(This post is the second of a two-part series)

The decision of the Supreme Court in Amazon.Com NV Investment Holdings LLC v. Future Retail Ltd. & Ors. clarified the issue of emergency awards in India-seated arbitrations. However, the legality of such awards when rendered in arbitrations seated outside India is still a moot-point. This part of the article will discuss the status of such awards in foreign-seated arbitrations and suggest a way forward to institutionalise the mechanism in India. 

Status of Emergency Awards in Arbitrations Seated Outside India:

Due to the inapplicability of Part I of the Act to arbitrations seated outside India^[i], the parties to international commercial arbitration have no method through which they can directly seek enforcement of the emergency award. Due to this void, various indirect methods have been developed by parties to enforce such emergency decisions rendered abroad. One of which is to approach national courts through Section 9 of the Act after obtaining a favourable decision from an emergency arbitrator.

The decision of the Bombay High Court in HSBC PI Holdings (Mauritius) Ltd. v. Avitel^[ii] is in consonance with this approach. Here, the applicant obtained a favourable order from an emergency arbitrator in an arbitration conducted as per the SIAC Rules in furtherance of which, he filed an application for interim relief under Section 9 of the Act. The court held that even though the applicant did not seek enforcement of emergency decision, he was entitled to invoke Section 9 for interim measures^[iii] and granted the relief sought. Also, the Delhi High Court in Raffles Design International India Pvt. Ltd v. Educomp Professional Education Ltd.^[iv] (“Raffles”) clarified to great extent the judicial stance pertaining to the enforcement of emergency awards rendered abroad. It categorically stated that parties to a foreign seated arbitration cannot invoke Section 17 to enforce an emergency decision but that does not prohibit the parties to file a separate application under Section 9.^[v] The court would deal with such an application on its own merits, independently of the emergency award. A significant pro-arbitration stance was adopted by the Delhi High Court in Ashwani Minda v. U-Shin Ltd.^[vi] (“U-Shin”). In this case, the applicant obtained an unfavourable order by an emergency arbitrator rendered under the Japan Commercial Arbitration Association Rules (“JCAA Rules”) following which he sought interim reliefs as per Section 9. While dismissing the application, the court recognized that it cannot be considered as an appellate forum against the decision of an emergency arbitrator. Furthermore, it noted that the parties, after agreeing on the forum from which interim reliefs can be sought, cannot utilise court intervention to override or appeal such an agreement.^[vii]

The disparate stances adopted by the courts in enforcing emergency decisions in foreign seated arbitrations becomes apparent from the decisions of U-Shin and Raffles. In Raffles, the court considered an application under Section 9 to be independent of the award passed by an emergency arbitrator. Whereas, in U-Shin, it took into account the unfavourable decision of the emergency arbitrator and dismissed the application under Section 9, considering it to be a “second bite at the cherry”.^[viii] However, in light of the legislative void and a lack of definitive apex court precedent, the future of effective institutionalisation of emergency arbitration in India, especially in foreign seated arbitrations, is still a moot point. Taking into account the rapid growth of commercial arbitration and India’s aim to promote the ease of doing business in the country,^[ix] substantive modifications to the Arbitration and Conciliation Act are required, which will be dealt with later in this article.

The Path To Institutionalise Emergency Arbitration In India

The current legislation makes no explicit mention of a provision pertaining to an emergency arbitrator or an emergency award even after its recognition by various arbitral institutions of the country. The 246^th Report of the Law Commission which was tasked to review the provisions of the Act in view of several inadequacies observed in its functioning, recommended that an emergency arbitrator be included within the definition of an “arbitral tribunal” as per Section 2(1)(d).^[x] The 2015 amendment to the legislation failed to incorporate this recommendation into its framework. Subsequently, the Srikrishna Committee which was set up to review the institutionalisation of arbitration mechanisms in the country also recommended that the Law Commission’s report be accepted and emergency decisions of arbitrators be enforceable.^[xi] However, the 2018 amendment, which was a milestone in recognizing the importance of domestic arbitral institutions also failed to utilise the opportunity to incorporate the concept in India.^[xii] Thus, for effectively institutionalising the emergency arbitration mechanism in India, its statutory recognition has become a legislative need.

