The recent legal feud between amazon.com Investment Holding LLC and Reliance Group Future Retail Ltd. for a claim of USD 3.38 billion worth retail asset sale has hit the global headlines and has also perturbed the legal professionals as it raises pertinent legal questions pertaining to the nuances of the concept of Emergency Arbitration.
Let us understand what it is, and what it means in the context of Indian Legal System.
Emergency Arbitration – What Is It?
Gautam Khaitan explains, “Emergency Arbitration is an action which allows the disputing party to request urgent pro tem or conservatory measures before an arbitration tribunal has been constituted”. In other words, this process allows the parties to secure interest as per the arbitration agreement prior to the formation of a formal arbitral tribunal and subsequent initiation of the arbitration process.
Such an arrangement has to be mutually agreed by the contracting parties at the first instance. The proceedings can be conducted domestically or internationally, adjudicated by a set of Arbitrators that contracting parties’ consent and agree upon.
Emergency Arbitration- Gautam Khaitan decodes its Validity, Legality
Though the Arbitration and Conciliation Act, 1996 and the subsequent 2019 Amendment does not find mention of the concept of emergency arbitration and does not find mention, however, an in-depth study of India’s approach towards an Emergency Arbitration order shows that it leans towards its ancillary enforceability.
Thus, the prominent arbitration institutions in India have adopted the internationally accepted provisions and regulations which are being utilized by similar leading global arbitration institutions.
History and Prominent Cases in India
The Law Commission of India vide its 246th Report dated 05.08.2014 on ‘Amendment to the Arbitration and Conciliation Act, 1996’ proposed to amend Section 2(1)(d) to include the concept of Emergency Arbitrator. This proposed amendment was to ensure that institutional rules such as the SIAC Arbitration Rules which provide for an emergency arbitrator are given statutory recognition in India.
Gautam Khaitan refers to these prominent cases:
- HSBC PI Holdings (Mauritius) Limited Avitel Post Studioz Limited 2014 SCC OnLine Bom 102
While the Emergency Arbitration was conducted in Singapore as per SIAC’s Rules, however, Bombay High Court upheld the position of the Emergency Arbitrator to grant interim relief.
- Raffles Design International India Pvt. Ltd. v. Educomp Professional Education 2016 SCC OnLine Del 5521:
This dispute regarding Share Purchase Agreement was also conducted in Singapore. Later, when a petition was filed before the Delhi High Court under Section 9, the Emergency Arbitration was upheld.
Notable Initiatives Taken by The Indian Legal System
Despite the omission of the term ‘Emergency Arbitration’ from the legal framework as of now, it is seen that the country’s law generally prefers the approach of arbitration. Gautam Khaitan remarks, “India is clearly trying to fill the lacunae in the current Indian Arbitration and Conciliation Act and Emergency Arbitration is just an amendment away from being a legally recognized mechanism.”
Some notable institutions that have been set up for the purpose are:
Delhi International Arbitration Centre
The Delhi International Arbitration Centre (DAC4), affiliated with the
Delhi High Court includes Emergency Arbitration in its Arbitration Rules in Part III. Moreover, Section 18A of part III also enlists the regulations for the procedure and time frame of the appointment of an Emergency Arbitrator, along with the responsibilities and powers they hold.
International Chambers of Commerce
International Chambers of Commerce (ICC) India holds the Court of Arbitration under their banner. Article 29 of the ‘Arbitration and ADR Rules’ read with Appendix V enumerates the provisions and regulations of Emergency Arbitration and responsibilities of Emergency Arbitrator.
International Commercial Arbitration
International Commercial Arbitration under Section 33 read with Section 36(3) (with effect from 01.01.2014) of International Commercial Arbitration (ICA), deals with rules regarding Emergency Arbitrator and Emergency Arbitrator.
Madras High Court Arbitration Centre
Madras High Court Arbitration Centre (MHCAC) enumerates its position and regulations on Emergency Arbitration and the appointment of Emergency Arbitrator in its Rules of 2014 in Part IV under Section 20 read with Schedule A and Schedule D.
Mumbai Centre for International Arbitration
As per Rules 2016, under their Section 3 with effect from 15.06.2016, Mumbai Centre for International Arbitration enlists their provisions of arranging Emergency Arbitration and Emergency Arbitrator for the purpose.
Exploring the scope of Emergency Arbitration
Going by precedents that are being set, Gautam Khaitan observes, “It is natural that emergency conditions will arise and parties who are in need of urgent relief will approach the court for Emergency Arbitration Proceedings.”
With time it is anticipated that later amendments will include and enumerate Emergency Arbitration and its provisions into the Indian law.
Gautam Khaitan is one of the leading experts in corporate law and has over three decades of experience of working in Power, Oil, Telecommunication, Mining, and Infrastructure Sectors. He is currently a managing partner in Delhi-based global law firm, OP Khaitan & Co.