The Singapore International Arbitration Centre (the SIAC) introduced emergency arbitrator provisions in its arbitration rules in July 2010 and has had 34 applications filed before it to date where parties have asked for an emergency arbitrator to be appointed. The SIAC further reports that 9 out of the 34 emergency arbitrator applications have involved Indian parties (5 where the Indian party was the respondent and 4 where Indian parties were both the claimant and the respondent).
An emergency arbitrator is typically approached by parties where the Tribunal has not been constituted and a party may require urgent interim relief including, amongst others, orders for preservation of properties, freezing accounts, orders against the dissipation of assets etc. Seeking relief from an emergency arbitrator is increasingly been chosen as an alternative to seeking injunctive relief from the courts (in support of the arbitration). According to statistics released by the SIAC, the average time taken by an emergency arbitrator to pass an award after having heard the parties ranges from 8-10 days, with the shortest period being 2 days to pass an award.
In an interesting case before the Bombay High Court where the parties had previously referred the dispute to an emergency arbitrator under the SIAC’s Rules, HSBC PI Holdings (Mauritius) Limited v. Avitel Post Studioz Limited and others¹ the High Court granted interim relief under Section 9 of the Arbitration and Conciliation Act 1996 (the Indian Arbitration Act). This case concerned an arbitration agreement entered into pre-BALCO and therefore, the parties had preserved the right to seek interim relief before the Indian Courts even though the arbitration was seated outside India. One of the parties had obtained interim relief from the emergency arbitrator in Singapore restraining the other party from withdrawing any amounts retained in a bank account pending the outcome of the arbitration. The Bombay High Court, further to a Section 9 application under the Indian Arbitration Act, passed reliefs in terms similar to those in the emergency arbitrator award.
In both pre-BALCO as well as post-BALCO situations, the enforcement of an emergency arbitrator award or any other foreign award providing for interim relief in the Indian Courts is highly unlikely as only enforcement of final awards appears to be recognized under Part II of the Indian Arbitration Act (Enforcement of Foreign Awards). The judge specifically noted in the HSBC case that as there was a separate Section 9 application filed before it, the successful party has not bypassed any conditions of enforceability under the Indian Arbitration Act i.e. the successful party was not trying to directly enforce the emergency arbitrator award but was seeking interim relief from the courts under the mechanism set out by it in its contract.
Therefore, although the court in the HSBC case did not directly enforce the emergency arbitrator award, this case could be of strategic importance – especially in pre-BALCO contracts where the rights under Section 9 of the Indian Arbitration Act have been preserved. This case could provide an avenue for parties to obtain interim relief before the Indian Courts faster than they normally would, although in foreign-seated arbitrations such a route would only be available based on arbitration agreements that were pre-BALCO. While parties to arbitration agreements are able to obtain ex parte orders for interim relief in section 9 applications with some degree of speed, obtaining final orders on interim relief would usually be after hearing and considering both parties’ submissions which could take some time. A way to speed up the process could be for parties to conduct a faster process before the emergency arbitrator and seek interim relief in the same terms as those granted by the arbitrator like HSBC did.
We would have to watch this space to see if the Bombay High Court’s decision is used as an example for parties to experiment with and use other efficacious and alternative routes (if any) for parties to enforce emergency arbitrator awards in India.
For further information, please contact Nick Peacock, Partner, Kritika Venugopal, Associate, or your usual Herbert Smith Freehills contact.