The Task Force on Emergency Arbitrator Proceedings and the ICC Commission on Arbitration recently released a report on emergency arbitrator (“EA”) proceedings (the “Report”). The Report aims to identify emerging trends based on a review of, inter alia, the ICC filings for EAs since 2012 (Annex I) and the ICC National Committees’ responses to questionnaires on local law (Annex II). We set out below a short summary of some key issues that emerge from the report and our observations on them.
The Report provides a useful categorisation of the most commonly encountered jurisdictional grounds for challenging an EA application. On admissibility, the Report raises an interesting point in relation to the “urgency” test; whilst an applicant must establish a prima facie case that a measure is needed urgently to have its EA application admitted, in practice an EA might consider the urgency as a substantive requirement which can result in a higher standard of proof on this issue. In our experience, a party’s subjective view of the urgency of the situation it finds itself in can often differ significantly from an objective view of the same facts. This point also emphasises the need for a party to move quickly; often a delay in seeking advice or taking emergency steps can fatally undermine a case on urgency.
The Report notes that an EA enjoys a wide procedural discretion to tailor an EA proceeding to the needs of the case. A wide variety of case management techniques are being used to achieve speed, efficiency and consistency across EA proceedings, whilst trying to balance the competing requirement of due process. Examples include telephone-only case management conferences, no cross examination of witnesses, documents-only decisions with no hearings, and limiting the scope, number and length of submissions.
The Report indicates that it is becoming common practice for EAs to apply criteria developed in the granting of interim measures in accordance with the standards of international arbitration practice. In particular, in addition to the standard criterion, namely urgent relief that cannot await the constitution of the arbitral tribunal, EAs often consider, inter alia, the likelihood of success on the merits, the risk of aggravation of the dispute and the principle of proportionality. The gradual adoption of such recognised criteria assists parties in knowing how to frame, and respond to, such applications.
With the exception of New Zealand, Hong Kong and Singapore, at present there are no national laws providing for the enforcement of an EA’s decision. The Report discusses the inevitable challenges to the enforcement of EA’s decisions which follow from this:
- Interim nature of relief sought: can an EA decision be framed as an award such that national courts will treat it as such? As will be familiar to many, the ICC Rules provide that an EA’s decision must take the form of an order. Other institutions including the LCIA, the HKIAC and SIAC have chosen to characterise pre-arbitral interim relief as awards. This is particularly relevant in jurisdictions such as Australia, Lebanon, Thailand, UAE and Russia where form prevails over substance. If not an award, but the relevant national law enforces interim measures, can an EA decision fall within these provisions? Examples of jurisdictions adopting this practice include Canada, Hong Kong and USA.
- EA’s status: is an EA an arbitrator or a third-party adjudicator (which is relevant to whether the source of their power is contractual)?
- Object of EA application: does an EA’s decision dispose of a separate and self-contained issue? If so, is it considered as final (not interim) irrespective of the nature of the process by which it was obtained? There is US case law supporting the view that an award is final if it resolves the rights and obligations of the parties definitively enough to preclude the need of further adjudication with respect to the issue submitted to arbitration. If an EA’s decision satisfies this threshold, it can be treated as final and enforceable award irrespective of its interim nature.
Strategic use of EA applications
One of the most interesting points addressed in the Report, not least given the recognised enforcement issues, is how EA applications are being used, on occasions, as tactical weapons. The Report identifies four reasons for this.
- If the requested relief is closely linked to the merits of the arbitration, the applicant, via an EA application, can get a better understanding of its chances of success and tailor its future course of action accordingly.
- An EA application can be used to put pressure on the other side and ultimately allow the applicant to settle the case.
- An EA’s decision can be used to influence national courts to grant parallel interim relief (assuming the EA decision has been ignored by the defaulting party).
- Non-compliance with an EA’s decision is taken into account by the arbitral tribunal when considering the merits or the award of costs; hence, the applicant can use the enforcement hurdle to its benefit.
Where a party has a reasonable case on urgency, there are (potentially considerable) tactical advantages that might be gained from an EA application, even if that application may ultimately not be successful or if a decision of the EA cannot be enforced.
Ben Carroll would like to thank Margarita Karkantzou for her assistance in preparing this article