A legislative incorporation of the mechanism in Section 2(1)(d) would bring India in line with other jurisdictions which are regarded by the international business community as arbitration-hubs. For instance, Hong Kong has explicitly recognized that any emergency relief granted by an emergency arbitrator under institutional rules whether in or outside Hong Kong will be “enforceable in the same manner as an order or direction of the Court”.^[xiii] A similar legislative provision has been introduced by Singapore.^[xiv] The commercial benefit is evident from the fact that these jurisdictions are increasingly becoming one of the most favoured arbitral seats of parties to international commercial arbitrations.^[xv]

Therefore, to reform the arbitration culture and incorporate a novel mechanism such as emergency arbitration in the Indian framework, one of the most practicable solutions is substantive modification in Arbitration and Conciliation Act by the inclusion of “emergency arbitrator” within the ambit of “arbitral tribunal” as per Section 2(1)(d).

Conclusion

The evolution of arbitration jurisprudence in India has seen a seismic shift subsequent to the repealing of the 1940 Act which ushered an arbitration friendly regime in India. Despite this evolution, court-ordered interim relief at a stage prior to the constitution of the tribunal is still considered as the “Achilles Heel” of Indian arbitration. Interim relief from Indian courts also invites unnecessary court intervention delays in the arbitral process which goes against its fundamental principle of minimal court-interference. Therefore, having a statutorily recognized alternate remedy wherein urgent relief can be obtained from an emergency arbitrator will be a reformative step in the arbitration framework of the country. Taking into account the pro-institutional arbitration stance adopted by India by its 2018 amendment to the Act, coupled with the rapid growth of the South Asian region as a commercial and arbitration hub, it is hoped that India will align itself with the growing need of providing effective interim relief at the pre-formation stage by institutionalising the emergency arbitration mechanism in India through a legislative recognition.

References

[i] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services, (2012) 9 SCC 552, ¶ 76, 92.

[ii] HSBC PI Holdings (Mauritius) Ltd. v. Avitel, 2014 SCC OnLine Bom 102.

[iii] Id., ¶ 89.

[iv] Raffles Design International India Pvt. Ltd v. Educomp Professional Education Ltd., 2016 SCC OnLine Del 5521.

[v] Id., ¶ 103-105

[vi] Ashwani Minda v. U-Shin Ltd, 2020 SCC OnLine Del 1648.

[vii] Id., ¶ 44.

[viii] Supra note 27 at ¶ 55.

[ix] Ashpreet Sethi, Quality Arbitration Integral to Ease Of Doing Business, Reducing Court’s Burden: PM Modi, Bloomberg Quint, (23 October 2016) https://www.bloombergquint.com/business/quality-arbitration-integral-to-ease-of-doing-business-reducing-courts-burden-pm-modi

[x] Law Commission of India, Amendments to the Arbitration and Conciliation Act 1996, Report No. 246 (August 2014).

[xi] Justice B.N. Srikrishna, High Level Committee to Review the Institutionalization of Arbitration Mechanism in India, (July 2017).

[xii] The Arbitration And Conciliation (Amendment) Act, No. 2, Acts of Parliament, 2018 (India).

[xiii] Arbitration Ordinance 2018, L.N. 38 of 2011, § 22 B (Hong Kong).

[xiv] International Arbitration Act 1994, The Statutes of Republic of Singapore, § 2(1) (Singapore).

[xv] White & Case and School of International Arbitration, Queen Mary University of London 2015, ‘International Arbitration Survey, Improvements and Innovations in International Arbitration’,  <https://arbitration.qmul.ac.uk/media/arbitration/docs/2015_International_Arbitration_Survey.pdf> (last visited on 22 April 2022).