Evolution of the law on the issue of emergency arbitration in India

Emergency arbitrators (EA) are recognized as an alternative of courts for providing interim relief before the constitution of the arbitral tribunal, for the purpose of adjudication of the merits of a particular claim. Most progressive arbitration jurisdictions like Singapore and other Scandinavian countries have a statutory provision for recognition of such arbitrators. However, in India, there exists no legal framework for recognizing the credibility of such a concept. Thereby, turning it into an Ad hoc process and creating a legal vacuum.

In India, the EAs consider the claims made by the party seeking interim relief and provide their findings in the nature of an emergency arbitral award. Now, there is no final determination of claims, and it simply aims to fulfil the objective identified under Section 17 of the Indian Arbitration & Conciliation Act, 1996 (“act”), thereby making it liable to be appealed under Section 37 of the act.

Therefore, the nature of such relief is temporary and not final, thereby making it an order which can be challenged. However, the nomenclature causes confusion since the relief is provided in the nature of an order yet is called an award. 

The 246th Law Commission of India Report recommended the legislature to include EA within the scope of its definition of “arbitrator” within Section 2 (1)(d) of the act, however, the same was rejected. 

Now, in the absence of legal provisions, we will see how Emergency arbitration as a concept has evolved in India over the years, owing to certain cases which have come before the Indian Courts. 

In Raffles Design vs. Educomp (2016)[1], the Seat of Arbitration (SA) was Singapore and the Substantive Law and lex arbitri was the Singapore International Arbitration Centre (SIAC Rules). In this case, Raffles had received an interim award in his favour by the EA in Singapore. He then wanted the same relief from the Delhi High Court (HC) under Section 9 of the act. The court upheld that under S.17 of the act, the award of a foreign seated EA would not be enforceable in India since, as it is a Part I provision.

It was further held that we do not have any statutory provisions in our domestic law to recognize the award of the EA. It stated that other than the court, no other authority can give such interim relief before constitution of tribunal. Therefore, under Section 9 of the act, the court can provide relief provided all the requirements of the section are fulfilled. Moreover, such a decision would be independent of the Singapore EA’s findings. This decision was criticized since the court failed to realize that EA is becoming the reality of the country and recognition of the same was necessary. 

In Ashwani Minda vs. U-Shin (2020)[2], the dispute settlement clause entailed that the arbitration was to be held in Japan and in accordance with Japanese Rules. Therefore, even though one of the parties is Indian, the SA should be Japan as more real connection exists here. Now, Ashwani Minda had invoked the EA under Japanese Rules, however, the claim was rejected. Then he tried getting an interim relief from Delhi HC under Section 9 of the act, while using the Raffles case as precedent. While using the BALCO[3] and Reliance[4] principles, the court held that Raffles principles would not apply here as the two cases were extremely different. It clarified that firstly, both the parties were Indian in the Raffles case and their dispute resolution mechanism had no explicit or implicit exclusion of applicability of Section 9.

While, in the present case, the SA, the applicable law, the language and the dispute settlement clause show an implicit exclusion of the same. It shows that the parties did not intend to invoke Section 9. Secondly, the court stated that the SIAC rules used in the previous case permitted parties to approach court for interim relief, while the Japanese Rules state otherwise. Further, in Raffles the party achieved the EA’s interim award while, here Ashwani’s claim was rejected. Additionally, the court said that giving reconsideration to the claim even after getting rejected from the Japanese EA would be like giving the party a second bite of the cherry and would go against doctrines of res judicata and election.

Although, the court did take a step further from Raffles by providing some clarity regarding the applicability and invokability of Section 9. However, the language is such that this point contradicts the point regarding the rejection from EA of Japan, when read together, creating immense confusion. 

Further, in Amazon vs. Future (2021)[5], the SA was India, and the parties were Indian, but the SIAC Rules applied. Here, the court stated that if the parties have chosen a foreign institution to provide emergency arbitral relief and if the same is granted, then the Indian Courts must enforce the same. The court opined that the legislature’s rejection of the 246th LC Report’s recommendations must not affect India’s stance as an arbitration friendly jurisdiction. Therefore, to safeguard the rights and party autonomy, it claimed that through proper interpretation, the courts can recognize and enforce EA’s awards. It exercised judicial activism to clarify that since SIAC rules, EA’s powers are similar to the arbitrator’s, therefore, the same can be brought within the scope of Section 17.  

This meant that the interim relief provided by the EA would be equal to the award granted by an arbitral tribunal. It further held that this would promote arbitration as well as public policy as this would reduce the burden of the courts under Section 9 for interim relief. Moreover, it stated that firstly agreeing to institutional rules which provide for EA, participating in the EA proceedings and then saying that these are non-binding goes against principles of estoppel. Therefore, courts recognized EAs as a substitute to arbitrators under Section 17 and the same can be appealed under Section 37 of the act. It clarified that the application of this is only if the SA is India. This was starkly different from the stance taken by Raffles

However, EAs are supposed to substitute courts and not arbitrators. Therefore, this negates the purpose of having EAs as an alternative to courts. Moreover, arbitral tribunal is constituted based on the contract of the parties, therefore this cannot be the same as the EA. 

Yet, here, the court recognized and enforced the EA’s decision which is an important precedent. Further, the principles laid down in all the aforementioned cases are valid and applicable. The first two cases, although different, deal with Part I, exclusion under Section 9 and its application wrt. cases with SA outside India, while the latter deals with SA in India. 

Therefore, it is seen that these are not a permanent fix, having properly laid statutory provisions for emergency arbitration is extremely necessary seeing the ground reality of the situation. 

[1] Raffles Design International India Private Limited & Anr. vs. Educomp Professional Education Limited & Ors., (2016) (6) ARBLR 426.

[2] Ashwani Minda vs. U-Shin Ltd., (2020) (4) ArbLR256

  (2020) (4) ArbLR256.

[3] Bharat Aluminium Co vs. Kaiser Aluminium Technical, (2012) Civil Appeal No. 7019 OF 2005.

[4] Union Of India vs. Reliance Industries Limited, (2014) 7 SCC 603.

[5] Amazon.Com NV Investment Holdings LLC vs. Future Coupons Private Limited & Ors., (2021) CIVIL APPEAL NOs. 4492-4493 OF 2021. 

Aishwarya Says:

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