This interesting issue came up before Delhi High Court in Amazon.Com Nv Investment vs Future Coupons Private Limited & ors passed on 18 March, 2021
Three important questions arose for consideration before Delhi High Court :-
What is the legal status of an Emergency Arbitrator i.e. whether the Emergency Arbitrator is an arbitrator and whether the interim order of the Emergency Arbitrator is an order under Section 17 (1) and is enforceable under 17(2) of the Arbitration and Conciliation Act?
- Observed: Section 2(8) of the Indian Arbitration Act 1996 expressly provides that where Part I of the Indian Arbitration Act 1996 refers to an ―agreement of the parties‖, such agreement shall include the arbitration rules referred to in the parties’ agreement. In this way, the Indian Arbitration Act 1996 provides that any arbitration rules agreed to by the parties are incorporated into the arbitration agreement. Unless expressly excluded, it is trite that the parties cannot resile from the terms of their arbitration agreement, including their agreement to allow either party to request the appointment of an emergency arbitrator. Further, Section 17 of the Indian Arbitration Act 1996, which empowers an arbitral tribunal to grant interim reliefs, does not preclude or intimate that parties cannot agree to institutional rules which allow recourse to emergency arbitration. In the absence of a mandatory prohibition contained in the Indian Arbitration Act 1996 or public policy constraints, the parties may agree to any arbitral procedure.
Whether the Emergency Arbitrator misapplied the Group of Companies doctrine which applies only to proceedings under Section 8 of the Arbitration and Conciliation Act?
- Held The Indian Arbitration Act 1996, does not preclude parties from agreeing to arbitrate under institutional rules that allow either party to request appropriate reliefs from an emergency arbitrator. The Respondents’ references to the 246th Law Commission Report do not assist its submissions on this issue in a meaningful way. It is just as plausible that Parliament, in its wisdom, did not consider it necessary to amend the Indian Arbitration Act 1996 to make a specific reference to emergency arbitrators because it was legally unnecessary – that is to say, it might have been an instance of the Law Commission making a suggestion to gild the lily. There was no need for statutory recognition if the courts and case law did not find this a problematic issue. Indeed, given the prevalence, even then, in the employment and use of this useful procedure internationally, this is likely to have been the case. It is also noteworthy that the power to appoint an emergency arbitrator is currently recognized in a number of domestic Indian arbitration institution rules, including (a) the Delhi International Arbitration Centre of the Delhi High Court; (b) the Mumbai Centre for International Arbitration; and (c) the Madras High Court Arbitration Centre, all of which include, under their rules, provisions for emergency arbitration and set out the appointment process, applicable procedures, and timing as well as the powers of an emergency arbitrator.
- Emergency Arbitrators are recognised under the Indian Arbitration Framework
- The Claimant rightly asserts that the Respondents’ insistence that the notion of emergency arbitration is alien to, or not contemplated by the Indian Arbitration Act 1996, is, in fact, contrary to the practice adopted by Indian courts. Indian courts, including the Supreme Court of India, have considered cases involving orders/awards issued by an emergency arbitrator within the framework of the Indian Arbitration Act 1996. In none of the cases did any Indian Court cast any doubt over the recognition of the remedy of emergency arbitration under Indian law.
- Notably, all the Parties were advised by first-tier Indian law firms when they entered into the Agreements and must have been aware of this legal position when they entered into their contractual agreements. They have expressly affirmed in the Agreements that the contractual provisions were valid and enforceable under Indian law. This includes the arbitration agreement in Section 25 of the FCPL SHA, by which the parties agreed that their disputes shall be referred to and finally resolved by arbitration in accordance with the arbitration rules of the SIAC Rules. Having made a conscious, valid, and enforceable choice, the Respondents cannot now resile from the terms of their arbitration agreement or diminish its efficacy.
- Therefore, court expressed its view that, under Indian law, once parties agree to arbitrate under particular institutional rules or agree to a particular remedy as part of their arbitration agreement , they cannot ignore or resile from the agreed procedures and remedies. The SIAC Rules expressly stipulate that interim relief may be given by an emergency arbitrator before the formal constitution of the Tribunal and by the Tribunal once it is formally constituted. The Claimant has a valid right under the SIAC Rules to seek relief from an emergency arbitrator. Under Indian law, this choice will be respected.
Whether the interim order of Emergency Arbitrator is Nullity?
- Observed: The respondents have pleaded the interim order to be Nullity without pleading the law on Nullity; what are the essential ingredients of law on Nullity and how the essential ingredients of the law on Nullity are satisfied in the present case. At the outset, this Court finds the submission to be vague and unsubstantiated. It is like a litigant pleading before the Court that the interim order is ―Illegal‖ without placing reliance on the applicable substantial law; what are the essential ingredients of the substantial law and how the essential ingredients are satisfied in the given case. The respondents‟ approach does not appear to be innocent as it is not believable that the respondents are not aware of the law on Nullity. This appears to be a deliberate attempt to mislead this Court. If the respondents had pleaded the agreements to be null and void, the respondents would be liable to return back the advantage/benefit received by them under Section 65 of the Contract Act. The respondents have therefore deliberately set up a vague plea of Nullity to mislead this Court.
The interim order is legal, valid and enforceable as an order of the Court.