Last month, the International Centre for Dispute Resolution (ICDR) Young & International, International Chamber of Commerce (ICC) Young Arbitrators Forum and the Portuguese Arbitration Association (APA) sub-40 co-hosted a panel in Lisbon dedicated to discussing “The Emergency Arbitrator,” which I had the pleasure of moderating.
A number of writings on the topic imply a guarded optimism regarding the likely effectiveness and usefulness of emergency arbitrator procedures that have flourished amongst most arbitral institutions. “Flawed Fashion or Sensible Solution,” 1 “Creeping Consensus or Passing Fancy?” 2 and similar titles also indicate an air of scepticism surrounding this “new” invention.
As the panel discussion unfolded, however, one thing became increasingly clear: the emergency arbitrator is neither a passing fancy nor a flawed fashion. Indeed, emergency arbitrator procedures have proven to be an effective means of obtaining urgent relief expeditiously prior to the constitution of the arbitral tribunal, and also have provided parties and counsel with an effective early settlement tool. Emergency arbitrator procedures are yet another flexible tool held by arbitration users and counsel – one which many users have chosen to use.
Emergency arbitrator procedures largely have proven successful – the institutions that have adopted such procedures report both considerable use and satisfaction from arbitration users. Indeed, the verdict on Emergency Arbitrators reveals the following:
Most arbitral institutions have adopted emergency arbitrator provisions
An increasing number of arbitral institutions have adopted emergency arbitrator provisions. In 2006, the ICDR, the international division of the American Arbitration Association (AAA), was the first to do so. 3 Other major institutions, such as the ICC, 4 the Singapore International Arbitration Centre (SIAC), 5 the Hong Kong International Arbitration Centre (HKIAC), 6 and the Stockholm Chamber of Commerce (SCC) 7 followed suit. So too has the Swiss Chambers’ Arbitration Institution, 8 the Australian Centre for International Commercial Arbitration (ACICA), 9 the Mexico City National Chamber of Commerce (CANACO), 10 the Netherlands Arbitration Institute (NAI), 11 the Madrid Court of Arbitration 12 and the Arbitration Centre of the Portuguese Chamber of Commerce and Industry, 13 among others. Given the stiff competition among arbitral institutions, it is perhaps unsurprising that an increasing number of institutions have adopted such provisions. However, the popularity of emergency arbitrator procedures appears to stem not only from inter-institution competition, but also from a genuine demand from arbitration users, as discussed below.
The Emergency Arbitrator solves an important temporal problem
The emergency arbitrator protects the parties’ rights during the critical period of time between the filing of an arbitration and the constitution of the arbitral tribunal.
It is not uncommon for an arbitral tribunal to take several weeks, if not months, to constitute. Prior to the advent of emergency arbitrator procedures, parties had no other option but to seek urgent interim relief from national courts. While courts may in some instances provide fast and effective interim relief, this is not true in all cases and in all jurisdictions. Indeed, there are a number of reasons why a party may not wish to seek interim relief from national courts. The relief sought may not be available from the relevant court. Court proceedings are not confidential, and are often lengthy and costly. There is also often a concern (either perceived or real) that certain national courts may be biased towards their own nationals, not to mention the fact that in certain cases, the relief requested might concern multiple jurisdictions, making a one-stop-interim-relief-shop a great deal more attractive than a multiplicity of court proceedings spanning numerous jurisdictions.
Emergency arbitrator procedures provide an important solution to this temporal problem by affording the parties a choice of forum in which they can seek interim relief while awaiting the constitution of the tribunal. This is not to say that decisions by emergency arbitrators are not without their own issues (see below), or that a decision from an emergency arbitrator is preferable to a decision from a court. It very well may not be. However, the crucial point is that emergency arbitrator procedures provide parties with a choice. Parties can appeal to an emergency arbitrator, national courts, or both. For the parties to an arbitration and their counsel, this is forum shopping at its best.
