INTRODUCTION
Arbitration is the recently emerging concept which is gaining more importance in recent days. The litigants are nowadays opting for arbitration rather than court proceedings as they feel the court procedures are dragging and take more time, whereas arbitration on the other hand saves time. The arbitration is itself cost-effective, and the new concept of emergency arbitration is, even more, cost-effective. But emergency arbitration in India has not met all the people as people are not aware much about emergency arbitration.
NEED FOR EMERGENCY ARBITRATION
Emergency arbitration is mainly preferred when interim relief is urgent in nature. In this regard, an emergency arbitrator is appointed. An emergency arbitrator can be defined as an arbitrator who is appointed mainly by the arbitral institution on an urgent basis and is mainly appointed to specifically deal with an application for interim relief during instances when there are no chances of constituting the arbitral tribunal so as to deal with the substantive disputes between the parties.
The main need for emergency arbitration is to provide an alternative way of remedial measures in urgent matters. Before the emergence of an emergency arbitrator, interim reliefs for urgent matters are not availed in arbitration and the parties to the arbitration are mostly compelled to move to civil courts to get interim reliefs. In civil cases, interim relief was provided by way of interlocutory orders. Interim reliefs are very essential at times because interim reliefs play a vital role in the cases as they would act as a bar to the other party on several occasions. Therefore, in this regard, emergency arbitration is mandated to provide interim relief in arbitration cases as an alternative to the interim relief granted by the courts.
Another need for emergency arbitration is to bridge the gap that arises in the disputes between the parties and the formation of arbitral tribunals. Generally, in the agreement, there would be a clause for arbitration, only then the parties can opt for arbitration. But as soon as the disputes arise between the parties, the arbitral tribunal would not be established. It would take some months to constitute an arbitral tribunal. Till that time, the parties to the dispute would not have enough time to wait, so they can opt for emergency arbitration proceedings during such instances.
EMERGENCY ARBITRATION IN INDIA – THE REALITY
LAWS IN INDIA
The arbitration matters are dealt with solely by the Arbitration and Conciliation Act, 1996. When the Act was enacted in the year 1996, it remained silent about emergency arbitration, as the concept has not evolved in international arbitration. The International Court of Arbitration officially declared the provisions of an emergency arbitrator only in 2012 and incorporated the same in Article 29 of the Rules of Arbitrator of the ICC and in addition, it also provided a clear cut procedure related to the emergency arbitrator in its Appendix V of the Rules of Arbitrator of the ICC. Keeping this in mind, the lawmakers of India intended to incorporate the emergency arbitration provisions in the Indian Laws.
To look into the viability of making provisions of emergency arbitration, a Law Commission was formed. The Commission in its 246th report on ‘Amendments to the Arbitration and Conciliation Act 1996’ recommended the inclusion of emergency arbitrator in the Arbitration and Conciliation Act, 1996. In this context, Section 2 (1) (d) has to be amended and in the panel of arbitrators, the emergency arbitrator has also to be included. But when the Act was amended in 2015, it did not incorporate the recommendation of the Law Commission as to the appointment of an emergency arbitrator. Therefore, the current position of emergency arbitration in the legal framework is that it has not been recognized in any of the existing laws in India.
However, Indian Judiciary in its various judicial pronouncements recognized the emergency arbitration. In Raffles Design Int I India Pvt. Ltd v. Educomp Professional Education Ltd. & Ors., the Court held that when the emergency award is passed, then the same cannot be enforced under the Arbitration and Conciliation Act as the Act has no provisions on the same. Instead, the parties are left with only one method of enforcing the emergency award that is to file a suit for the same. In another case of Ashwani Minda and M/S Jay Ushin Limited v. M/S. U-Shin Limited and M/S Minebea Mitsumi Inc., the Court held that the parties were refused to act in accordance with the emergency arbitrator award and moved a petition under Section 9 of the Arbitration and Conciliation Act, 1996 towards the Court. The Court in further observed that the petition under Section 9 is not maintainable as the parties are not willing to obey the emergency arbitrator order. In addition, the judgment is providing strict enforcement of the emergency arbitrator award.
PROCEDURE
Though the Indian Law is silent on emergency arbitration, several arbitral institutions in India such as Mumbai Centre for International Arbitration, Nani Palkhivala Arbitration Centre (NPAC), Indian Council of Arbitration (ICA) and several other arbitration institutions are providing emergency arbitrator when needed. The procedure for emergency arbitration is very simple as it includes steps such as:
Step 1 – the party who intends to get an interim relief by way of emergency arbitration has to move an application before the arbitration institution who is supposed to create an arbitral tribunal for the parties.
Step 2 – upon receiving an application from the party, within one or two days, the arbitration institution will appoint an emergency arbitrator.
Step 3 – once the emergency arbitrator is appointed is appointed, the arbitrator has to dispose off the interim dispute matter within 14 to 15 days applying and acting in accordance with the rules and regulations of such Arbitration Institution.
This clearly depicts the time-bound disposal of the emergency interim reliefs and could be understood the need for emergency arbitration from this itself.
EMERGENCY ARBITRATION – THE WAY FORWARD
It is of no doubt that alternate dispute resolution mechanisms like arbitration are gaining more momentum at the international level. Several international arbitration institutions are recognizing emergency arbitration and are appointing such arbitrators when applied by the parties to the dispute. So when a foreign seated international arbitration is opted and if any of the party applies for interim relief under emergency arbitration, the relief will be granted. But the real issue is such kind of interim reliefs granted by the foreign arbitration institutions cannot be enforced in India due to the lack of legal sanctity in India. This is often considered as a serious lag for India’s arbitration standard at the international level.
In the other hand, when India is seated in international arbitration, parties cannot opt for interim urgent reliefs under emergency arbitration. Instead, they have to apply for the same under Section 9 of the Arbitration and Conciliation Act, 1996 before the local courts. Parties are opting for arbitration mainly because they do not need the intervention of the court in any means, but moving to the courts for interim reliefs obstructs this objective, which is not desirable by the parties. This, in turn, will lead to poor opting of India as a seat in international arbitration matters, which will not lead to the development of India in arbitration matters on par with international standards.
CONCLUSION
To cope up with the international standards of the arbitration and for more parties in selecting India as a seat for international arbitration disputes, the laws and rules in this regard have to be in accordance with the international model laws and rules. This is to give uniformity of rules and procedures throughout the world, and the parties to the dispute will not be confused about the conflicting local laws and the international laws.
Therefore it can be expected the lawmakers of the nation would consider the 246th Law Commission report and would certainly make necessary amendments in the Arbitration and Conciliation Act, 1996 in order to incorporate emergency arbitration explicitly in Indian legal framework in the near future. It is certain it will help India in achieving more in arbitration matters and will attract more international arbitral disputes to opt India as their seat. Incorporating emergency arbitration would be like right move in the right direction, therefore it is of the very mandate for India to have the same in its laws.
