Comparative Analysis of Interim Measures in the Context of International Arbitration
- Interim measures through the lens of different arbitration rules
- English Arbitration Act, 1996
- UNCITRAL Model Law
- ICC Rules 2017, Art. 28
- LCIA 2014, Art 25
- UNCITRAL Arbitration Rules, Art 26
- Different forums for seeking interim measures
- Power of Tribunal to order interim relief in an ad hoc arbitration
- Interim measures and courts
- Interim measures and emergency arbitrators
- Which venue is better: An arbitral tribunal, an emergency arbitrator or the court?
- Enforceability of measure
- Practical considerations for enforcement of interim arbitral measures
International arbitration awards are a dispute resolution process that helps the parties efficiently and effectively reach a conclusion for their dispute on time and by achieving finality. There may be various types of international arbitrations available. Some of them are:
International Commercial Arbitration: Distinct from domestic arbitrations, these are mostly governed by the standards of ethical conduct. Some of the common forums to conduct these arbitrations include the International Chamber of Commerce’s International Court of Arbitration (ICC), the London Court of International Arbitration (LCIA), the International Centre for Dispute Resolution (ICDR), the American Arbitration Association (AAA), and many others.
Investor-State Arbitration: In these types of arbitrations, the investors seek remedy from foreign governments who have made the relevant investments in the international investment treaties, constructive expropriations, compensations, etc.
Protecting the rights of the parties before the formation of the arbitral tribunal is essential. An “interim measure” is a temporary relief in the guise of the award, or other forms, which may be granted at any point in the course of arbitral proceedings to preserve or maintain the status quo, assets, or evidence till the dispute gets to the ultimate point.
In the past, as there were no meaningful interim measures in the context of arbitration, the aforesaid lack was considered the “Achilles heel” of international arbitration. However, in the present time, there are a variety of interim measures appropriate in different situations depending on the particularity and the nature of the issues since these measures would guarantee the reliability and effectiveness of arbitration.
This update analyzes the legal concept, application, and enforcement of interim measures from the perspective of different arbitration rules. To improve clarity and ease of discussion, this examination deals with the different forums applicants can seek provisional measures. To be exact, this article is divided into five parts. The first part examines the approach of different arbitration rules to interim measures. The remaining parts then address different forums and available options of applicants when they intend to seek interim measures, and finally, the last part summarizes the enforceability of the measures in practice.
Interim measures through the lens of different arbitration rules
Interim measures are also called “provisional” or “conservatory” relief. These measures are granted by either arbitral tribunals, national courts, or emergency arbitrators per the arbitration agreement, applicable (institutional) arbitral rules, or the national laws of the country of the seat or the state where relief is sought. According to Moses, interim measures are those measures intended to protect the ability of a party to obtain the final award.
It should be noted that regarding interim measures, there are significant differences in arbitration rules. For instance, the differences include the types of available reliefs, the time it takes an applicant to obtain them, and even the preconditions for obtaining them. Hence, this part of the article examines how different arbitration rules have addressed the concept of interim measures.
English Arbitration Act, 1996
Interim measures are to be issued as a procedural order unless it is authorized under the contract to be an award under s.39(4) of the act. It is worth noting that there is no general provision regarding emergency arbitration under the Arbitration Act 1996 (AA96). Since then, emergency arbitration has applied in the case of the explicit and implied agreement of the parties, especially through the incorporation of institutional arbitration rules in a particular case. Moreover, the enforceability of the parties or arbitral discretion in granting such relief is measured under the applicable law of the seat of arbitration.
Moreover, under s.39 of the AA96, the parties are free to establish the arbitration tribunal and confer any right they want, including the right to grant interim measures. Although the parties can enshrine their particular terms in the arbitration agreement, in the majority of instances, they implicitly, by way of incorporation, embody the existing model or institutional terms.
