Enforcement of Emergency Awards – India takes a leap

Brief Background

In the dispute, the Claimant obtained an 'interim award' from an emergency arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre ("SIAC Rules"), injuncting the other side from proceeding with a disputed transaction. The seat of arbitration was New Delhi.

The Claimant sought to enforce the interim award in India under section 17(2) of the Indian Arbitration and Conciliation Act ("Arbitration Act").

Issues decided by the Supreme Court of India

In its judgement, the Supreme Court dealt with the following two questions:

• First, would an award delivered by an emergency arbitrator under the SIAC Rules qualify as an order under Section 17(1) of the Arbitration Act?
• Second, is an order passed under Section 17(2) of the Arbitration Act appealable?

The Supreme Court held that emergency awards are enforceable

Section 17(1) of the Arbitration Act reads:

"A party may, during the arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to the arbitral tribunal … for an interim measure ….  and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it."

Section 17(2) further states that an order issued by a tribunal under section 17(1) is deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure,1908 (5 of 1908), in the same manner as if it were an order of the Court. The exact wording of section 17(2) reads:

[…] any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court […]

As a matter of background, under Indian law, parties to an arbitration agreement, unless they have agreed otherwise, can obtain interim measures either from the arbitral tribunal or the court. The Arbitration Act does not include any provisions on emergency arbitrators, although some steps have been taken in this regard in other jurisdictions (Singapore and Hong Kong amongst others) and were also considered during the recent reforms of the Indian arbitration law, but ultimately rejected by the Indian parliament. Generally, emergency arbitration proceedings provide parties, which seek a quick decision in urgent cases, with the option to apply for interim relief even before the arbitral tribunal is constituted. In many jurisdictions, it is unclear and heavily discussed, whether such decisions rendered by an emergency arbitrator can be enforced. The same was true for India, both with regard to arbitration seated in India or abroad. The arguments and considerations by the parties and the Indian Supreme Court reflect this discussion.

The Respondent argued that the emergency arbitrator was appointed before the arbitral tribunal was constituted. Therefore, the emergency arbitrator would not fall under the realm of Section 17 (1). The Supreme Court rejected this argument and held that Section 17(1) is "elastic enough" to capture emergency arbitration proceedings.

Moreover, according to the Supreme Court, "arbitration proceedings" by their definition cannot be restricted to any form or type of arbitration. In other words, arbitral proceedings can also include proceedings before an emergency arbitrator, despite the fact that provisions on emergency arbitrators were not included in the Arbitration Act.

This conclusion draws on the legislative intent behind India’s recent amendments to the Arbitration Act which made it clear that a tribunal has the same powers as a court to grant interim relief. While the ruling also draws on the particular wording of Section 12 of Schedule 1 of the SIAC Rules, including the requirement "to carry out the interim order or Award immediately and without delay", it is unlikely that the emergency arbitrator provisions of other leading institutions will yield a different conclusion.

Appeal against enforcement of emergency awards

In relation to the second question, the Supreme Court referred to Section 37 of the Arbitration Act which deals with appealable orders and to Section 17(2). The Supreme Court opined that enforcement proceedings are not covered by the appeal provision and hence no appeal would be possible against the order of emergency awards under section 37 of the Arbitration Act. 

Is it all settled?

This judgement by the Supreme Court creates clarity concerning the enforceability of decisions issued by an emergency arbitrator in an India-seated arbitration. At the same time, it is a positive step in the right direction, giving full effect to the agreement to have the possibility to get interim relief by an emergency arbitrator.

Regarding arbitrations seated outside India, the situation is still unclear.

A few years ago, in 2016, the Delhi High Court in the case Raffles Design International India Pvt. Ltd.& Anr. v. Educomp Professional Education Ltd. & Ors. had held that Section 17(2) of the Arbitration Act does not apply to arbitrations seated outside India and accordingly, such an emergency award in a foreign, seated arbitration is not directly enforceable under the Arbitration Act. However, the Indian Supreme Court did not have to decide on this case.

India is a signatory to the New York Convention, dealing with the recognition and enforcement of foreign arbitral awards. The New York Convention requires an award to be final in order to be enforceable. As a matter of background, decisions of emergency arbitrators can take different forms, such as an order or an award. For example, Article 29(2) of the ICC Rules of Arbitration provides that "emergency arbitrator's decision shall take the form of an order". Pursuant to Section 9 of Schedule 1 of the SIAC Rules, the emergency arbitrator "shall make his interim order or Award"; similarly, Article 9.9 of the LCIA Rules refers to "any order or award" of the emergency arbitrator. In light of their interim nature, decisions of emergency arbitrators may later be amended or revoked by the arbitral tribunal. With regard to their form and their "interim" nature, there is no uniform approach taken in different jurisdictions on the enforcement of emergency arbitrator's decision under the New York Convention. Given that the seat of arbitration was in India, the Supreme Court did not have to deal with this question.

Practically, as it stands in India, if the arbitration is foreign-seated, parties may indirectly give effect to an emergency award by filing a suit with Indian state courts. The respective state court is to determine the interim relief sought on the basis of Indian procedural law, independently of the emergency award. However, when deciding, the state court might take the content of the emergency decision into consideration and grant similar interim relief. In HSBC Pl Holdings (Mauritius) Ltd v Avitel Post Studioz Ltd & Others, the Bombay High Court adopted this ‘indirect’ approach. The petitioning party had obtained an award from a Singapore emergency arbitrator and had in addition also obtained interim relief under Section 9 of the Arbitration Act from an Indian court. The court held that a Section 9 application was not equivalent to the enforcement of an emergency award, though granting interim relief in terms similar to those in the emergency award. Given that the 2015 Amendments provided for Section 9 to be applicable to foreign arbitrations unless the parties agree otherwise, the Bombay High Court decision might offer a solution to parties seeking to enforce an emergency award in India.

Next Steps

Emergency arbitration is playing an increasing role in international practice and India-related disputes are behind a number of the cases in this area. The Supreme Court’s ruling implicitly recognises the importance of this role and makes enforcement of emergency awards possible in cases where the arbitration is domestic-seated. One can hope that the Supreme Court will have soon the opportunity to decide also on the enforcement of foreign-seated emergency awards remain unanswered by the Indian Supreme Court, hopefully in the same vein. This clearly reflects the agreement of the parties to an arbitration agreement, providing for emergency arbitrators and would further strengthen the international application of the rule of law. Until such a decision is rendered, parties are left with the above described ‘indirect’ option should enforcement in India be required.

The judgement of the Supreme Court will also have a positive effect on the development of institutional arbitration in India, confirming the arbitration friendly approach the Supreme Court has taken in the last years. Whilst ad-hoc arbitrations remain popular, ad-hoc arbitration does not offer emergency arbitrator options as provided by the rules of arbitral institutions, such as SIAC, LCIA, MCIA and ICC. Against this background, opting for institutional arbitration may now be a safer option for parties involved in India-related transactions.

Authored by Karl Pörnbacher, Narmdeshwar Singh, Benson Lim, Kent Phillips, and Nadine Lederer.