Law Insider India

Legal News, Current Trends and Legal Insight | Supreme Court of India and High Courts

Emergency Arbitrator & Emergency Awards

4 min read
arbitration-law-insider

arbitration-law-insider

By Umamageswari Maruthappan

Published on: May,5, 2022 at 12:17 IST

The concept of ‘Emergency Arbitration’ was introduced to provide an immediate relief for a considerable time to parties when there is no established Arbitrator Tribunal. This award can be treated as equivalent to an ‘interim order’ passed by any court.

The main objective of this concept is to protect a party’s assets or evidence which, they fear, might get altered if they had to wait until the setting up of a tribunal. This award comes into picture mostly through an agreement between the parties. However, an award passed under this category is not final but provides an urgent relief.

The importance for institutionalization of this Award can be understood with the help of two maxims:

  1. Fumus boni iriuris: Reasonable possibility that the applicant will succeed on merits; and
  2. Periculum in mora: The applicant would suffer irrecoverable damage if the relief is not granted immediately.

The Arbitrator who passes an Emergency Award is called an ‘Emergency Arbitrator’. He has the right to exercise the powers of an Arbitrator Tribunal to an extent. However, his orders are not binding on the Tribunal.

With its growing importance, various Arbitration Tribunals such as the Singapore International Arbitration Centre (SIAC), the Hong Kong International Arbitration Centre (HKIAC), the International Chamber of Commerce (ICC), and the London Court of International Arbitration (LCIA) have made provisions for including emergency arbitration as a redress to parties who cannot wait till the constitution of a tribunal.

Position in India

In India, the chief arbitration centres like the Delhi International Arbitration Center (DIAC), Mumbai Center for International Arbitration (MCIA), Madras High Court Arbitration Center (MHCAC), Nani Palkhivala Arbitration Center (NPAC), Indian Council of Arbitration (ICA), and others have introduced the concept in their respective rules.

Under the MCIA rules, “award” is defined as: ““Award” includes a partial or final award and an award of an Emergency Arbitrator.”

Despite these individual provisions, there is no country-wide acknowledgement of this concept as the Arbitration and Conciliation Act of 1996, which is the principle act that governs the laws regarding arbitration, does not recognise the term within its provisions.

Despite recommendations of the Law Commission in its 246th Report, our country neither included ‘emergency award’ within the scope of the term ‘award’ defined under section 2(c) of the act nor it had included an ‘emergency arbitrator’ under section 2 (d) that defines an ‘arbitration tribunal’.

At present, the only section that deals with emergency awards is Section 9 of the aforementioned Act.

In HSBC PI Holdings (Mauritius) Limited v. Avitel Post Studioz Ltd and Raffles Design International India Pvt. Ltd. v. Educomp Professional Education, the Delhi High Court held that an emergency award granted by a foreign tribunal is not enforceable until a suit is filed for its enforcement.

Further, the Courts may have independent opinion in this regard. Even in Ashwani Minda v. U-Shin Ltd, the Court held that such awards are  not enforceable.

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 states that interim awards passed by a foreign arbitral tribunal are not recognised and enforceable. For its validation, a suit has to be filed in the respective country courts.

However, recently, the Delhi High Court, in Future Retails Ltd. v. Reliance Ltd., observed that emergency awards cannot be termed as altogether invalid only by reason of its non-inclusion under Section 2(c).

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,” the Delhi High Court Bench said.

With respect to the concerned case, the Court observed, “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 above analysis manifests that the legal fraternity has been recognising the concept of ‘Emergency Award’ under various disciplines. However, India is yet to accept the same. It is high time for our country to realise the importance of Emergency Awards in providing immediate relief for the parties as well as to strengthen the courts of arbitration in India. It will also help in reducing the intervention of the judiciary and until its validation.

Read also: Madhya Pradesh HC: Commercial matters involving Arbitration disputes can only be heard by Commercial Court