Emergency Arbitration in India

Before the formal organisation of an arbitral tribunal, emergency arbitration (as a legal process) can be used to provide urgent interim relief. This ensures that the core goals of arbitration are not derailed and allows parties to quickly address their most pressing concerns. In Indian law, emergency arbitration is analogous to the ad-interim injunction granted under Section 37 of the Specific Relief Act, 1963. Both systems place a premium on maintaining the status quo, shielding parties from undue injury while they await the outcome of a comprehensive arbitration process. The Arbitration and Conciliation Act, 1996 (“Act”) does not provide for Emergency Arbitration. Therefore, it can be invoked only if the parties agree to institutional arbitration providing the option of Emergency Arbitration.

It is critical to remember that institutional arbitration is the best forum for emergency arbitration since it has the highest success rate. The use of institutional arbitration ensures the availability of an emergency arbiter and speeds up the process. On the other hand, Ad hoc arbitration may drag on if the parties cannot agree on the arbiter selections. Unless they have opted out, parties that have signed arbitration agreements are subject to the emergency arbitration clause. Emergency arbitration clauses were first approved by organisations such as the International Centre for Dispute Resolution (“ICDR”) in 2006, and they eventually became part of the International Chamber of Commerce (“ICC”) Rules in 2012.[1]

Some countries, including the Singapore International Arbitration Centre (“SIAC”), allow the appointment of an emergency arbitrator before the formal start of the arbitration procedure.[2] If the asking party proves a real need for such relief, the emergency arbitrator is responsible for imposing emergency interim measures to maintain the status quo. The importance of emergency arbitration stems from its ability to protect parties’ rights, accelerate conflict resolution, and ensure the tribunal’s conclusions are upheld.

Advantages of Emergency Arbitration

Emergency Arbitration has the following advantages:

1. Quick Mechanism: The critical goal of emergency arbitration is to provide parties interested in arbitration with urgent pro tem or conservatory measures. This mechanism acts as a safety net, ensuring that delays in the creation of the Arbitral Tribunal do not jeopardise the primary aims of arbitration. Parties can swiftly address their complaints while safeguarding their rights and interests.
2. Elimination of the Need for Multiple Court Approaches: Emergency arbitration helps avoid the need to seek multiple courts in various jurisdictions to obtain urgent relief. Rather than negotiating a complex web of legal proceedings, parties may seek immediate assistance from emergency arbitrators. This simplified strategy increases process efficiency and minimises the complications that can arise from many court orders issued in different jurisdictions.
3. Uniformity and Efficiency: By adding a degree of uniformity to the orders rendered, emergency arbitration assures consistency in the relief provided. As a result, the parties are spared the burden of dealing with conflicting decisions from courts in different jurisdictions. This not only streamlines the process but also expedites dispute resolution, which is critical in complex and time-sensitive cases.

Challenges to Emergency Arbitration

Emergency Arbitration has the following challenges:

1. Recognition and Enforceability Challenges: One of the most significant issues in the field of emergency arbitration is the recognition and enforceability of emergency arbitrators’ orders in multiple jurisdictions. Different governments may take different ways to recognise the legitimacy of these instructions. The lack of legislation recognising emergency arbitration can make enforcement more difficult.
2. Absence of Clear Provisions in Indian Law: The statutory regulations relating to emergency arbitration in India are ambiguous, as the Act does not directly address the idea of emergency arbitration. When attempting to execute emergency arbitration orders in Indian courts, this lack of clarity might create ambiguity and difficulty.
3. Impact of Interim Relief Form on Enforcement: The nature of the interim relief given by emergency arbitrators can have an impact on the enforcement process. When interim relief is provided in the form of an order rather than an award, it may raise concerns regarding the ease with which it can be enforced. The particular standards and processes for enforcement may differ depending on the type of relief granted.

Legal Status of Emergency Arbitration in India

Emergency arbitration is not yet recognised under Indian law due to the absence of specific provisions addressing the same under the Act. The Law Commission of India’s 246^th Report (2014) argued for modernising the Arbitration and Conciliation Act and broadening the scope of an arbitral tribunal to include emergency arbitrators.[3] However, the proposed changes were not implemented into law when they were presented to Parliament in 2015. Thus, there exists a gap between the ideas and the current legal framework. Before the Amazon-Future case, the legal position of emergency arbitration in India was largely unknown, with the judicial landscape experiencing various interpretations about their enforceability, resulting in ambiguity around the recognition and enforcement of such rulings.

Amazon-Future Dispute

The Amazon-Future Dispute is centred around Reliance Retail’s acquisition of Future Group’s retail holdings, in which Amazon has a large stake.[4] The case revolved around the fundamental tenets of contractual responsibilities and the enforcement of foreign arbitration rulings. The Delhi High Court halted the Future-Reliance agreement by issuing an interim injunction in favour of Amazon. This highlighted the importance of emergency arbitration and the potential for such awards to be recognised and enforced within Indian jurisdiction.

The case eventually reached the Supreme Court of India, which issued a landmark decision upholding the enforceability of emergency arbitration rulings in the country. This judicial decision has significant ramifications, establishing a significant precedent for future arbitration hearings and bolstering the position of parties seeking immediate relief through emergency arbitration.

Conclusion

In India, emergency arbitration has both advantages and disadvantages. It provides a quick option for interim relief, expediting the arbitration procedure and assuring consistency. However, issues include cross-jurisdictional recognition of emergency arbitration orders and the absence of specific rules under Indian law. Notably, the landmark Amazon-Future Dispute case created a precedent in India, supporting the enforceability of emergency arbitration verdicts, and so marked a watershed point in the legal position of emergency arbitration. As Indian law evolves and modernises, emergency arbitration is positioned to play a larger role in improving the efficiency of the country’s arbitration procedure.

FAQs

[1] https://www.lexisnexis.com/uk/lexispsl/arbitration/synopsis/96703:119870/International-arbitration/Interim-and-emergency-measures?wa_origin=gnb.

[2] https://uk.practicallaw.thomsonreuters.com/3-381-2028?transitionType=Default&contextData=(sc.Default)&firstPage=true.

[3] https://cdnbbsr.s3waas.gov.in/s3ca0daec69b5adc880fb464895726dbdf/uploads/2022/08/2022081615.pdf.

[4] https://www.scobserver.in/cases/amazon-future-reliance-dispute-amazon-com-nv-investment-holdings-v-future-retail-ltd/.

King Stubb & Kasiva,
Advocates & Attorneys

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