A recent decision of the English Commercial Court refusing a party's application for urgent injunctive relief under s.44 of the Arbitration Act 1996 (the "Act"), brings into focus an important issue to consider when drafting agreements to arbitrate (see Gerard Metals v The Trustees of the Timis Trust & others).
In very brief summary:
1. Gerard Metals had applied to the LCIA Court for (i) the appointment of an emergency arbitrator under Article 9A of the LCIA Rules, or (ii) the expedited formation of the arbitral tribunal under Article 9B of the LCIA Rules, in order to obtain an urgent freezing order.
2. The LCIA Court refused the application on the basis that it was not a case of "exceptional urgency" or "emergency", as required under Articles 9A and 9B.
3. Gerard Metals subsequently applied to the Commercial Court (pursuant to the Court's jurisdiction under s.44 of the Act) for the freezing order.
4. The Commercial Court rejected the application on the basis that its jurisdiction under s.44 only arises where "the case is one of urgency" (s.44(3)) and the tribunal or relevant institution (in this instance, the LCIA Court) "has no power or is unable for the time being to act effectively" (s.44(5)). In the Commercial Court's view, "urgency" in the context of s.44 should therefore be understood to mean that the time it would take a party to obtain relief through the tribunal (or LCIA Court) would render that relief ineffective, which was not the case in the circumstances of Gerard Metals.
IMPLICATIONS ON INCORPORATING THE LCIA RULES
The decision in Gerard Metals suggests that the Commercial Court may only entertain s.44 applications made by parties to LCIA-administered arbitrations in circumstances where there is not enough time for the LCIA Court to appoint the emergency arbitrator (or tribunal) in order to grant the relevant relief.
Therefore, rather than Articles 9A and 9B acting as additional means to obtaining urgent relief, they are now, arguably, the default process save in truly exceptional circumstances. This is notwithstanding that Article 9.12, on its face, suggests that Article 9B is without prejudice to the parties' rights to seek relief from the Commercial Court.
DOES THIS INFLUENCE THE DECISION AS TO WHICH INSTITUTIONAL RULES TO CHOOSE?
In short, no. This is because it is unlikely that the Gerard Metals decision only bites on arbitrations conducted pursuant to the LCIA Rules. Most of the major institutional rules (including the ICC Rules, SIAC Rules and ICDR/AAA Rules) contain equivalent provisions in relation to appointing emergency arbitrators for the purpose of granting urgent relief. Accordingly, it seems likely that the English Court would adopt the same approach to arbitrations conducted under those sets of rules as well (and, in a 2013 case (Seele Middle East FZE v Drake & Scull International SA Co), the Commercial Court implied (albeit without stating expressly) that the relevant provisions of the ICC Rules have a similar effect).
Thus, in determining which rules to incorporate into an arbitration clause, parties should continue to assess the respective benefits more widely, rather than focussing on the implications of the decision in Gerard Metals. Relevant factors in this regard may include the calculation of fees, the compatibility of the rules with the applicable procedural law, the default procedure for appointing arbitrators, and the extent to which institutions scrutinise awards for publication.
That said, in light of the Commercial Court's decision in Gerard Metals, parties should now give due consideration when drafting agreements to arbitrate as to whether they should, in fact, opt out of the emergency relief provisions in the relevant set of rules altogether. If they do so, applying the reasoning in Gerard Metals, there is likely to be greater scope to obtain urgent relief from the Commercial Court pursuant to s.44 of the Act.