Introduction
The most vital part of arbitration is speedy resolution, which would involve the rendering of enforceable conservatory measures at the interim stages of the proceedings. Unfortunately, however, the conservatory measures, like interim awards or emergency awards, particularly those passed in the foreign jurisdiction, do not find specific statutory prescriptions, spelling out the measures of their enforcement. This discourages the vitality of arbitration as a measure of 'speedy resolution'. It is noteworthy that Complex, commercial arbitrations take significant time to complete and successful parties would then have to contend with challenges to the validity as well as enforcement of the arbitral award. In this context, urgent interim relief along with quick enforcement becomes crucial in such disputes. Therefore, the objective of the Emergency Award is to provide urgent pro tem or conservatory measures to a party or parties that cannot await the formation of an Arbitral Tribunal.1 However, the enforceability of such awards depends on the seat of the Arbitration. For example, an award rendered by an emergency arbitrator in an arbitration seated in India is enforceable in the Indian courts but it's not the same case with foreign seated arbitration.
Lacunas Present in the Concept
A party can take advantage of Section 17 of the Arbitration & Conciliation Act (the Act) for enforcement only when the arbitration is seated in India, as Section 17 falls under Part I of the act. This raises questions as to the enforceability of interim measures granted by arbitral tribunals which are situated outside India. There is also no similar provision in the Arbitration and Conciliation Act that grants enforceability to the interim orders issued by tribunals outside India.
In India, the statutory provision relating to emergency arbitration is not specific/clear. This tends to lessen the confidence in the minds of the corporate giants who choose the seat of arbitration on basis of the flexibility of the local laws.2 More so when the Act is silent on the recognition of emergency arbitrators it is very less likely that the same can be speedily enforced by the Indian courts.
Enforceability of Interim Relief/Order given by Emergency Arbitrator (Judicial Precedents)
Enforcement of a foreign seated award in India is highly unlikely as the enforcement shall only be recognized under Part II of the Arbitration and Conciliation Act, 1996. In accordance with the decision laid down by the Supreme Court of India in BALCO vs. Kaiser Aluminum Technical Services3, the powers of Indian courts are prospectively excluded to grant interim relief in relation to foreign seated arbitrations.
Later on in the case of HSBC v. Avitel4, the Bombay High Court while upholding the award of the Emergency Arbitrator and granting interim relief observed that the '...petitioner has not bypassed any mandatory conditions of enforceability.' It is germane to note that the subject agreements were entered into between the parties prior to the BALCO judgment, thus the Ratio Decidendi of BALCO did not apply to this case.
The Delhi High Court judgment in Raffles Design International (India) (P) Ltd. v. Educomp Professional Education Ltd.5 dealt with an award by an Emergency Arbitrator in an arbitration seated outside India as per Srikrishna Committee Report.6 This report stated that it is possible to interpret Section 17(2) of the Act to enforce emergency awards for arbitrations seated in India, and recommended that the Act be amended, so that it comes in line with international practice in favor of recognizing and enforcing an emergency award. The Delhi High Court held that the emergency award passed by the arbitral tribunal could not be enforced under the Act and that the only method for enforcing the same would be for the petitioner to file a regular civil suit. Moreover, the Court was conscious of the legal position that, under Part II of the A&C Act, interim orders could not be enforced.7
Thereafter, in Ashwani Minda v U-Shin, 8 the Delhi High Court observed that the order passed by an emergency arbitrator had the same character as an interim order passed by an arbitral tribunal, and in terms of section 9(3) of the A&C Act, a court ought not to intervene if an emergency arbitrator has already been appointed.9 Moreover, in the case of Plus Holdings v Xeitgeist Entertainment Group,10 the Bombay High Court granted reliefs in an application filed under section 9 where similar reliefs had been granted by the foreign-seated emergency arbitrator.
Recently, in the famous case Amazon.com NV Investment Holdings LLC v. Future Retail Ltd.11, The Hon'ble Supreme Court held that the interim award passed by an emergency arbitrator appointed under the Arbitration Rules of the Singapore International Arbitration Centre is recognized under Section 17(1) of the Act12, and thus, enforceable under Section 17(2) of the Act. In particular, the Supreme Court was of the view that if the orders of an emergency arbitrator are not given effect then the same would render the whole concept of emergency arbitration otiose. It is relevant to note that in this case the arbitration proceedings were Indian seated.
Legal Status of Emergency Arbitration in India
There is significant uncertainty in the law regarding the enforceability of emergency awards in arbitrations seated outside India. The Law Commission of India in its 246th Report had recommended recognizing the concept of the emergency arbitrator by widening the definition of arbitral tribunal Under Section 2(d) of the Act to include an emergency arbitrator. However, this recommendation was not incorporated in the 2015 Amendment Act.
While one could possibly rely on Section 17(2) of the Act to enforce emergency awards for arbitrations seated in India, the Delhi High Court decision in Raffles Case would discourage the same, as the High Court had held in that case that an emergency award in an arbitration seated outside India is not enforceable in India. India's approach differs from that of developed arbitration jurisdictions such as Singapore and Hong Kong which have recognized the enforceability of orders given by an emergency arbitrator.
