Emergency Arbitrator proceedings under the 2012 ICC Rules

Akhil Raina*

In the latest edition of the Journal of International Arbitration, Baruch Baigel[i] has written an excellent piece on the novel concept of Emergency Arbitrator (“EA”) under the 2012 International Chamber of Commerce Rules (“2012 Rules”).[ii] The author has very deftly tried to tackle several important issues like the relationship that exists between the jurisdiction of the EA and the jurisdiction of the Arbitral Tribunal.

A joint reading of Article 29 of the Rules and Appendix V makes it clear that a party seeking urgent interim measures that cannot await the constitution of an arbitral tribunal, may make an application to the Secretariat of the ICC.[iii] However, the same is curtailed in the following situations:

  • When the arbitration agreement under the Rules was concluded before 1 January 2012;
  • When the parties have opted out of the Emergency Arbitrator Provisions (see the Standard ICC Arbitration Clauses); or
  • When the parties have agreed to another pre-arbitral procedure that provides for the granting of conservatory, interim or similar measures.

One of the primary reasons why such a procedure receives popularity is the fact that interim relief is extremely important in arbitration proceedings.[iv] This is true especially if we consider that it can take weeks or even months to constitute an arbitral tribunal which would be agreeable to both parties. Articles 2(1) and 6(4) of Appendix V clarify that the Rules are an attempt to deal only with situations of an urgent nature. In doing so, it stipulates a very short-ended timetable which was nothing short of a fantasy for most parties in past arbitral proceedings. The emergency arbitrator should be appointed by the President of the ICC Court no later than 2 days from the application (Article 2(1)), and the emergency arbitrator must make an order no later than 15 days following receipt of the file, although this time limit may be extended in some circumstances (Article 6(4)).

The situation that exists now negates some of the classical criticism that is levied on International Arbitration because it allows some pressure to be taken off the shoulders of the contesting parties. It is interesting to note that the ICC already had a Pre-Arbitral Referee Procedure in place since the 1990s. By contrast, in respect of the arbitration agreements concluded after January 1st of 2012, the new EA procedure applies automatically.[v] The special feature of the ICC rules is that it enables parties to invoke the EA procedure even before a Request for Arbitration is filed.[vi]Nonetheless, the applicant party is obliged to submit its request for arbitration to the Secretariat within 10 days following the date of application for an emergency arbitrator.[vii]

But like always, there seems to be something lacking. Like the fact that it applies only to signatories of the arbitration agreement (or their successors) but does not equally apply to third parties. Given the contractual, consensual basis of international arbitration, any order against a third party who is not a party to the arbitration agreement would be unenforceable. Consequently, if an order is required against a third party (for example, a freezing order in respect of funds held in a bank account), it would still be necessary to seek an order from a state court. This would completely defeat the very purpose for which the Rules were enacted in the first place.

Secondly, it must be remembered that the ultimate result of this procedure is not an award, but an order which is can still be reviewed by a state court. There is some doubt about the applicability of national arbitration laws to pre-arbitral procedures and the extent to which courts will enforce orders or awards made by emergency arbitrators. In light of the formal designation in Article 29(2), it is unclear whether an emergency arbitrator’s “order” will have the same status as an arbitral tribunal’s decision granting interim measures under Article 28(1) of the ICC Rules.[viii] As a result, depending on the treatment given to orders in support of arbitration according to the relevant state law, the order may not be directly enforceable in the same way that a final award would be widely enforceable under the New York Convention.

In the event that a party fails to comply with the order, it is likely that enforcement under the New York Convention will not be possible, because the order is not described by the Emergency Arbitrator Provisions as an “award” and, in any case, may not satisfy the requirement of finality under the Convention as it is an interim order. It may nonetheless be enforceable under other provisions of certain national laws.

Not to forget, all this comes at a pretty hefty price. The ICC will generally levy a flat fee of US$40,000 for any application under the Emergency Arbitrator Provisions. US$10,000 of this is for the ICC’s administrative expenses, and US$30,000 is for the emergency arbitrator’s fees and expenses. However, there is a provision for the costs to be increased by the President of the ICC Court if necessary, in light of “the nature of the case and nature and amount of work performed by the emergency arbitrator, the Court, the President, and the Secretariat.”  

At the end of the emergency arbitrator proceedings, the emergency arbitrator will fix the costs of the proceedings and decide which party should bear them.

For some, this may give rise to some rethinking. It remains to be seen when (if at all) the ICC provides some clarity on this point. Till then, the matter continues to be shrouded in confusion.

 

*VI Semester, III Year Student; B.Sc; LL.B (Hons.), National Law University, Jodhpur

[i]Baruch Baigel, (MA (Cantab) LLM (Harvard) Dip. Arb (Queen Mary, London)) is a solicitor at Asserson Law Offices where he specializes in commercial litigation and arbitration. He is a member of the LCIA European User Council and the Israel branch of the ICC.

[ii] Available at: http://www.kluwerarbitration.com/CommonUI/document.aspx?id=KLI-KA-JOIA-310101 (visited 23 March, 2014)

[iii] See: http://www.iccwbo.org/products-and-services/arbitration-and-adr/arbitration/emergency-arbitrator/

[iv] Ibid note 2

[v] For a discussion on the main features of the procedure, see: http://www.herbertsmithfreehills.com/-/media/HS/T-201211-4%20%282%29.pdf

[vi] Ibid

[vii] http://www.mondaq.com/x/252012/Arbitration+Dispute+Resolution/The+New+Emergency+Arbitrator+Procedure+Under+The+ICC+2012+Rules

[viii] See: http://www.blplaw.com/expert-legal-insights/articles/the-emergency-arbitrator-procedure-effective-tool-or-enforcement-headache/

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