UNCITRAL Model Law
(Model Law), Art. 17(1) and s.38(1) of AA96, deal with the tribunals’ authority to grant interim measures. In contrast with the Model Law that widely enables the tribunals to grant interim measures, the AA96 has empowered the tribunals to issue interim measures in specific cases of s.38 (3)(4)(5)(6), unless the parties have agreed on the exercisable power of the tribunal, namely to order security for costs, inspection, photographing and preservation of property in the proceedings, and to make orders for the preservation of evidence.
Furthermore, the tribunal has no right to issue provisional awards under s.39(3) of the act unless it is explicitly agreed between the parties. The authority of the parties to determine the power of the tribunal, as mentioned in s.38 and s.39, includes the implicit agreement of the parties on the applicable arbitration rules like ICC, LCIA, and UNCITRAL rules.
ICC Rules 2017, Art. 28
Conservatory and Interim Measures depend on the transmission of the file and constitution of the tribunal after getting appropriate security. Under Articles 23(1) & 25(2) of the ICC Rules, interim measures can take an order or award, but the tribunal must explain its reasoning in either instance.
However, it is possible to refer to the court before the file is transmitted to the arbitral tribunal and, in appropriate circumstances, even after that. It is the duty of the applicant to notify the secretariat of any such application and any measures taken by the judicial system without delay.
LCIA 2014, Art 25
Arbitral Tribunal shall have the power upon the application of any party, after giving all other parties a reasonable opportunity to respond to such application and upon such terms as the Arbitral Tribunal considers appropriate in the circumstances:
“(i) security for all or part of the amount in dispute (ii) to order the preservation, storage, sale or other disposals of (iii) to order on a provisional basis, subject to a final decision in an award, any relief which the Arbitral Tribunal would have the power to grant in an award, including the payment of money or the disposition of property as between any parties”.
UNCITRAL Arbitration Rules, Art 26
Considering the general power of the arbitral tribunal to grant interim measures:
An interim measure is any temporary measure by which, at any time before the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party, for example, and without limitation, to (a) Maintain or restore the status quo pending determination of the dispute; (b) Take action that would prevent, or refrain from taking action that is likely to cause, (i) current or imminent harm or (ii) prejudice to the arbitral process itself; (c) Provide a means of preserving assets out of which a subsequent award may be satisfied, or (d) Preserve evidence that may be relevant and material to the resolution of the dispute.
Further, the party requesting an interim measure under paragraphs 2 (a) to (c) shall satisfy the arbitral tribunal that:
(a) Harm not adequately repairable by an award of damages is likely to result if the measure is not ordered, and such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted, and
(b) There is a reasonable possibility that the requesting party will succeed on the claim’s merits.
The determination of this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination.
- With regard to a request for an interim measure, only to the extent the arbitral tribunal considers appropriate.
- The arbitral tribunal may require the party to request an interim measure to provide appropriate security in connection with the measure.
- The arbitral tribunal may require any party to promptly disclose any material change in the circumstances based on which the interim measure was requested or granted.
- The party requesting an interim measure may be liable for any costs and damages caused by the measure to any party if the arbitral tribunal later determines that, in the circumstances then prevailing, the measure should not have been granted. The arbitral tribunal may award such costs and damages at any point during the proceedings.
The interim measure is an equitable relief; maximum honesty and good faith are necessary to hold it. UNCITRAL Art. 17H(2): The party seeking or has obtained recognition or enforcement of an interim measure shall promptly inform the court of any termination, suspension, or modification of that interim measure.
If you are someone who is looking to obtain an interim measure in any kind of dispute or have obtained such a measure, but have not followed the requirements after obtaining such a measure, then it is crucial that you do so, and if you do not, you should consult an experienced lawyer.
