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

Introduction

The globalised trading environment of contemporary times has substantially reduced the encumbrances involved in the transfer of assets and evidence across borders. This simplification of managing resources becomes an impediment in effective dispute resolution in both domestic as well as international commercial arbitration, as the assets in question are under a constant threat of being put out of reach of the party who may want to preserve the status quo and ensure that the contractual obligations are fulfilled. It is at this stage that the importance of interim reliefs comes to the fore. Also referred to as interlocutory or conservatory measures, interim reliefs are essentially orders or decisions that are granted on a temporary basis with the objective to preserve the rights of a party until the final resolution of the dispute.^[i]

In India, the Arbitration and Conciliation Act, 1996^[ii] (“the Act”) gives statutory recognition to interim reliefs before, during, and after arbitral proceedings through Section 9 and Section 17. The operation of Section 17 can only be triggered once the arbitral tribunal has been constituted and the proceedings have commenced. At the stage which is prior to the formation of the arbitral tribunal, parties have no option but to take recourse of Section 9 which provides for court-ordered interim measures before the commencement of the arbitral proceedings. Decisions by various High Courts of the country showcase the apparent inconsistency in the principles that are applicable while granting interim reliefs through Section 9. Some courts have held that the principles applicable in granting interim reliefs under the Code of Civil Procedure, 1908 (“CPC”) shall be strictly applied to Section 9 while a section of other High Courts have held a liberal view by holding that principles under the CPC are to be considered as guiding factors but ought not to be strictly applied while dealing with an application under Section 9. Due to the absence of a definitive precedent of the apex court, the standards which apply while granting interim reliefs through Section 9 suffer from irregularities which affect the conduciveness of the country’s arbitration framework[iii]. Also, it opens the floodgates to court intervention in the consent-based alternative dispute resolution process.

This raises a question as to the relevance of the concept of emergency arbitration in India. Emergency arbitration allows parties to apply for urgent interim relief before an emergency arbitrator if the constitution of a tribunal is pending. However, in India, there are multiple factors which hinder the institutionalisation of emergency arbitration. The status of such decisions in India-seated arbitrations has seen landmark judicial developments. The concept is still a grey-area when the emergency award is passed in an arbitration seated outside India. Therefore, the author’s endeavour in the first part of the article will be to elaborate on the current status quo of the legality of emergency awards in both India-seated and foreign seated arbitration and in the second part, the author will suggest a path for the future which will be in furtherance of creating an environment that is instrumental to the institutionalisation of emergency arbitration in India.

Emergency Arbitration And Its Existence In India’s Arbitration Framework

Internationally, one of the first reformative steps to address the concern of effective interim reliefs at the pre-formation stage was the introduction of Pre-Arbitral Referee Procedure by the International Chamber of Commerce (“ICC”) in 1990^[iv] wherein the arbitrating parties would agree to appoint a referee who would only deal with the urgent provisional relief. However, the colloquial use of the term “emergency arbitration” occurred in 2006 when the International Centre for Dispute Resolution (“ICDR”) incorporated the concept within its framework.^[v] Under the provision, if parties wish to seek interim relief prior to the constitution of a tribunal, they can apply to the ICDR which will appoint an emergency arbitrator from a panel of arbitrators who will deal only with the urgent relief sought by the parties.

The two leading arbitral institution of India, namely, the Mumbai Centre for International Arbitration (“MCIA”) and the Delhi International Arbitration Centre (“DIAC”) introduced provisions pertaining to emergency arbitration within their institutional framework in 2016^[vi] and 2018^[vii] respectively. Any agreement referring a dispute to the respective institution would be qualified to apply for an emergency arbitration at any time prior to the constitution of the tribunal. The time frame provided by the MCIA for granting interim relief is within fourteen days after the appointment of an emergency arbitrator.^[viii] For DIAC, it is to be provided within seven days subsequent to such appointment.^[ix]

Status of Emergency-Awards in India-Seated Arbitrations:

The Hon’ble Supreme Court had the opportunity to deliberate whether emergency awards in India seated arbitrations are within the legislative boundary of the Act in Amazon.Com NV Investment Holdings LLC v. Future Retail Ltd. & Ors.^[x] (“Amazon”).

