By - King Stubb & Kasiva on November 7, 2023
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.
Some countries, including the Singapore International Arbitration Centre (“SIAC”), allow the appointment of an emergency arbitrator before the formal start of the arbitration procedure. 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.
Emergency Arbitration has the following advantages:
Emergency Arbitration has the following challenges:
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 246th Report (2014) argued for modernising the Arbitration and Conciliation Act and broadening the scope of an arbitral tribunal to include emergency arbitrators. 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.
The Amazon-Future Dispute is centred around Reliance Retail’s acquisition of Future Group’s retail holdings, in which Amazon has a large stake. 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.
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.
Emergency arbitration in India serves to offer parties interested in arbitration immediate temporary relief, ensuring that the essential goals of arbitration are not jeopardised by delays in assembling a formal arbitral tribunal.
In contrast to ad hoc arbitration, which may suffer delays owing to difficulty in selecting arbitrators, institutional arbitration is suggested because it has a greater success rate, ensuring the availability of an emergency arbiter and accelerating the procedure.
The recognition and enforceability of emergency arbitrator orders across several jurisdictions is a challenge for emergency arbitration in India. Furthermore, the absence of specific provisions in Indian law, as well as the type of interim relief offered, might have an impact on the enforcement process.