The Corporate & Commercial Law Society Blog, HNLU

Tag: emergency arbitration

  • Bridging Global Standards: India’s Approach To Enforcing Emergency Arbitrator Orders

    Bridging Global Standards: India’s Approach To Enforcing Emergency Arbitrator Orders

    Ishita kashyap and Vinayak RajaK, Fourth and Fifth Year students, NATIONAL LAW UNIVERSITY DELHI, NEW Delhi

    INTRODUCTION

    Emergency arbitration (‘EA’) is an evolving concept in the world of arbitration. It seeks to provide a speedy mechanism for disposal of interim relief applications made by the parties in arbitration before the tribunal is formed. It has been recognised by many international institutional rules such as Singapore International Arbitration Centre (‘SIAC’) and International Commercial Arbitration. There was an ambiguity on the legal question of enforceability of the ‘award’ given by such a method of arbitration. The Supreme Court of India, in the judgment of Amazon v Future, resolved this ambiguity and held the enforceability of such emergency arbitral ‘award’ under Section 17(1) of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’) valid in the cases of Indian-seated arbitration. This article provides the backdrop of the judgment and the recent Draft amendment of 2024 of the Arbitration and Conciliation Act,1996 (‘draft amendments’), and further analyses its legal implications on the arbitration landscape of India.

    JUDICIAL PRONOUNCEMENTS

    The legal standing of emergency orders in India was uncertain before the landmark judgment in the Amazon-Future case. The Delhi High Court, in Raffles Design v Educomp, determined that an emergency arbitrator’s order is unenforceable under Section 17 of the Act in foreign-seated arbitration, hence necessitating recourse under Section 9 of the Act for such arbitrations. Therefore, this case did not weaken emergency arbitration awards but rather focused only on foreign-seated arbitrations.

    Subsequently, the Delhi High Court in Ashwani Minda v. U-Shin denied the relief to the parties under Section 9, reasoning that the parties had excluded Part I of the Act, and the emergency arbitrator had already rejected the request, thereby the Doctrine of Election coming into play to bar the parties from switching forums. The Bombay High Court in Plus Holdings v. Xeitgeist granted interim relief to the parties under Section 9 despite an EA being appointed under SIAC rules because it explicitly allowed for court intervention.
    While neither case turned solely on Section 9(3), the two judgments showed the divergent judicial attitudes for court intervention when emergency arbitration has already been invoked. This judicial ambiguity around emergency arbitration enforcement in India was ultimately clarified in the Amazon-Future decision.

    AMAZON V. FUTURE RETAIL

    The Amazon–Future dispute originated when Amazon NV Investment Holdings LLC initiated arbitration proceedings against Future Retail Ltd. before the SIAC. In the course of these proceedings, Future moved to transfer its retail assets to a third party, which Amazon claimed was violative of pre-existing contractual arrangements. Amazon obtained interim relief from the emergency arbitrator, prohibiting Future from proceeding with this transaction. It sought to enforce this award in India under Section 17(2) of the 1996 Act.

    On 6th August 2021, the Supreme Court held that the Arbitration Act does not preclude parties from adopting procedural rules that allow an emergency arbitrator to grant interim relief. Since SIAC rules permit this mechanism, the EA award should be held valid and enforceable. The Court emphasised that party autonomy, which is the bedrock principle of arbitration, allows for such institutional rules, and as long as parties have agreed to them, the emergency arbitration must be respected.

    LEGAL ANALYSIS OF THE RULING

    The court answered the legal question of whether an award given by emergency arbitration can be considered as an order under section 17(1) of the Arbitration Act to be enforceable. The court read sections 2(1)(a), (c) and (d) along with sections 2(6) and 2(8) and recognised the party’s authority to determine issues that arise between the parties in any way they prefer. This autonomy was extended under section 2(8) to the selection of institutional rules which would govern the process of arbitration. Similarly, section 19(2) allowed for agreement on procedure to be followed by an arbitral tribunal in future proceedings.

    This reading emphasized the importance of party autonomy in dealing with substantive as well as procedural arrangements of arbitration. Further, section 21 proves that the arbitral proceedings are commenced on a date on which the request for that dispute to be referred to arbitration is received by the respondent. While this provision is expressed as limited by the parties’ consent to any other date, it provides a deemed date for commencement of proceedings before the actual arbitral tribunal is formed.