Arbitration users are invoking emergency arbitrator procedures
As of 6 March 2015, arbitration users have filed forty-nine cases pursuant to the ICDR’s emergency measures procedures, which is now embodied in Article 6 of the 2014 ICDR Rules. In twenty-four of these cases, the applicant was successful in obtaining the interim measures sought (either partially or in full), as opposed to fourteen cases in which the applicant was unsuccessful. Nine of the forty-nine cases settled, and in two cases, the applicant withdrew its application for expedited relief. In relation to the ICC, 14 applications for emergency measures were lodged through 2014 since the ICC’s adoption of emergency procedures in 2012 (two in 2012, and six in each of 2013 and 2014 respectively). 14 As of March 2015, forty-two parties had sought relief under SIAC’s Emergency Measures provisions, which came into force in 2010. 15 According to SCC reports, parties submitted thirteen applications under its emergency arbitrator procedures from 2010-2014, four of which were lodged in 2014. 16 Of those thirteen cases, emergency relief was granted (in whole or in part) in three cases. Relief was denied in the remaining ten cases, based on a lack of imminent harm, a lack of urgency, and/or an inability to bind third parties. 17
Emergency arbitrators typically issue their decisions expeditiously
Statistics show that emergency arbitrator procedures provide the speed and efficiency for which they were designed. According to SIAC, the average time for an award after hearing the parties’ cases is eight and a half days, and has been as short as one day. According to the SCC, decisions under its emergency procedures are most commonly issued between five and six days after receipt of the application. 18 ICDR Article 6(2) calls for the emergency arbitrator to be appointed within one business day of its receipt of an application for emergency relief. Within two days of her appointment, the emergency arbitrator must “establish a schedule for consideration of the application for emergency relief” pursuant to Article 6(3). The ICDR aims to complete the entire procedure within three weeks. Currently, the average time frame from the filing of a request to the issuance of an award or order is 25 days.
Emergency arbitrator procedures can be used as an effective early settlement tool
As can be seen from the foregoing statistics, the use of emergency arbitrator procedures varies to some extent by arbitral institution. Some authors have concluded that the low usage figures among certain institutions, particularly in relation to the ICC and SCC, indicate that “national courts remain the preferred fora for applications for pre-arbitral relief, rather than emergency arbitrators.” 19 In my opinion, this conclusion is not warranted. First, the statistics demonstrate an increasing use of emergency arbitrator procedures, even if that use is not yet prolific. Second, the statistics only tell part of the story. As the discussion at the recent Lisbon event made clear, parties frequently contact arbitral institutions, and in particular the ICDR and ICC, with an expressed intent to file an arbitration and simultaneously invoke emergency arbitrator procedures, but then never file either. Although it is impossible to say with certainty, the institutions interacting with these parties believe that the parties ultimately do not file those requests for arbitration and interim measures applications because the mere ability to do so functions as an effective early settlement tool. Any such tool facilitating the early settlement of disputes is a much welcomed one, and is of significant value in its own right.
Concerns about the enforceability of the emergency arbitrator’s decision
Since the introduction of emergency arbitrator procedures, concerns about the form and enforceability of their decisions have been of considerable interest and debate. The three primary concerns relating to enforceability are (1) the emergency arbitrator’s status, i.e. does an emergency arbitrator have standing as an “arbitrator” or “tribunal” under national arbitration laws, most of which do not expressly account for the role of an emergency arbitrator?; (2) the interim nature of the emergency arbitrator’s decision; and (3) the impact of the form of the emergency arbitrator’s decision – as an award or an order – on enforceability. These potential hurdles will be discussed briefly in turn.
First, the issue of the emergency arbitrator’s status results from the fact that most national laws do not expressly contemplate an “emergency arbitrator” role. For example, while the English Arbitration Act 1996 refers to “arbitrators” and the “arbitral tribunal”, it does not reference expressly an “emergency arbitrator.” While Section 41 of the 1996 Act empowers the arbitral tribunal to issue peremptory orders, and Section 42 allows English Courts to enforce such orders, both provisions expressly concern orders made by the “arbitral tribunal.” This casts some doubt as to whether an emergency arbitrator is an “arbitrator” or “tribunal” for the purposes of the 1996 Act (and indeed other national arbitration legislation). Accordingly, whether the emergency arbitrator is empowered to act under the 1996 Act and whether English courts are empowered to enforce any decisions rendered by an emergency arbitrator are unsettled at present.
