The ICC International Court of Arbitration (ICC) has recently announced that the ICC Report on Emergency Arbitrator Proceedings (report) will be released on 3 April 2019, as a part of the Paris Arbitration Week 2019. Considering the previous comprehensive analysis of the emergency arbitrator provisions was undertaken in 2014 when a study was conducted on the first ten emergency arbitrator cases (first emergency arbitrator report), an updated, more detailed report would be a welcome move. The report promises to analyse all aspects, including procedural and substantive issues, which may arise in emergency arbitrator proceedings. It will be based on an empirical study of the first 80 applications that have been filed with the ICC since the inception of the emergency arbitrator provisions.
The ICC formally introduced the emergency arbitrator provisions in 2012 at Article 29 in the Rules of Arbitration of the ICC (ICC Rules) and also provided detailed procedures with respect to these provisions in Appendix V attached to the ICC Rules (together, the emergency arbitrator provisions). These provisions allowed parties to obtain urgent relief prior to the constitution of the tribunal in the case of an ICC arbitration. They were also given an “opt-out” status, wherein these provisions become applicable in all cases under arbitration agreements concluded on or after 1 January 2012 unless the parties agree to opt out.
In the run up to the “Global Kick-Off” of this report, this blog seeks to take a look at what we know (and do not know ) about the “‘urgency” of the emergency arbitrator process and highlights a specific issue that the author hopes will be addressed in the report.
The emergency arbitrator provisions serve two primary purposes. Firstly, they fill the temporary gap in requesting relief between filing a request for arbitration and the constitution of the tribunal. Secondly, they offer parties an avenue to claim interim relief where national courts may have their hands tied, either in terms of confidentiality concerns or where they do not afford interim relief at all. Having said that, the emergency arbitrator provisions do not prevent parties from seeking urgent interim/conservatory measures from a competent judicial authority at any time prior to making an emergency arbitrator application and, in appropriate circumstances, even thereafter.
How urgent is “urgent”?
The scope of work of an emergency arbitrator does not include ruling on the merits of the case and is always limited to emergency measures, that is, those “urgent, interim or conservatory measures that cannot await the constitution of an arbitral tribunal”. Thus, one of the main criteria taken into account by an emergency arbitrator while deciding whether relief may be granted is if such relief “cannot wait the constitution of a tribunal” and is “urgently” required by the party seeking it. This condition is specifically mentioned in Article 29(1) of the ICC Rules and is also listed as an admissibility-check item in the ICC Emergency Arbitrator Order Checklist, which is a guidance note issued by the ICC for emergency arbitrators.
Thus, the question of urgency would need to be answered in the affirmative while:
- Looking at the admissibility/jurisdiction of the emergency arbitrator application.
- As a substantive requirement for the relief to be granted pursuant to admission.
Emergency arbitrators have approached these questions in various ways based on the circumstances of the case at hand. There is no strict, clear-cut formula on what standard of proof is required for an emergency relief request to be admitted and subsequently granted.
In a case known to the author, an emergency arbitrator, when deciding whether a matter was actually urgent and could not await the constitution of the tribunal, enquired whether the situation giving rise to the interim measures requested would be different if it were to be examined subsequently by the tribunal. In finding that it would not be different, the emergency arbitrator rejected the request to grant interim relief. In this case, the claimant had requested the emergency arbitrator to order the respondent to deliver certain goods to maintain the flow of goods to the claimant until the constitution of the tribunal. However, the emergency arbitrator held that the claimant had not actually shown that there would be a shortage of the goods during the period until the tribunal was constituted. The emergency arbitrator also considered the period of time that it would take for the final constitution of the tribunal and held that, during this period, the claimant would not suffer any loss or harm which would need to be urgently remedied by the respondent; they therefore did not foresee the need for emergency relief to be granted.