    The court used the ratio in Bharat Aluminium Co vs Kaiser Aluminium Technical Services and M/S. Centrotrade Minerals and Metals  to reaffirm the significance of party autonomy being the brooding and guiding principle  in arbitration. In this light, when section 2(1)(d) is read, it is to be read in subjection to the phrase “unless context otherwise requires”. The context in cases is provided by institutional rules agreed upon by the parties, which in this case were given by SIAC, which does provide for emergency arbitration.

    THE DRAFT ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2024

    This draft amendment fills the legal gap which was created by Amazon v. Future. While it judicially recognized orders of emergency arbitrators seated in India, there was no express statutory basis for the same. By bringing “emergency arbitrator” in the definitional clause and creating Section 9A, Parliament would recognize the appointment and functioning of emergency arbitrators in domestic arbitration, bringing the existing implied power under institutional rules now under the statute’s backing.

    The draft explicitly provides that orders of emergency arbitrators are enforceable as if they are tribunal orders under Section 17(2). This fades away the ambiguity about whether courts would treat EA orders as interim measures or final awards, which was an interpretive tension post-Amazon. Now, parties can rely on EA relief being directly enforceable without seeking parallel court injunctions.

    Section 9A(4) and the new Section 17(1)(da) ensure that once the full tribunal is constituted, it can confirm, modify, or vacate the EA’s order. This balances the urgent nature of EA relief with party rights to a full hearing. It mirrors Singapore and Hong Kong’s approach and ensures that provisional relief does not unjustly prejudice parties, once more facts emerge.

    However, a major limitation that persists is that the draft does not address foreign-seated emergency arbitration. There is no mechanism to enforce EA orders made abroad, since Part II, which governs foreign awards, does not extend to interim relief. Part II applies only to final awards under the New York Convention, and therefore, the cross-border parties would still need to apply for interim measures before Indian courts under Section 9 if they need urgent relief within India’s territory. This leaves India behind Singapore and Hong Kong, which allow some cross-border EA enforcement.

    IMPLICATIONS FOR ARBITRATION LAW IN INDIA

    This is a boon for foreign investors and multinational parties who prefer arbitration but need urgent interim relief early on. While high compliance rates with EA awards have been reported globally, having enforceability on record is critical for those situations where compliance fails. It also advances a pro-arbitration policy that the Law Commission and experts have long advocated. The Supreme Court in Amazon v Future used EA orders as a tool “in aid of decongesting the civil courts and affording expeditious interim relief to the parties”.

    The court’s approach may prompt parties to reconsider forum choices. Because only Indian-seated EAs benefit from this enforceability (by virtue of Part I applying), parties to international contracts may increasingly prefer India as the seat when quick interim relief is desired. However, the court’s reasoning is strictly limited to Indian-seated arbitrations. Notably, the Court held that an EA award with a foreign seat is not a “decree” or final award and therefore not enforceable in India under the New York Convention or Section 17(2). Thus, the Amazon v. Future case is raising the question of the enforcement of EA orders with a foreign seat in India—a sector that could potentially require legislative intervention if it is found to be problematic.

    CONCLUSION

    The Amazon v. Future Retail Supreme Court ruling is a crucial step towards harmonising India’s emergency arbitration regime with the values enshrined in United Nations Commission On International Trade Law Model Law (‘Model Law’), while at the same time uncovering subtle tensions. Model Law Articles 7, 9, and 17H converge with each other in consolidating party autonomy, coexistence of interim measures issued by courts and arbitration agreements, and enforcement of interim relief granted by arbitral tribunals. The Court’s judgment is consistent with this principle by treating orders issued under EA as binding interim measures enforceable under Section 17(2) of the Arbitration and Conciliation Act, thereby solidifying India’s pro-arbitration policy. A subtle divergence remains, as unlike the Model Law and SIAC Rules, which equate EA orders to awards, the Supreme Court treats them as provisional and enforceable, subject to modification by the arbitral tribunal.

    This interpretation works reasonably well with Model Law Article 17H, but it causes complications under the New York Convention, which generally authorizes cross-border enforcement of awards. In limiting enforceability to EAs seated in India, the ruling excludes foreign-seated EA orders from the Convention’s ambit, thus exposing a residual lacuna to be refined legislatively in the future.

