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Emergency awards: The way forward

The first point to appreciate is that, though the dispute is governed by the SIAC Rules, the seat or location of the arbitration is Delhi. In other words, the emergency award was passed by Mr V.K. Rajah SC (a former Attorney General and Judge of Singapore) in domestic proceedings, governed by Part I of the Arbitration and Conciliation Act 1996.

On 6 August 2021, the Supreme Court pronounced an important judgment holding that an award delivered by an emergency arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre (SIAC) was an order made under Section 17(1) of the Indian Arbitration and Conciliation Act, 1996.

This set off a flurry of articles and reports which were generally commendatory, praising the outcome as a consistent with the pro-arbitration approach of the Indian Supreme Court. Adding to the importance was the fact that this judgment was pronounced in a dispute between Amazon and the Future group, a dispute which, given the parties involved, attracts tremendous, sometimes prurient, interest.

I start with a disclosure. Having appeared for Amazon throughout the dispute, it is obviously a moment of triumph when the Supreme Court decides in your favour. That the judgment was authored by R.F.Nariman J., gave it added lustre. The purpose of the article is not to add to the already extensive literature of national and international commentators on the judgment, but to consider its practical implications and the way forward.

The first point to appreciate is that, though the dispute is governed by the SIAC Rules, the seat or location of the arbitration is Delhi. In other words, the emergency award was passed by Mr. VK Rajah SC (a former Attorney General and Judge of Singapore) in domestic proceedings, governed by Part I of the Arbitration and Conciliation Act 1996. What the Supreme Court has now held, on the basis of party autonomy, is that the emergency award passed by him is an interim order under Section 17 of the Act, which means that it can be enforced “as if it were an order of the Court” under Section 17(2).

This is good news so far as India-seated arbitrations are concerned. Such a decision promotes not only foreign institutions who choose to have arbitrations seated in India (like the Singapore International Arbitration Centre, International Chamber of Commerce and London Court of International Arbitration) but more importantly, it gives weight to the institutional rules of Indian institutions such as the Delhi International Arbitration Centre, Madras High Court Arbitration Centre, Nani Palkhivala Arbitration Centre and the Mumbai International Arbitration Centre, all of which provide for the facility of emergency arbitrators.

The rationale for providing this facility has also been indicated in the Supreme Court’s judgment. This would aid in de-congesting the clogged court system as parties, who adopt institutional arbitration, have the option of going before the emergency arbitrator, instead of rushing to the Court for emergency relief, at least till the time the arbitral tribunal stands constituted. Indeed, this was the intention of amending Section 9 and Section 17, and introducing Section 9(3) to limit the Court’s intervention to exceptional cases where the arbitral tribunal may not render efficacious relief.

However, the judgment does not address one other important aspect, which still remains a grey area. Our legislation has based itself on the UNCITRAL Model Law and the New York Convention 1958 for enforcement of foreign awards. Many a time, emergency awards are passed by institutions (such as SIAC) in foreign-seated arbitrations and those awards are sought to be enforced in India. It is doubtful whether such emergency award can be enforced under the New York Convention. Rather, the approach generally adopted by parties is to file petitions under Section 9 of the Arbitration and Conciliation Act, 1996 seeking relief on the basis of the emergency award. Such a route was adopted in a dispute between HSBC and Avitel, with success before the Bombay High Court and Supreme Court. Ideally the Arbitration and Conciliation Act requires to be amended in order to bring it in line with the UNCITRAL Model Law amendments in 2006 which provide a mechanism for enforcing interim orders of foreign jurisdictions.

Indeed, the lesson to take away from the Amazon-Future litigation is that it would not have happened if the legislature had intervened in a timely manner and brought the 1996 Act fully in line with international practice. There are a number of other areas where the 1996 Act needs amendments.

From a commercial point of view, it is important to understand that when one enters into an agreement and adopts institutional rules which provides for emergency arbitration, one agrees to those rules unless there is a specific “opt-out” clause. So far as domestic arbitrations are concerned, the matter is now settled. However, for the enforcement of foreign emergency arbitral awards, legislative intervention is called for.

Other countries have amended their arbitration law rapidly to keep up with the times. It is high time we did so. Having been involved at earlier attempts at amendment, there is one last concern that I would flag. Rather than a judge and government-centric approach, more emphasis should be put on inputs from industry, general counsel and arbitration practitioners.

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