Business Laws

Emergency Arbitration: India and the international perspective

Sidhartha Srivastava / Yasmeen Sabir October 18 | Updated on October 18, 2021

The Emergency Award is a mechanism by which parties can elect to obtain urgent interim relief when they cannot wait till the formation of the arbitral tribunal   -  istock.com/solidcolours

The concept of E-Arbitration is unknown to the Arbitration and Conciliation Act, 1996, however, the Indian courts and arbitration institutions are familiar with it

The dispute between Amazon and Future Group, concerning enforcement of an ‘Emergency Award’ (“EA”), gave impetus to EA and Emergency Arbitration (“E-Arbitration”) in the country. The concept of E-Arbitration is unknown to the Arbitration and Conciliation Act, 1996, however, the Indian courts and arbitration institutions are familiar with it.

The EA is a mechanism by which parties can elect to obtain urgent interim relief when they cannot wait till the formation of the arbitral tribunal (“Tribunal”). The EA is passed by an Emergency Arbitrator (“E-Arbitrator”) either with the consensus of the parties or according to the agreement executed and thereafter, vacates its office.

Even today, the concept of EA/E-Arbitration is not part of the Act. However, to give recognition to E-Arbitrations, the Law Commission Report and the BN Srikrishna Committee Report, on amendments to the Act, had proposed an amendment to incorporate the term “Emergency Award” under the definition of “Arbitral Award”. The amendments, however, failed to incorporate the recommendations.

Indian Judiciary’s approach

Though there is no clear proviso under the Act concerning the EA, the Indian courts have adopted a pro-arbitration approach and have indirectly enforced the EA and the latest example is the Amazon-Future Case.

Some of the old precedents include the Bharat Aluminium Co Vs Kaiser Aluminium Technical Service, Inc (“BALCO”) case, wherein the Supreme Court held that the powers of Indian courts are prospectively excluded to grant interim relief in relation to foreign seated arbitrations. In the case of HSBC PI Holdings (Mauritius) Ltd Vs Avitel Post Studioz, the Bombay High Court granted interim relief to the petitioner in line with the award of the E-Arbitrator.

The Delhi High Court, in the matter of Raffles Design International India Private Limited Vs Ducomp Professional Education Limited, held that the award passed by the E-Arbitrator cannot be enforced under the Act and the court shall not consider the award passed by the E-Arbitrator while granting interim measures. Contrastingly, in the case of Ashwani Minda Vs U-Shin Ltd, the division bench of Delhi High Court indirectly enforced the award of the E-Arbitrator and rejected interim reliefs on the ground of refusal of identical relief by the E-Arbitrator.

The matter of Amazon NV Investment Holdings Vs Future Coupons Ltd is a turning point in E-Arbitration. In this judgment, the Supreme Court held that an EA is enforceable in India and further held that the definition of Tribunal, provided under the Act, is wide enough to include an E-Arbitrator and order of an E-Arbitrator is exactly like an order of a Tribunal. The Supreme Court dealt with two issues mainly – (a) whether an award delivered by an Emergency Arbitrator under an institutional arbitration is an order under section (u/s) 17(1) of the Act, and (b) whether an appeal can be filed against an order of enforcement of an E-Arbitrator’s order made u/s 17(2) of the Act.

Issue 1

Sections 2(6) and 2(8) of the Act provides that parties are free to authorise any person, including an institution to determine issues. The Supreme Court analysed these provisions of the Act and held that if a party submits its disputes to an arbitral institution (“Institution”), then the chosen institution will be the Tribunal and the rules of the institution will apply to include E-Arbitrator.

Section 17 and 9 of the Act enables the parties to apply for interim reliefs before the Tribunal and court, respectively. The Supreme Court held that, Sections 9(3) and 17 form part of the same scheme, and that the ‘Tribunal’ spoken of in Section 9(3) would be like the Tribunal spoken of in Section 17(1), thereby including an E-Arbitrator appointed under institutional rules.

Issue 2

The Supreme Court analysed Section 37 (Appeal) of the Act, with the amended Sections 17 and 9 and held that, amended Section 37 continued to provide appeals only from measure u/s 17(1) and therefore, no appeal lies u/s 37 against an order of enforcement of an E-Arbitrator’s order made u/s 17(2).

While Emergency arbitration serves as a turning point for the worldwide scenario, India still awaits full statutory recognition of EA. E-Arbitration is the need of the hour which works in the interest of both the parties, and which is one of the objectives behind alternative dispute resolution.

(The authors are Partner and Senior Associate, respectively, with Link Legal, a law firm)

Published on October 18, 2021

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