Applicable Standard of Review for Vacation of Emergency Arbitral Awards

Most institutional rules provide that emergency awards, once rendered, continue to bind parties even after the tribunal has been constituted, and remain operative until the tribunal makes the final award, unless the same is vacated or modified by the tribunal (see para 10, schedule 1, SIAC Rules; article 9.11, LCIA Rules; article 14.9, MCIA Rules). While the power of the tribunal to vacate emergency awards under the applicable institutional rules is uncontroversial, there is no uniform or universally accepted standard that ought to be applied while exercising such power.

Ordinarily, in a given case, the tribunal may adopt (i) an international standard, deriving from international sources such commentaries by scholars, past decisions, etc; or (ii) a national standard applied by the seat courts; or (iii) a hybrid consisting of national and international standards, as the tribunal may deem reasonable.

Due to the lack of a clear consensus, the question of the applicable standard for vacation of emergency awards is often a point of contention between the disputing parties. A claimant will naturally want to safeguard its hard-fought gains before the emergency arbitrator and avoid a detailed review of the emergency award before the tribunal. On the other hand, a respondent is likely to argue that the tribunal ought to conduct a de novo review of the emergency award and give enhanced consideration to the case, both in scope and time. Ultimately, it is within the tribunal’s discretion to identify the standard of review. In this context, this post analyses the standard of review that tribunals may apply when deciding whether an emergency award should be vacated.

De novo standard

Emergency arbitrators are expected to render their awards at the earliest and, in most cases, within 14 days of their appointment (see para 9, schedule 1, SIAC Rules; article 9.8, LCIA Rules). As a result, it may be argued that a de novo review of the case is warranted, as an emergency arbitrator might not be able to analyse the issues and evidence at hand in the same detail and extent which a tribunal ordinarily would. The tribunal’s power to review the emergency award is also not qualified in any way under institutional rules (see para 10 of schedule 1 of the SIAC Rules; article 9.11, LCIA Rules). Therefore, it may be within the tribunal’s discretion to conduct a de novo review of the emergency award, if it considers that the same is reasonable based on the facts of the case.

Having said that, there are strong efficiency and policy considerations that militate against a de novo standard of review, particularly when parties are given full opportunity to present their arguments and the matter is considered in detail by the emergency arbitrator. In such circumstances, allowing fresh consideration of the case would permit a party to have two bites of the cherry in the hope that the tribunal might exercise its discretion differently, essentially on the basis of the same facts and arguments canvassed before the emergency arbitrator.

Standard of ‘changed circumstances’

While there is no accepted ‘international standard’ for review of emergency awards, several international tribunals have adhered to the approach of minimal interference and applied the standard of ‘changed circumstances’. Under the standard of ‘changed circumstances’, the tribunal would only allow requests to vacate emergency awards where its analysis leads to the conclusion that the emergency award is no longer appropriate in light of a material change in circumstances. For instance, the Report of the ICC Commission notes ‘it is most likely that [Emergency] Orders are not modified unless the objecting party can show that circumstances have changed to such an extent since the rendering of the Order that a modification of the Order is warranted’. This standard therefore accords due deference to emergency awards and has been largely favoured by international tribunals in practice.

Standard applied by seat courts

It is also not unusual for tribunals to rely on the standard applied by seat courts. This is particularly true in jurisdictions such as India and Singapore. In India, the tribunal’s power to grant interim relief is a statutory remedy recognised under section 17(1) of the Arbitration & Conciliation Act, 1996 (‘A&C Act’). Section 17 of the A&C Act was amended in 2015 to bring it at parity with section 9 of the A&C Act, which recognises the power of Indian courts to issue interim measures in aid of arbitration (‘2015 Amendment’). In doing so, the 2015 amendment expressly provided that ‘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’, and that such orders shall be enforceable like orders passed by the court. Pertinently, in Amazon NV Investment Holdings LLC v Future Retail Limited, the Indian Supreme Court has recently clarified that this position applies to emergency awards as well, holding them to be orders passed under section 17(1) of the A&C Act.

The legislative as well as judicial treatment of section 17 of the A&C Act, therefore, indicates that emergency awards are to be treated on an equal footing to interim court orders for all intentions and purposes. This would entail applying the same standard of review and providing the same protection and sanctity to emergency awards, ie that accorded to interim court orders once granted. Therefore, it may be appropriate for India-seated tribunals to consider how an Indian court, when faced with an application to vacate an interim court order, would exercise its power to vacate that order (see Order XXXIX Rule 4 of the Indian Civil Procedure Code, 1908). In India, similar to the standard of ‘changed circumstances’, vacation of an interim injunction is warranted only when, owing to fresh circumstances, the same becomes unduly harsh, unnecessary or unworkable.

Similarly, in the context of Singapore, Dr Michael Hwang, SC, speaking at a SIAC Summit in New Delhi in 2019, had noted that the natural interpretation of section 12(1)(i) (read with section 12(5)) of the Singapore International Arbitration Act (Cap. 143A), taking into account its legislative history, was that it would be appropriate for Singapore-seated tribunals to apply the domestic standard applied by the Singaporean courts when dealing with interim injunctions.

Conclusion

With the growing relevance of emergency arbitration, the applicable standard of review for vacation of emergency awards is a question that tribunals will be increasingly asked to decide. In this regard, the standard of ‘changed circumstances’ provides a suitable test as it adheres to the principles of judicial efficiency and propriety. To ensure the effectiveness of emergency arbitration, it is important that tribunals refrain from conducting a de novo review of emergency awards. The principle that the fruits of an arbitral process ought not to be lightly disturbed should hold true for emergency awards as well. Therefore, a de novo review should be an outlier or an exception, which should only be undertaken on account of extreme circumstances, such as the emergency arbitrator not providing a full and equal opportunity to the parties to present their case or failing to provide reasons for his decision, in line with principles of natural justice.

Vijayendra Pratap Singh is a partner and the Head of Dispute Resolution at AZB & Partners New Delhi.

Abhisar Vidyarthi is an associate at AZB & Partners New Delhi.

Both authors acted for Amazon NV Investment Holdings LLC in the above-mentioned Supreme Court proceedings as well as in the arbitration. Views expressed are personal.