing so.” The Court observed that the parties having deliberately left it open to themselves to seek interim relief from an emergency arbitrator, or the Court in terms of Rule 30.3 of SIAC Rules, the authority of the said Emergency Arbitrator cannot be invalidated merely because it does not strictly fall within the definition under Section 2(1)(d) of the A&C Act.
Along with the FRL – Amazon Suit filed by FRL, Amazon has also filed a petition seeking enforcement of the Emergency Award passed by the Emergency Arbitrator (‘Enforcement Petition’). In the said Enforcement Petition, the Delhi High Court, recognizing the validity of Emergency Award passed by
the Emergency Arbitrator, had directed that FRL maintains status-quo with respect to its business deal with Reliance. However, on a challenge before the Division Bench of the Delhi High Court, the said order dated 02 February 2021 directing status-quo has been stayed until final order is passed in the Enforcement Petition.
Conclusion:
Although the position of law in respect of Emergency Awards passed by Emergency Arbitrators remains fluid, the Courts appear inclined to recognize the same and rightly so. The legality of an emergency award in India will help in providing legal sanctity to the provisions pertaining to emergency arbitrators and awards in the various international arbitration centres and further providing more impetus to party autonomy. It will also help in providing quick relief to parties seeking interim reliefs. The same will also strengthen the development of arbitration in India and decrease judicial intervention in arbitration.