  • Future Retail v. Amazon: Time to Strike Out Emergency Arbitration in India

    Future Retail v. Amazon: Time to Strike Out Emergency Arbitration in India

    By Swikruti Nayak and Vaishnavi Bansal, third-years students at NLU, Jodhpur

    Introduction

    The single bench decision of Future Retail Ltd. v. Amazon.com Investment LLC passed by the Delhi High Court on 21st December, 2020 has resulted in a lot of turbulence and furore in the legal community for the future of emergency arbitration (“EA”) in India. This judgement sets the tone for increasing the ease of doing business in India and making it more arbitration friendly. The court  upheld the validity of an emergency arbitrator’s order of interim relief in the favour of Amazon. However, this matter is yet to be resolved. On appeal, a division bench of the Delhi High Court passed an interim order against the validity of EA which was upheld in the said judgement. Subsequently, Amazon filed a special leave petition to the Supreme Court, contending that the Delhi High Court neither had the jurisdiction to entertain Future Group’s appeal against Amazon nor can it pass any interim order that acts against the SIAC’s emergency arbitrator order, as the same is valid under Indian law.

    The concept of Emergency Arbitration

    EA, as a process, is based on the importance of obtaining interim relief for the parties which is key to protect and preserve the relationship of parties involved in a dispute, before a final relief is secured. The concept of emergency arbitration finds its origins in the Pre-arbitral Referee Rules of the International Chamber of Commerce (“ICC”) in 1990, however, it was rarely used by the parties.[i] In the Asia-Pacific region, the Singapore International Arbitration Centre (“SIAC”) was the first to introduce provisions regarding EA in 2010, to obtain emergency interim relief before an Arbitral Tribunal is constituted. Essentially, EA enables parties to obtain urgent relief and not spend a considerable amount of time, awaiting the appointment of an arbitral tribunal. This will also enable parties to exercise confidentiality even while seeking interim relief, which is not possible in court system.

    The concept of EA is based on two legal maxims, fumusboniiuris and periculum in mora, which mean that there is a reasonable possibility that the requesting party will succeed on merits and if the measure is not granted immediately, the loss cannot be compensated through damages. The specific details of the procedure may vary in different jurisdictions, but the two common procedures for obtaining a relief in emergency arbitration is, filing of the proof of service of the application to an emergency arbitrator upon opposite parties and payment of the fee decided according to the centre, where the arbitration will be carried out.

    Future Retail v. Amazon: A Shift in the Judicial Trend

    The dispute arose between parties in the present case, Future Retail and Amazon, because of non-compliance with the provision in the Shareholders Agreement, that prohibited Future Retail from selling its assets to some enlisted entities. In the agreement, the parties had chosen the Arbitration Rules of SIAC as the law of the conduct of arbitration making it to be the curial law for their arbitration agreement. Since SIAC rules provide for the appointment of an emergency arbitrator, the parties chose to go for EA. The issue for consideration before the court was whether the emergency arbitrator provision under the SIAC Rules is contrary to the mandatory provisions of the Arbitration and Conciliation Act 1996 (“the Act”), thereby examining the validity of emergency arbitration conducted between the parties.

    The court in its discussion relied heavily on the Supreme Court case NTPC v. Singer which deals with the situation of parties choosing a different curial law and proper law. It came to the conclusion that SIAC rules which is the curial law of arbitration agreement will apply to the extent they are not contrary to the public policy of India or against the mandatory requirement of the Act. Thereafter, the court used the bedrock of the arbitration law i.e. party autonomy to hold that since the rules are chosen by express consent of the parties, the court would not unnecessarily interfere with the award. Rule 30 of the SIAC Rules provide that the parties are also entitled to plead before the judicial authority for the interim relief, thus it is also not taking away the substantive right of the parties to reach the courts for interim relief. Moreover, there is nothing in the Act to invalidate the whole process of EA, merely because it is not strictly falling under the definition of section 2(1)(d). The court also clarified the applicability of section 9 along with section 27, 37(1)(a), 37(2) of the Act in the judgment. It said that applicability of these sections may be derogated with the agreement in International Commercial Arbitration and there is no inconsistency between SIAC Rules and Part 1 of the Act. The court defended it relying on the phrase “even if the place of arbitration is outside India” in proviso section 2(2), making it obvious that the exception is also valid for international commercial arbitrations. Hence, the court upheld the validity of the emergency arbitrator’s order of interim relief.

