Emergency arbitration is a feature of the rules of all leading international arbitration institutions, both across Asia and elsewhere. Emergency arbitration is considerably new and likely to remain a permanent part of the international arbitration landscape.
Prior to the modern day emergency arbitration provisions, precursor emergency arbitration rules existed, such as the International Chamber of Commerce (ICC) Pre-Arbitral Referee procedure, as well as optional emergency arbitrator provisions in the rules of the American Arbitration Association. The emergency arbitration rules implemented in the Stockholm Chamber of Commerce (SCC) Rules (2010 Edn) may, however, be said to be the first instance of the modern form of emergency arbitration rules. Since these rules were promulgated, other leading arbitration institutions have followed suit, issuing comparable rules with a variety of refinements.
Filing an emergency arbitration claim
One notable aspect of emergency arbitration is the comparison of fees for filing a request for emergency arbitration as between the various institutions.
In filing a request for emergency arbitration under the Singapore International Arbitration Centre (SIAC) Rules, the cost consists of a filing fee of S$ 5000 and a minimum of S$ 20,000 for the arbitrator’s fee (totalling US$ 18,000). Under the Kuala Lumpur Regional Centre for Arbitration (KLRCA) Rules, the cost is a US$ 2,000 filing fee and an arbitrator’s fee of US$ 10,000. Under the Japan Commercial Arbitration Association (JCAA) Rules, an administration fee of ¥216,000 is charged for filing an application for emergency arbitration, as well as a deposit of ¥100,000 that will go towards the arbitrator’s fee of ¥2,160,000 (total cost US$ 19,900). Under the ICC Rules the cost is US$ 40,000.
The Hong Kong International Arbitration Centre (HKIAC) emergency arbitrator fees are based on the hourly rate of an arbitrator and administrative expenses. When filing a request for emergency arbitration under the HKIAC Administered Arbitration Rules, (HKIAC Rules), the claimant must pay an application deposit that will cover administration expenses and arbitrator’s fees. Under the China International Economic and Trade Arbitration Commission (CIETAC) Rules, emergency arbitrator fees are based on an hourly fee. Under the International Centre for Dispute Resolution (ICDR) Rules, there is no filing fee; parties must, however, pay the emergency arbitrator an hourly fee, plus the arbitrator’s expenses. An article summarising the first eight ICDR emergency arbitration cases indicates that emergency arbitrators spent between 10 and 40 hours in each emergency arbitration. From this estimate of time spent in the ICDR cases, using an hourly rate has the potential for considerable cost savings when compared with the flat fee approach.
Once a request for emergency arbitration is filed, it must be accepted by the relevant arbitration institution. In determining whether to accept a request, the institution conducts a very general prima facie review of it before appointing an emergency arbitrator, in order to ensure that all requirements for filing the request have been satisfied. After this initial review has been conducted and an emergency arbitrator has been appointed, the emergency arbitrator will, at the outset of the proceedings, apply a strict test of whether there is a prima facie case on the merits and whether the claimant has demonstrated both urgency and that, without relief, it would suffer irreparable harm. This is a difficult threshold to meet, in particular in satisfying the issues of urgency and irreparable harm. A report published by the SCC indicates that in five of the nine cases received by the SCC between 2010 and 2013, the arbitrators found that this threshold had not been met. The ICC appears to have had similar experiences, with emergency arbitrators having rendered emergency orders in only four out of the 10 applications for emergency arbitration received.
Frequency of the use of emergency arbitration provisions
In terms of actual use, a number of arbitral institutions have recently published reports on the use of their emergency arbitration provisions. The SIAC has provided an overview of its experiences with the 34 applications received during the period 2010-2014,5 with that number increasing to 42 at the end of 2014. The ICDR reported 28 emergency arbitrations. The SCC provided a summary of each of the nine cases it received between 2010 and 2013, with that number increasing to a total of 13 in 2014. Similarly, the ICC published a report outlining the 10 emergency arbitration cases filed under the emergency arbitrator provisions included in the ICC Rules of Arbitration (2012 Edn). It has additionally been reported that the Kigali International Arbitration Centre received one emergency arbitration within its first two years of operation. These reports vary in detail, with those of the SCC and ICC being the most comprehensive.
One striking difference between the SIAC emergency arbitration provisions and those of other arbitration centres is that the SIAC Rules provide for the retrospective application of its emergency arbitration provisions to agreements entered into before those provisions were implemented. This may explain why the SIAC has received so many applications for emergency arbitration. By contrast, other rules, such as those of the HKIAC and ICC, provide for emergency arbitration if the arbitration agreement relied on was entered into after the emergency arbitration provisions were included in those rules; emergency arbitration has, therefore, not yet been available in many arbitrations.
