This blog first appeared on the Practical Law Arbitration Blog on 12 December 2017 and can be viewed here (includes links to PLC sources).
Despite the tensions that sometimes arise in the relationship between national courts and the institutions of international arbitration, one critical area of cooperation is the support that national courts provide by way of interim relief. One of the most obvious examples of that relief is the granting of freezing injunctions and disclosure orders restraining a respondent from disposing of its assets, pending the outcome of a reference and identifying the scope of those assets. Depending on the nature of the case and the location of the respondent, it may be that such relief is sought in more than one jurisdiction.
As a matter of English law, the jurisdiction to grant interim relief is constrained by the requirements of section 44, of the Arbitration Act 1996 (AA 1996). Specifically, where the case is not one of urgency, the court may only act with the permission of the tribunal or with the agreement in writing of the other parties (section 44(4)). Where the case is one of urgency, the court may, on the application of a party, make orders for the preservation of evidence or assets (section 44(3)). However, in any case, the court may only act if and to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively (section 44(5)).
The requirements of sections 44(3) and (5) have taken on an increasingly important significance with the wider availability of emergency relief from tribunals. The leading international arbitral institutions offer varying procedures for emergency interim relief, especially at the time when the tribunal has not yet been formed. Obvious examples include the emergency arbitrator powers found in the rules of institutions such as the London Court of International Arbitration (LCIA), International Chamber of Commerce (ICC), Singapore International Arbitration Centre (SIAC), Kuala Lumpur Regional Centre for Arbitration (KLRCA) and many others, as well as powers for the expedited appointment of the tribunal found in some institutional rules, such as those of the LCIA.
There are, of course, difficult questions that may arise as to whether emergency relief from the tribunal is a viable alternative to seeking similar relief from the national court. Such questions include:
- Even with the expedited timetables found in the different emergency arbitrator regimes, will an award or order be available within a timeframe which will provide effective relief?
- If the relief sought is going to require cooperation or at least compliance from a third party, will it be possible to make the order or award binding in a way that is effective against such third parties?
- If the award or order is going to require enforcement in another jurisdiction, is it enforceable under the New York Convention or another regional convention? For example, certain institutional rules, such as those of the ICC, only provide for an emergency arbitrator to make a decision in the form of an order (Article 29 of the ICC Rules). This, of course, means the decision is in a form where there is risk that it will not enforceable under the terms of the New York Convention.
Nevertheless, the availability of emergency interim relief from the tribunal is now a factor which parties have to take into account when asking the court for such relief as part of establishing both that the requirement of urgency and that the requirements of section 44(5) are met. Two decisions of the High Court illustrate the type of problems that can arise.
In Seele Middle East Fze v Drake & Scull Int SA Co, the court was asked for injunctive relief granting the claimant access to a site overseas for the purposes of obtaining documents needed to answer the defendant’s case. The arbitration agreement between the claimant and the defendant provided for arbitration under ICC Rules, but a version of those rules which pre-dated the introduction of that institution’s emergency arbitrator regime. The judge accordingly held that he did not have to consider for the purposes of section 44(5) whether an emergency arbitrator would have been able to act effectively. However, it is clear from the tone of the judgment that, had relief been available from an emergency arbitrator, that was a factor which the judge would have considered relevant as to whether the requirements of section 44(5) were met and whether injunctive relief was therefore available.
Gerald Metals SA v Timis & others concerned applications for freezing injunctions against an individual and against a trust in support of claims for breach of contract, deceit and procuring breach of contract. The underlying arbitration agreement governing the relationship between the claimant and the trust provided for LCIA arbitration in respect of the substantive dispute. The claimant had applied for the appointment of an emergency arbitrator or expedited formation of a tribunal under the LCIA Rules, which the LCIA refused. The judge considered the relationship between section 44 and the relevant emergency arbitrator provisions, holding that there could be circumstances where the need for relief was so urgent that the power to appoint an emergency arbitrator was insufficient; for example where relief was required without notice. The judge also considered that the test for urgency under section 44(3) and what counts as an emergency for the LCIA Rules is in practice the same, namely whether effective relief could not otherwise be granted within the relevant timescale. Considering section 44 against the background of the LCIA Rules, the judge held that it was only where any emergency or expedited powers available under the relevant arbitral rules are inadequate or where the practical ability to exercise those powers was lacking, that the court may act under section 44. The judge went on to hold that the only inference which could be drawn from the refusal of the LCIA to appoint an emergency arbitrator or expedite the formation of the tribunal was that in light of undertakings given by the trust, such emergency relief was not required. Against that background, the judge held that the court had no power to grant a freezing injunction against the trust.
The powers of national courts and tribunals or emergency arbitrators to grant emergency interim relief are well-used. Deciding whether to use those powers separately or in combination may not be straightforward, not least for the reasons outlined above. What is, however, clear is that where relief is sought from the national courts which might otherwise be available under the governing institutional arbitration rules, a party will have to demonstrate with evidence why relief from the arbitration tribunal or an emergency arbitrator is not sufficient. This may be a question of timing, a question of the reach of any arbitral relief, a question of enforceability or a combination of factors, but the evidence must enable a judge to be satisfied that the requirements of sections 44(3) and (5) of the AA 1996 are met, such that relief from the court can be properly granted.