In another recent case, involving a request for urgent relief, the claimant asked the emergency arbitrator to restrain a company, which was a beneficiary of an on-demand guarantee made by a bank, from calling on such a guarantee. However, the emergency arbitrator noted that the claimant had conceded in its submissions that if this guarantee was indeed called upon, the claimant’s shareholders would in fact be able to make additional contributions for the purposes of satisfying a request for reimbursement by the bank. Thus, the emergency arbitrator held that there was no sufficient proof of the urgency of the claimant becoming bankrupt and hence rejected the request. This case illustrates that the question of an “emergency” is not necessarily one that turns on what can change in the short period between submitting the request for arbitration and the constitution of the tribunal, but on whether a party could mitigate circumstances that may actually result in an “emergency”.
Neither of the cases addressed the specific question of the threshold required to meet the standard of urgency for emergency arbitrator applications, and whether this is the same or any higher than required for “regular” interim measure applications submitted to the tribunal. As stated in the first emergency arbitrator report, this question was also raised by an emergency arbitrator while hearing one of the first emergency arbitrator applications filed with the ICC, but no conclusion was reached with respect to this question.
What did the first emergency arbitrator report say?
The first emergency arbitrator report had briefly touched upon this issue. It observed that certain emergency arbitrators had addressed the urgency test while discussing both admissibility and merits, while other emergency arbitrators had restricted the urgency discussion to the merits of the case. At the present time, a clear definition or explanation of this requirement has not been provided and emergency arbitrators have generally analysed this question based on the specific circumstances of each case. While it is true that deciding whether a matter is urgent or not would largely turn on the facts of a particular case, it would be interesting to see whether this approach has changed over the years and if the report addresses this in greater detail, or offers any clarity on the practice generally followed.
Also of note in the first emergency arbitrator report is the narrative of a case where an application was finally dismissed, not on the basis of whether the emergency arbitrator considered the measure to be an urgent one or not, but because there was no sufficient proof of irreparable harm to the claimant. This case, according to the first emergency arbitrator report, demonstrates that urgency does not always necessarily determine the outcome of the application, which could be rejected on other grounds. Thus, despite the fact that the ICC Rules do not explicitly mention any other substantive standards or prerequisites for granting emergency measures, emergency arbitrators have been known to look at other criteria as well.
It is interesting to note that the UNCITRAL Rules and the Hong Kong International Arbitration Centre (HKIAC) Rules unambiguously lay down criteria that may be taken into account while deciding applications to grant interim/emergency measures. However, since emergency arbitrators appointed in ICC arbitrations are not provided with such a list, they often turn to standards applicable to granting interim relief laid down by national arbitration laws, international arbitration practice, and civil procedure laws of the seat of arbitration.
Besides the urgency test, the most common questions that are taken into account by emergency arbitrators in deciding an emergency relief application are whether:
- There is a prima facie case for the measures requested.
- There is a risk of irreparable harm.
- The applicant has demonstrated a reasonable chance of succeeding on the merits of the case.
In answering the last question, the emergency arbitrator would, however, have to tread carefully so as to avoid prematurely ruling on the merits at a stage of the proceedings where the evidentiary record is yet to be complete. Having said that, it is interesting to note that the first emergency arbitrator report observes that emergency arbitrators have generally been flexible in their approach and have not felt strictly bound by criteria commonly relied on in international arbitration practice as referred to above.
The then Secretary General and Deputy Secretary General of the ICC, authors of the first emergency arbitrator report, had observed that the question of the standards governing the granting of emergency measures is one of the most important and controversial issues in relation to interim measures. We will have to wait and see if this continues to be true today and to what extent the upcoming report addresses this. It would indeed be very helpful if the report lays down the threshold for the “urgency” test, describes factors that may be taken into account while evaluating whether the “urgency” criteria has been met, and possibly also sets out a “laundry list” of items that emergency arbitrators have generally considered over the years while granting (or not granting) emergency relief measures. This will not only help emergency arbitrators who may be appointed in the future, but it will also give parties and their counsel a clearer picture in deciding whether to proceed with an emergency arbitrator application or not.
The author would like to thank Smrithi Punnoose for her contribution to this blog.