Enforceability and implementation
Despite the questionable enforceability of emergency arbitration awards under the New York Convention, there exists case law in the US that demonstrates a willingness by the courts to uphold an order by an emergency arbitrator on grounds of equitable relief to support arbitration pending the outcome of a final award. Another US court has upheld an emergency arbitration award where the respondent unsuccessfully argued that the emergency arbitrator acted outside of his authority. Both of these cases illustrate that the decision of an emergency arbitrator is likely to be upheld by the courts; each of these cases involved challenges at the seat. To this author’s knowledge, there are no decisions in which the enforcement of an emergency arbitration award has been sought in a jurisdiction other than the seat.
With regard to arbitration rules providing for emergency arbitration, one noteworthy aspect of the ICC Rules, by contrast with those of various other institutions, is that the former provide that the decision rendered by an arbitral tribunal is termed an ‘order’ and not an ‘award’. Making this distinction avoids the issue of whether what is decided by an emergency arbitrator can be considered as an award. This is particularly prudent because such a determination is not final and binding and, as a result is unlikely to be enforceable under the New York Convention. Similarly, the SCC Rules use the phrase “emergency decision on interim measures”. It is noteworthy to mention that the HKIAC Rules provide that an interim measure may be in the form of an order or an award. In this regard, at least in the US, courts would not be constrained by formalistic distinctions of the label applied to a tribunal’s decision, whether an order or an award. Furthermore, a preliminary order to protect assets is final under the US Federal Arbitration Act.
A number of jurisdictions, such as Hong Kong, have amended their international arbitration legislation to provide explicitly for the enforcement of “any emergency relief granted, whether in or outside Hong Kong, by an emergency arbitrator.” This provision avoids any potential problems of the classification of a decision. Furthermore, by taking this particularly welcome step, Hong Kong has made clear that it will enforce emergency arbitration awards rendered outside of the territory. To similar effect, the definition of ‘arbitral tribunal’ in Singapore’s International Arbitration Act (Cap 143A) has been amended to include an emergency arbitrator. Strangely, however, the Singapore Act has not adopted arts 17H and 17I of the UNCITRAL Model Law (2006 version), which have been adopted by other Model Law jurisdictions, such as Hong Kong (albeit in a slightly modified form). These articles are particularly important, in that they aid the enforceability of emergency arbitration decisions: art 17H provides for enforcement, while art 17I provides grounds for denial of enforcement.
Despite Hong Kong and Singapore including relevant provisions to facilitate the enforcement of emergency arbitration orders, not all jurisdictions are so enforcement friendly – in particular, China, where only courts may grant interim relief. The most recent CIETAC Rules reflect this: they include provisions on interim relief that have been drafted to refer parties arbitrating in Mainland China to a court for conservatory measures. Where parties arbitrate outside of Mainland China, emergency arbitrator rules comparable to those of other leading centres are available for interim relief. In China, mandatory laws prohibit an arbitral tribunal from issuing interim measures, which would also likely apply to emergency arbitration awards. As such, it is doubtful whether an emergency arbitration decision would be enforceable in China. This is despite Hong Kong and Mainland China having entered in 1999 into an agreement regarding the mutual enforcement of awards, as this agreement governs only the enforcement of awards and does not pertain to orders. Furthermore the agreement permits a court in Mainland China to refuse enforcement of an award if enforcement would be contrary to the public interest of Mainland China. This agreement is necessary for the enforcement of Hong Kong awards in Mainland China, as Hong Kong is a Special Administrative Region (SAR) of China, so that the New York Convention does not apply to the enforcement of Hong Kong awards in Mainland China (and vice versa). Hong Kong and Macao (which is also an SAR) entered into a similar agreement in 2014, permitting the mutual enforcement of awards made in each jurisdiction. The agreement of 1999 was reflected in the previous version of the Hong Kong Arbitration Ordinance (Cap 341), while that of 2014 is reflected in amendments made in 2014 to the current Arbitration Ordinance (Cap 609).
From a combination of case law and legislative ingenuity across jurisdictions, it appears that there are tools in place that provide for the enforcement of emergency arbitration awards. This is with the exception of China, which provides a counterbalance in the form of uncertainty as to whether emergency arbitration awards are enforceable under the New York Convention.
The reporting of emergency arbitration decisions is particularly useful in a number of respects. Such reporting provides practitioners with an understanding of how frequently emergency arbitration has been utilised, as well as how often claimants have been successful in obtaining emergency relief. From this author’s experience working in the secretariat of an arbitration institution, many legal counsel are not aware of the high threshold that has been put in place in order for an arbitrator to have jurisdiction over an emergency arbitration. This is likely due in part to the fact that most rules do not outline this high threshold clearly. The HKIAC Rules are an example of institutional rules that do provide parties with a clear picture of the required threshold, which is particularly helpful for parties considering whether to commence an emergency arbitration.
Perhaps the most controversial aspect of emergency arbitration awards is their enforceability. It is most likely the case that emergency arbitration awards fall short of being considered as a final award under the New York Convention. Based on the cases discussed above as well as legislative ingenuity, however, it appears that emergency arbitration awards will be upheld by a court in most instances. The best approach to take in clarifying this uncertainty is to amend legislation, as Hong Kong and Singapore have done, in order to ensure the enforceability of such awards.
The Article was first published in the Asian Dispute Review, July 2015