Given that international practice is in favor of enforcing emergency awards (Singapore, Hong Kong, and the United Kingdom all permit enforcement of emergency awards), it is time that India permitted the enforcement of emergency awards in all arbitral proceedings. This would also provide legislative support to the Rules of arbitral institutions that presently provide for emergency arbitrators13. For this purpose, the recommendation made by the Law Commission of India in its 246th Report may be adopted.
Conclusion
The issue of enforceability can be resolved when the emergency arbitrator's order shall take the form of an interim award which the parties undertake to comply with. In the event that a party fails to comply with such order, it may be enforceable by resorting to processes under the provisions of various national laws depending upon the discretion of national courts and national laws which may or may not include Emergency Arbitration provisions. Although Emergency Arbitration steps in as a turning tide for the global scenario in view of injunctions in Arbitration proceedings, India still awaits a formal statutory recognition of the awards of the Emergency Arbitrator.
As noted above, In India there is currently no provision similar to section 17 of the Act applicable to the enforcement of foreign-seated Emergency Awards with the result that, as things stand, foreign-seated Emergency Awards are unlikely to be directly enforceable in the Indian courts. Therefore, it is to be hoped that the Court will provide further clarity on this important issue sooner rather than later.14
The Way Forward
The 246th Report of the Law Commission of India, which formed the basis of the 2015 Amendment, specifically observed that the purpose of the amendment to section 2(2) was to empower Indian courts to exercise jurisdiction under section 27 even to foreign seated arbitrations. An equitable relief granted by the emergency arbitrator may fall within the meaning of an 'interim award' and even if an interim award is intended to have effect only so long as the final award is not delivered, such an award may also qualify to be an 'interim award', depending on its form as observed in the case of Satwant Singh Sodhi v. State of Punjab.15
Through the years, the courts of India have transformed the Indian legal landscape by indirectly adapting and embracing Emergency Awards passed in foreign seated arbitrations. The Indian Judiciary has proved that the order of the court in an application for interim measures is largely dominated by the awards delivered by Emergency Arbitrators around the globe. However, statutory recognition of the emergency awards in India is still awaited. It is anticipated that statutory recognition of Emergency Arbitration has the potential to make India a global arbitration hub. It can help India strengthen its arbitration landscape and minimise judicial intervention in the arbitration mechanism to a major extent. The concept of Emergency Arbitration has proven to be more efficient, less time-consuming and trusted worldwide. It is felt that if Emergency Arbitration is legitimised in India it will accelerate India's journey towards becoming a leading arbitration destination in the world.
Footnotes
1 India-parties cannot apply to courts after emergency arbitration (Ashwani Minda v U-Shin); Link - https://www.nishithdesai.com/fileadmin/user_upload/pdfs/NDA%20In%20The%20Media/News%20Articles/200626_A_India_parties_cannot_apply_to_courts_after_emergency_arbitration.pdf 200626_A_India_parties_cannot_apply_to_courts_after_emergency_arbitration.pdf (nishithdesai.com)
2 United Nations Conference on International Commercial Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.
3 BALCO Kaiser Aluminum Technical Services (2012) 9 SCC 552.
4 HSBC PI Holdings (Mauritius) Ltd. v. Avitel Post Studioz Ltd & Ors., Arbitration Petition No. 1062/2012 dated January 22nd, 2014.
5 Raffles Design International (India) (P) Ltd. v. Educomp Professional Education Ltd., 2016 SCC OnLine Del 5521 : (2016) 234 DLT 349.
6 Report of the High Level Committee to Review the Institutionalization of Arbitration Mechanism in India, New Delhi, 30 July 2017, Link Available here.
7 Part II of the A&C Act has not incorporated article 17 of the UNCITRAL Model Law, which enables enforcement of interim measures granted by a foreign seated arbitral tribunal.
8 Ashwani Minda v U-Shin Limited, Order dated 12 May 2020 in OMP(Comm.) 920/2020 (Delhi High Court).
9 Section 9(3) of the A&C Act expressly refers to section 17 of the A&C Act.
10 Plus Holdings v Xeitgeist Entertainment Group (2019) SCC Online Bom 13069.
11 Amazon.com NV Investment Holdings LLC v. Future Retail Ltd (2022) 1 SCC 209.
12 Arbitration and Conciliation Act, 1996, S. 17(1).
13 Dennis Nolan and Roger Abrams, 'Arbitral Immunity, Berkeley Journal of Employment and Labour Law, Vol. 11 Issue 2 (1989), pp. 228-266.
14 Indian Supreme Court Allows Indian Parties To Choose A Foreign Seat Of Arbitration, Herbert Smith Freehills, 30 April, 2021; Link -
15 Satwant Singh Sodhi vs. State of Punjab and Ors. (26.03.1999 - SC) : MANU/SC/0212/1999.
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