Emergency Arbitration And Its Applicability In India

Shivam || Student of Campus Law Centre ( shivammkd0@gmail.com )

|| Feb 6, 2023 ||

Emergency Arbitration

It is a stage before the appointment of an arbitral tribunal. In this mechanism, if the party to the arbitration proceedings wants urgent relief, then it can ask for the appointment of the Emergency Arbitrator who decides the dispute within the specified period and pass the emergency award and this award is in a form of an interim award as the arbitral tribunal can modify/revoke the emergency award after its formation. Various international arbitration centres amended their rules to include the emergency awards like the Singapore International Arbitration Centre, the Stockholm Chamber of Commerce, etc.

Applicability in India

In India, awards passed by the emergency arbitrator are not given statutory recognition. In India, the arbitration is governed by the Arbitration and Conciliation Act, 1996 (Act 26 of 1996) (‘A&C Act’), Sec 2(1)(d) which defines the “arbitral tribunal” does not include the ‘emergency arbitrator’. The Law Commission of India in the year 2014, in its 246^th report,[1] recommended the govt. to amend section 2(1)(d) of the A&C Act to include the ‘emergency awards’ in the definition of ‘arbitral tribunal’ but it is not included in the 2015 amendment of the A&C Act. Again, in the year 2017, Justice B. N. Srikrishna committee[2] recommended the inclusion of emergency arbitration in the A&C Act and the adoption of the recommendations made in the 246^th law commission report.

Applicability in Arbitration Seated in India

The applicability of the emergency award in India is unclear till the judgment of the Hon’ble supreme court in the case of Amazon.com NV Investment Holdings LLC v. Future Retail Limited and Others[3] held that the emergency arbitration is well within the ambit of the A&C Act and the expression “during the arbitral proceedings”  used in section 17(1) of the A&C Act, is wide enough to include the emergency arbitration and the awards made under these proceedings and can be executed in India by interpreting section 17(2), in case of arbitration seated in India (in this case the proceedings are governed by the rules of Singapore International Arbitration Centre and arbitration is seated in New Delhi). Therefore, in case of arbitration seated in India, the party has two options either it can beg the emergency award or it can approach the court under Sec. 9 of the A&C Act of 1996.

Applicability in Arbitration Seated outside India

In case the emergency award is passed by the emergency arbitrator in the arbitration seated outside India, that award is not enforceable in India, as section 17 does not cover the arbitration proceedings seated outside India. The Hon’ble Delhi High Court in the case of Raffles Design International India Pvt. Ltd. v. Educomp Professional Education Ltd[4] (in this case the emergency arbitration seated in Singapore) held that the arbitration award passed by the emergency arbitrator seated outside India is not enforceable in India and it will only be enforceable after the approval of the court under section 9 of A&C Act read with section 2(2) and its proviso. Although the emergency award will have some persuasive value, but the court pointed out that it will deal with the application made under section 9 regardless of the decision of the emergency arbitration. Therefore, it is advisable that the party should approach the court in the first instance rather than approaching the foreign seated arbitration as far as the enforcement of the award only in India is concerned.

Conclusion

The awards given by the Emergency Arbitrator are enforceable in India as the decree of the civil courts in case the emergency arbitration is seated in India, but they are not enforceable in case of foreign seated arbitration. Therefore, if the party wants interim relief, then it can approach the court under sec. 9 of the A&C, Act, or it can go for emergency arbitration seated in India but if the arbitration is seated outside India, then the party must approach the court after getting the emergency award or it can straight away approach the court under sec. 9 of the A&C Act. These judgments are steps, by India, in the direction of a pro-arbitration country but India is still waiting for the statutory recognition of the emergency arbitration. As the advanced and leading international arbitration centres in the world had amended their rules to include emergency arbitration and to recognize the emergency awards made in all arbitration proceedings. Therefore, India should also change their law and make the required amendments, in accordance with the recommendations made in the 246^th report of the law commission, to be on par with the international community, to ensure best practices are followed, to increase the efficiency of the arbitration proceedings and to remove the ambiguity created by the decisions of the court.

References

1. https://www.lexology.com/library/detail.aspx?g=dcb3ff1d-6b2f-48dd-9103-11032cbd876f#:~:text=An%20emergency%20arbitration%20(%E2%80%9CEA%E2%80%9D,formation%20of%20the%20arbitral%20tribunal.(last visited on November 15, 2022)
2. https://www.mondaq.com/advicecentre/content/3958/Emergency-Arbitration-In-India-Concept-And-Beginning (last visited on November 15, 2022)
3. Law Commission of India, 246^th Report on Amendments to the Arbitration and Conciliation Act, 1996(Act 26 of 1996), available at: https://indiankanoon.org/doc/194486288/ (last visited on November 15, 2022)
4. Arbitration and Conciliation Act, 1996 (Act 26 of 1996), available at https://www.indiacode.nic.in/bitstream/123456789/1978/1/AAA1996__26.pdf (last visited on November 15, 2022)
5. High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India, available at  https://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf (last visited on November 15, 2022)

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[1] Law Commission of India, 246^th Report on Amendments to the Arbitration and Conciliation Act, 1996(Act 26 of 1996).

[2] High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India.

[3] Amazon.com NV Investment Holdings LLC v. Future Retail Limited and Others, 2021 SCC OnLine SC 623.

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