In the recent case of Gerald Metals SA v Timis, the English High Court held that it did not have power to grant urgent relief in support of arbitration in circumstances where timely and effective relief could be obtained through the arbitral process; for example, by appointing an emergency arbitrator.
Parties who choose English seated arbitration must appreciate that the extra flexibility provided by the availability of emergency arbitrators in institutional rules may come at a cost in terms of access to the English courts for injunctive relief. Parties therefore need to ask themselves: is the cost worth it?
No urgent relief where timely and effective relief available through arbitral process
The court in Gerald Metals considered its power to order urgent relief (a freezing injunction) under section 44(3) of the Arbitration Act 1996 (AA 1996) in circumstances where the London Court of International Arbitration (LCIA) Court had already considered, and refused, an application to appoint an emergency arbitrator.
The court held that urgent relief would not be available unless either:
- The matter was so urgent that there would not be sufficient time to appoint an emergency arbitrator or form an expedited tribunal.
- The emergency arbitrator or expedited tribunal could not exercise the necessary powers.
The court considered that, because the application for appointment of an emergency arbitrator had already been considered and dismissed by the LCIA Court, the matter was insufficiently urgent to invoke the court’s power to grant urgent relief.
What is noteworthy about the decision is that the principles, as expressed by the court, were said to be of general application and were not confined to the specific fact pattern before it (that is, after an unsuccessful attempt to go down the emergency arbitrator route).
When will urgent court relief still be available?
The possibility of appointing an emergency arbitrator or forming an expedited tribunal under institutional rules will not preclude the granting of relief from the English courts in all cases.
The court will still have power to grant relief when the matter is so urgent that it cannot wait for an emergency arbitrator, such as an application for a freezing injunction without notice.
Court relief will also be available where the emergency arbitrator or expedited tribunal cannot give effective relief; for example, where the application is for relief against a third party.
It remains to be seen how a court will deal with an application for relief where the court agrees that the matter is urgent but the application to the institution for an emergency arbitrator or expedited tribunal was refused. The question did not arise in Gerald Metals because the court considered that, even if it did have power to grant relief, the matter was not urgent in light of undertakings given by the respondent. But if the court took a different view as to urgency, would the institution’s refusal to act amount to an inability to act effectively for the time being, and prompt the court to intervene? It will be for subsequent cases to determine whether, and the extent to which, an unsuccessful application to the institution for urgent relief rules out “a fall back” application to the court.
Opting out of emergency arbitrator provisions
Given that the availability of an emergency arbitrator will tend to narrow the scope of urgent relief that is available from the English courts, parties who choose English seated arbitration should consider whether they ought to opt out of any applicable emergency arbitrator provisions (for example, under paragraph 9.14 of Article 9B of the LCIA Rules, Article 29(6)(b) of the International Chamber of Commerce (ICC) Rules and Schedule 1 of the Singapore International Arbitration Centre (SIAC) Rules).
Some factors that may weigh in favour of opting out of any applicable emergency arbitrator provisions are:
- A court order may be easier to enforce than a decision of an emergency arbitrator.
- It may be simpler from a case management perspective to have a single forum hearing all applications for urgent relief, rather than having some applications heard by the court (for example, without notice applications, relief against third parties) and other applications heard by an emergency arbitrator.
- An emergency arbitrator is unlikely to order urgent relief more readily or on more expansive terms than the English courts.
Parties to arbitration in England should give careful thought to whether the advantages of any applicable emergency arbitrator regime (for example, flexibility, privacy) outweigh the cost, in terms of reduced access to the court. However, in commercial reality it is unlikely that many parties will enter into contracts with hypothetical future recourse to an emergency arbitrator in mind, and in practice the interplay between the two options is most likely to arise only when it becomes necessary to apply for relief.
Other options for increasing chances of obtaining urgent court relief
A more general point which arises from Gerald Metals is that the English court will apply a fairly rigorous test when deciding whether applications brought under section 44(3) of the AA 1996 truly are “urgent”.
Parties choosing English seated arbitration who anticipate that certain matters may be the subject of an application for urgent court relief (for example, to maintain confidentiality or to preserve certain assets) may wish to consider specifying in their arbitration agreement that such matters amount to a “case of urgency” within the meaning of section 44(3) of the AA 1996.
Although such a clause could not override the urgency requirement in section 44(3) by transforming a genuinely non-urgent matter into an urgent one, the parties’ recognition that the matter is significant and time-sensitive may go some way to persuading the court that the urgency requirement is satisfied on the facts.
An alternative option that parties may wish to consider is to agree in the arbitration agreement that certain matters may be referred to the court under section 44(4) of the AA 1996. While this would avoid the urgency requirement in section 44(3), it would potentially allow non-urgent matters to be referred to the court (even when an arbitral tribunal has been constituted and is better placed to address the application). Care would therefore need to be taken to specify both the matters that may be referred to the court, and the stage in the arbitration process (for example, before the formation of the tribunal) during which the referral may be made.