REUTERS | Mike Segar

How “effective” are emergency arbitrators?

Back in the mid-1990s, when the Departmental Advisory Committee (DAC) was drafting the Arbitration Act 1996, there was no such thing as an emergency arbitrator. The only way of securing urgent interim relief was to go to court. This was justified by the theory that court-ordered interim relief was not incompatible with the agreement to arbitrate (see, for example, Article 9 of the Model Law). As long as the court did not encroach on the merits of the underlying substantive dispute, this division of labour worked tolerably well in practice, and did not (in theory) involve any breach of party autonomy.

The theory

Section 44 of the 1996 Act (inspired by Article 9 of the Model Law) reflects this approach by conferring on the English court a closely defined power to grant interim measures in support of arbitration. The DAC were at pains to stress that section 44 should not be used to usurp the tribunal’s jurisdiction. To this end, the provision builds in various restrictions on the court’s power to act, including:

  • Absent consent from the parties or the tribunal, the court may intervene only in urgent cases, and then only for the purpose of preserving evidence or assets.
  • In any case, the court may act “only if or 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.”

It is pretty clear from their report that the DAC envisaged section 44 as being relevant primarily to urgent applications for freezing injunctions and search orders. In all other cases, they seem to have thought that section 44 could be used only if the parties or the tribunal consented. However, this narrow interpretation of section 44 was rejected in Cetelem S.A v Roust Holdings Limited, in which the Court of Appeal held that, while it was true that in urgent cases the court could only intervene for the purpose of preserving assets or evidence, the term “assets” should be widely construed to include contractual rights. This meant that section 44 was available outside the freezing injunction/search order context and could extend to a wide range of injunctive relief. In Cetelem, this included mandatory injunctive relief. Further, the court was empowered to grant relief even if this would finally dispose of substantive issues. (A narrower approach to a substantially identically drafted provision has been taken in Singapore: in Maldives Airports Co Ltd v GMR Male International Airport Ltd it was held that only those contractual rights that would be enforceable by way of specific performance or a final injunction would fall within the provision.)

The practice

In practice, then, the courts have interpreted section 44 generously as encompassing a wide range of remedies. The trend of authority suggests a growing willingness on the part of the English courts to intervene in support of arbitration. However, things have moved on since the 1996 Act was drafted, and many institutional rules now provide for obtaining interim measures from emergency arbitrators. Does this mean that the goalposts have shifted, and the remit of the English court should now start to shrink? Put another way: is an emergency arbitrator able to act “effectively” for the purposes of section 44(5)? In Seele Middle East FZE v Drake & Scull International SA Co, Ramsey J noted this argument but held, on the facts, that it was not necessary for him to consider whether an emergency arbitrator under the ICC rules “would be able to act effectively”. The issue does not appear to have emerged in any subsequent case, but is bound to do so.

The analysis

Analysis of the nature of emergency arbitrator proceedings suggests that there will be many situations in which an emergency arbitrator is unable to act “effectively”. In such cases, recourse under section 44 will remain both possible and the best option.

For example, as a matter of English law, there is still a big question mark about whether the parties can ever confer power on an arbitrator (emergency or otherwise) to grant a freezing injunction. Even if that power existed, an emergency arbitrator cannot bind third parties. In practical terms, then, “effective” freezing injunctions are not available from emergency arbitrators. Similarly, emergency arbitrators could not make orders requiring the attendance of witnesses.

Many institutional rules require emergency arbitrators to hear both sides before making any decision. Even if empowered to proceed ex parte, they may well be very reluctant to do so. Again, this may mean that an emergency arbitrator cannot act “effectively” in the context of very urgent ex parte applications.

Furthermore, the timescales within which emergency awards or orders must be made may not answer the needs of the case: for example, under the LCIA Rules, the emergency arbitrator’s decision must be made within 14 days. That would be far too long a delay for many urgent applications. In Gigsky APS v Vodafone Roaming Services SARL, Waksman J held that a failure by a claimant under section 44 to disclose the existence of the ICC emergency arbitrator scheme was immaterial, and that there was no tribunal empowered to act effectively, because it would have taken at least 11.5 days to obtain any order from the emergency arbitrator.

Perhaps most fundamentally, there remain significant doubts and lack of clarity around the means of enforcing the decisions of emergency arbitrators. As a matter of English law, such decisions would generally be characterised as orders or provisional awards: neither is enforceable under the New York Convention. (By contrast, court orders under section 44 attract sanctions for contempt of court.) Problems with award enforcement were held to have been irrelevant to the issue of “effectiveness” in Starlight Shipping Co v Tai Ping Insurance Co Ltd (Hubei Branch), but this was not in the context of emergency arbitrators, where the fundamental doubts around the enforceability of the decisions may dictate a different conclusion.

The effectiveness

Overall, then, it looks as though section 44 will continue to be a significant and useful weapon in a claimant’s armoury, even in the era of the emergency arbitrator.

20 Essex Street Karen Maxwell

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