    However, this was not the first instance where the courts were faced with the question of enforceability of the EA in India. In 2016, Raffles Design International India Pvt. Ltd. &Anr. v. Educomp Professional Education Ltd. and Ors.was decided by the Delhi HC wherein the court upheld the maintainability of application for interim measures under section 9 after an emergency award was obtained from a foreign seated arbitral tribunal. The court held that section 9 cannot be used to enforce emergency awards but can be used by the parties to file interim relief. This judgment, however, fails to take note of the Bombay HC judgment of HSBC PI Holdings (Mauritius) Ltd. v. Avitel Post Studioz Ltd. &Ors. which was the first case to recognise the concept of EA in India. In this case, the emergency arbitrator in SIAC had passed two interim awards and the court had also granted interim relief to the party. The judgement of the HC was affirmed by the SC in 2020.

    Ashwani Minda and Anr v. U-Shin Ltd. and Anr, a Delhi HC judgement of 2019, laid the foundation to enable the bold stance of the court in Future Retail. The court recognised the concept of EA, however, dismissed the application for interim relief as the emergency arbitrator had declined the same.  The Japan Commercial Arbitration Association (“JCAA”) Rules governing the conduct of the arbitration, which provides for emergency arbitration to obtain relief before an arbitral tribunal is constituted. The arbitration agreement did not contain a provision for obtaining relief from domestic courts. The enforceability of emergency awards was not clearly discussed, however, the court held that once EA is invoked, interim relief cannot be sought from domestic courts. According to the court, the emergency arbitrator passed a very detailed and reasoned order and hence it did not interfere with it.

    Hurdles Lying Ahead

    It is quite evident that the judicial trend in India is gradually changing from circumventing discussions on the status of EA to discussing relevant issues related to the validity of EA. However, the concept of EA is far more complex, involving separate and specific procedures that need to be answered before India adopts an authoritative status of EA. As under section 2(1)(d) of the Act, an emergency arbitrator has not been recognised as an ‘arbitral tribunal’- his position and statutory benefits are not clear. Concurrent jurisdiction also presents a major issue since for obtaining interim relief, parties will be free to approach both the courts as well as the emergency arbitrator. The status of EA proceedings needs to be clarified, for instance, whether under section 8 which provides a judicial authority with the power to refer the parties to arbitration in the presence of an arbitration agreement, is applicable to an EA agreement or not. The scope of interference by court under EA as in full arbitral proceedings under section 34 also needs to be laid down. Moreover, an arbitral tribunal may continue proceedings ex-parte under section 25(3) of the Act and grant an award on the basis of the evidence before it, however, the same is not clear in case of an emergency arbitrator. Emergency arbitral awards apart from above are also susceptible to various enforcement issues in different jurisdictions as it is  more of a voluntary practice between parties. Moreover, it is mostly agreed upon, because of the consequences of refusing an EA order on the full arbitral tribunal process. There is no mention of the procedures like EA in Model law on which India’s arbitration law is based, which further strikes on its enforceability and acceptance in India.

    Conclusion

    The concept of EA holds a promising future worldwide as, besides Singapore, countries such as Hong Kong, Netherlands and Bolivia have amended their rules to include provisions regarding an emergency arbitrator. The Stockholm Chamber of Commerce (SCC), the London Court of International Arbitration(LCIA), the International Centre for Dispute Resolution of the American Arbitration Association(ICDR/AAA) and the International Chamber of Commerce(ICC) have also inserted provisions specifically dealing with emergency arbitration. In the USA, there is no specific provision regarding an emergency arbitrator, but national courts have generally tended to favour their validity.

    The decision of the Delhi HC in Future Retail v. Amazon revived a much-needed discussion on the status of EA in India. In the light of the principle of party autonomy, parties are free to choose the curial law of arbitration which can have specific provisions for approaching an emergency arbitrator to obtain interim relief. The same does not restrict a party to approach the domestic courts under section 9 of the Act. There is nothing contained in the Act which invalidates the whole process of EA and makes the emergency arbitrator’s order unenforceable. Although, the decision paves the way for facilitating a more business-friendly economy in India and reaffirms the true essence of arbitration i.e. party autonomy, it left the door wide open for interpreting what exact position an emergency arbitrator holds and the technicalities of EA.

    [i] Suraj Sajnani, ‘Emergency Arbitration in Asia: Threshold for Grant and Enforcement of Emergency Relief’ in Arbitration: The International Journal of Arbitration, Mediation and Dispute Management (Brekoulakis ed., 2020).