To deal with the uncertain status of the emergency arbitrator and the enforceability of her awards, the Singaporean Parliament enacted the International Arbitration Act(?) (Amendment) 2012, in which it defined “arbitral tribunal” to include “an emergency arbitrator appointment pursuant to the rules of arbitration agreed to or adopted by the parties including the rules of arbitration of an institution or organization.” 20 The amendments thus give emergency arbitrators the same legal status and powers as that of any other arbitral tribunal and importantly, they likewise ensure that orders made by emergency arbitrators are enforceable under Singapore’s International Arbitration Act. The 2012 Amendment constitutes a clear and effective response to stamp out any uncertainty regarding the emergency arbitrator’s status – and the enforceability of her decisions – in international arbitrations seated in Singapore. Similarly, the Legislative Council of Hong Kong passed the Arbitration (Amendment) Bill 2013 which empowers Hong Kong courts to enforce relief granted by an emergency arbitrator. 21 While these provisions were introduced in response to HKIAC’s updated Administered Arbitration Rules, which include an emergency arbitrator procedure, they also authorize Hong Kong courts to support parties who have obtained emergency relief outside of Hong Kong who then seek to enforce such relief within Hong Kong. The proactive approach of Singapore and Hong Kong is to be commended, and could be adopted by other jurisdictions to deal with the status of the emergency arbitrator and her decisions.
Second, the emergency arbitrator by design only issues interim decisions pending the constitution of the arbitral tribunal, who may then modify or overturn any decisions of the emergency arbitrator. 22 This scenario raises the question of whether an emergency arbitrator’s decision is enforceable if it is not a “final” award.
The short answer is that the question is complicated and the answer varies depending upon the jurisdiction in which it arises. For example, while interim measures are not considered enforceable awards in Sweden, 23 other jurisdictions such as Hong Kong and Switzerland, empower their national courts to enforce interim measures issued by arbitral tribunals. In the United States, courts have held that interim measures are final for the purpose of enforcement pursuant to both the Federal Arbitration Act 24 (the primary federal law applicable to domestic and international arbitration awards) and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Thus, the question of whether “interim” decisions issued by emergency arbitrators will be enforceable is largely dependent upon the laws of the nation in which enforcement is sought.
Third and finally, the issue of the emergency arbitrator’s “form” of decision – as an “order” or an “award” – is an additional perceived hurdle to enforcement. The arbitration rules of the ICDR, SIAC, and the SCC, for example, empower the emergency arbitrator to decide the form of the award, thereby providing an element of flexibility to the emergency arbitrator and the parties. The ICC Arbitration Rules, however, specify that an emergency arbitrator must render its decisions as an order, which allows such decisions to bypass the (sometime lengthy) scrutiny process that ICC awards are subject to generally.
All considered, it is my view that nomenclature is largely irrelevant. What is key is not the label of the emergency arbitrator’s decision but rather the nature and effect of that decision and, in particular, whether that decision fully and finally resolves a particular issue before the emergency arbitrator. If it does, it should be enforceable. While the resolution of this issue will undoubtedly vary by jurisdiction, courts in the United States and France appear to adopt this approach, elevating substance over form. 25
The foregoing perceived enforcement hurdles should not be overstated. The vast majority of parties voluntarily comply with the decisions of emergency arbitrators, thereby rendering the foregoing discussion largely academic. Perhaps the best deterrent of noncompliance is the parties’ perception that noncompliance will draw negative inferences from the arbitral tribunal once constituted, thereby adversely affecting the tribunal’s opinion of the noncomplying party. Parties would not wish for their noncompliance with the decision of an emergency arbitrator to have an knock-on-effect during the “main event,” and potentially colour the tribunal’s perception of the noncomplying party and thereby impact the merits of the dispute. This deterrent effect is further bolstered by the fact that many arbitral rules require parties to comply with the decisions of emergency arbitrators. 26
In sum, concerns about the enforceability of emergency arbitrator decisions – while real – should not be overstated, and certainly should not overshadow the many benefits of this “new” invention. After all, there is much value in providing arbitration users and practitioners with a choice for obtaining the urgent relief they desire. The emergency arbitrator has proven to be a worthy alternative (or addition to) national courts in the pursuit of such urgent relief.