Interim Relief Orders – Leave it to the Arbitrator?

When deciding if arbitration should be included in the dispute resolution clause of a contract, the parties should consider whether the chosen arbitration rules cut down the power of the courts of law to assist the parties in arbitration proceedings. This is an important consideration because an interim order of an arbitrator may not be as readily enforceable in some jurisdictions as a court order.

Historically, the granting of interim relief in arbitration was generally a power reserved to local courts of law.  But in recent years the position has changed.  For instance, in England, Wales and Northern Ireland (Scotland has its own rules), the Arbitration Act 1996 allows the courts to intervene in support of arbitrations to which the Act relates (see ss. 44(3) and 44(4)) but pursuant to section 44(5) of the Act and the English high court case of  Ikon International (HK) Holdings Public Co Ltd v Ikon Finance Ltd [2015] EWHC 3088 (Comm), the courts may only intervene where the:

“… arbitral tribunal or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively”.

Accordingly, where the Arbitration Act 1996 applies, the powers of the courts to grant interim relief are reduced if an emergency arbitrator can be quickly appointed, is empowered to grant the requested relief and is able to “act effectively” for the purposes of section 44(5) of the Act. It should be noted that the position under the Act is not unique and a number of jurisdictions similarly recognise in their laws the power of arbitrators to make interim orders.

Some arbitration rules commonly adopted in arbitration clauses (e.g. LCIA, ICC) now provide a mechanism to appoint an emergency arbitrator.  In 2014 the LCIA amended its arbitration rules by providing, at article 9A, for the parties to apply for the expedited formation of an arbitration tribunal in cases of exceptional urgency.  By article 9B of the rules, a party may also apply to the LCIA for the immediate appointment of a temporary arbitrator to conduct emergency proceedings pending the formation of the tribunal. In Gerald Metals SA v The Trustees of the Timis Trust and others [2016] EWHC 23, it was decided that the emergency arbitrator provisions in the LCIA arbitration rules limited the scope of the court’s jurisdiction to grant freezing injunctions in support of arbitration as the tests of “exceptional urgency” under article 9A and “in case of emergency” under article 9B of the rules were effectively the same as the test of “urgency” under section 44 of the Arbitration Act 1996.

In conclusion, those drafting contracts with arbitration clauses need to determine (i) whether the arbitration rules they propose adopting confer power on arbitrators to make orders for interim relief to the exclusion of the courts, (ii) whether the laws of the jurisdiction in which the arbitration is seated will recognise such a power and, if so, whether any limitations will apply to the exercise of the power, (iii) whether such a power is advisable in the context of the subject transaction and the places where awards and orders may need to be enforced, and (iv) whether it is possible to limit or exclude altogether the arbitrator’s power in favour of the courts.

 

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