To encapsulate the factual background of the matter, Amazon initiated arbitral proceedings against the Future Group as per the Rules of Singapore International Arbitration (“SIAC Rules”) on the ground that Future Group violated terms of their Shareholder Agreement.^[xi] As per the said agreement, Future Group was barred from entering into transactions with certain restricted entities without the prior consent of Amazon; one of such restricted entities was the Reliance Group. However, contrary to this clause, Future Group entered into a sales transaction with Reliance in 2020 due to which Amazon initiated the arbitration under the SIAC Rules with its seat in India. An emergency award was passed in favour of Amazon in October 2020 which restricted the Future Group in proceeding with the transaction and a petition was filed in the Delhi High Court under Section 17(2) of the Act to enforce the said interim measure. After a Division Bench stayed the order of a single bench the matter reached the Hon’ble Supreme Court for a definitive answer. 

The Apex Court held that such an emergency award is not a nullity and conducted a careful scrutiny of the mechanism of emergency arbitration. It noted that the principle of party autonomy allows the arbitrating parties to submit their dispute to any arbitral institution. A conjunctive reading of Section 2(6), Section 2(8), and Section 19(2) of the Act would lead to the conclusion that the parties have an indefeasible right to submit their dispute to any institution which can include provisions akin to emergency arbitration.^[xii] Furthermore, it held that an emergency arbitrator is within the umbrella of “Arbitral Tribunal” as per Section 2(1)(d) of the Act.^[xiii] While acknowledging that Section 2(1)(d) does not make an express mention of the term “emergency arbitrator”, a collective reading of Section 1, which opens with the words “unless the context otherwise requires”,^[xiv] with Section 2(1)(a), Section 2(6), and Section 2(8) which permit the incorporation of rules of arbitral institutions, the court held that interim orders passed by emergency arbitrators under the rules of arbitral institution would be enforceable as per Section 17(2) of the Act.^[xv]

Therefore, the judgement of the Hon’ble Supreme Court in Amazon effectively covered the legislative lacuna of Act by recognizing that interim orders of emergency arbitrators rendered under institutional rules will be enforceable. However, it is to be noted that Amazon pertained to India-seated arbitration and the Supreme Court interpreted Section 17 which is only applicable to domestic arbitrations.

References

[i] Albert Jan Aan den Berg, International Commercial Arbitration: Important Contemporary Questions, ICCA Congress Series (11^th edn., Kluwer Law International 2008) 82.

[ii] The Arbitration and Conciliation Act 1995, No. 26, Acts of Parliament, 1995 (India) [hereinafter “the 1996 Act”].

[iii] Arvind Construction v. Kalinga Mining Corporation and Ors, (2007) 6 SCC 798 (India).

[iv] International Chamber of Commerce, ‘Pre-Arbitral Referee’ https://iccwbo.org/dispute-resolution-services/pre-arbitral-referee/ (last visited on 22 April 2022).

[v] International Centre for Dispute Resolution (ICDR) Arbitration Rules 2006, art. 37.

[vi] Mumbai Centre For International Arbitration, MCIA Rules 2016, § 14 [hereinafter “MCIA Rules, 2016”].

[vii] Delhi International Arbitration Centre, DIAC (Arbitration Proceedings) Rules 2018, § 14 [hereinafter “DIAC Rules, 2018”].

[viii] MCIA Rules, § 14.6.

[ix] DIAC Rules, § 14.9.  

[x] Amazon.Com NV Investment Holdings LLC v. Future Retail Ltd. & Ors., 2021 SCC OnLine SC 557 (India) [hereinafter “Amazon”].

[xi] Shruti Mahajan, Amazon vs Future: Here’s the Lowdown on India’s biggest Legal Case Right Now, Money Control, (26 January 2022) https://www.moneycontrol.com/news/trends/legal-trends/amazon-vs-future-heres-the-lowdown-on-indias-biggest-legal-case-right-now-7988041.html

[xii] Amazon, ¶ 11 to ¶ 19.

[xiii] Amazon, ¶ 20.

[xiv] The 1996 Act, § 1.

[xv] Amazon, ¶ 35