In the course of dispute resolution, there are times when the tribunal cannot legally grant interim measures in either lack of power granted by the parties, in instances when the tribunal has not yet constituted, even when the case has not yet been handed to the tribunal (in institutional arbitration), or after issuing the final award when the tribunal is functus officio. In almost all other instances where the tribunal is duly constituted, especially where the case is submitted to institutional arbitration, it is the duty of the tribunal to assess the situation and decide on the appropriate and reasonable measures on a case-by-case basis.
Different forums for seeking interim measures
Power of Tribunal to order interim relief in an ad hoc arbitration
In an ad hoc arbitration, where the arbitration does not take place under the auspices of an arbitral institution, there are three possibilities in this regard:
- Most commonly, the UNCITRAL Rules are applied in ad hoc agreements to the arbitration. If this is the case, then the position vis-à-vis interim measures will be as described in UNCITRAL Rules (1976). Sometimes, the parties agree to apply institutional rules (even when the proceeding does not take place under the auspices of, and is not administered by, any particular arbitral institution).
- Alternatively, the arbitration agreement may confer power on the tribunal to grant interim relief. If so, the orders available will depend on the scope of the arbitration agreement.
- Finally, the law which applies at the seat of the arbitration may confer powers on the arbitral tribunal to grant interim relief. For example, where the seat of an arbitration is in England and Wales, section 38 of the Arbitration Act 1996 confers on the tribunal’s power to make conservatory and other orders in respect of the property.
Interim measures and courts
The English courts can grant interim measures in support of arbitration under s.44 AA96 of the act. The act, by virtue of s.44 (3) – (5), exercises its power wherever it is a matter of urgency, or if it is not an urgent case, the parties to the tribunal have permitted the court to do so. In any circumstances, the statutory authority of the courts should not be implemented, but in cases where the tribunal has no power or cannot act effectively in a particular time.
This test applies even if there are provisions for the emergency arbitrator. The only material situation before the court to decide is the reality of whether or not the tribunal or emergency arbitrator can act effectively. This test is applied in a number of cases, such as GigSky APS v Vodafone Roaming Services Sarl, where it was held ‘whether the arbitral tribunal or other arbitral institution is in place and able to act effectively falls applicant could have applied for the appointment of an emergency arbitrator earlier’.
The other significant element of the courts’ authority reveals where an international element, like the abroad set of arbitration, exists. In these cases, the question is whether English courts have the jurisdiction to step into the case and decide on relief upon s 2 of the AA96. Generally speaking, the English courts have the jurisdiction to exercise their power in support of arbitration under s.3(b), even if the seat of the arbitration is outside of England and Wales Northern Ireland, only where they believe it is appropriate to do so.
The courts, time by time, may refuse to exercise their power if the court realizes that their interference is irrelevant or inappropriate in a case-by-case assessment. So, it seems natural that the different grounds give rise to the different decisions to which a court may exercise its power in Recydia Atik Yonetimi Yenilenebilir Enerji Uretimi Nakliye ve Lojistik Hizmetleri Sanayi ve Ticaret AS v Collins‐Thomas and refuse to do the same in U&M Mining Zambia Ltd v Konkola Copper Mines. They are cases that investigate the relevance or appropriation of judicial intervention. For instance, we can highlight Mobil Cerro Negro Ltd v Petroleos de Venezuela or Econet v Networks, where there was no connection with their jurisdiction.
The other surplus of the court’s powers is the specific circumstances of the case. It is particularly relevant for the courts, with due regard to the scheme of the AA96, to find whether or not the tribunal is constituted or is able to implement its power effectively as was mentioned in the Supreme Court decision of AES v UST.
Note, however, that an application to a court for an interim measure is not defeated by an application for a stay under s.9 of the AA96, even if the arbitrators have the power to grant the relief. This approach is reflected in Jacobs E&C Ltd v Laker case.
Additionally, broadly speaking, the bindingness of the courts’ decisions roots in public law upon which the court’s order binds everyone, including the third parties to the arbitration proceeding (such as the consultant of either party), public or private authority. It means the court’s order is more effective than the arbitral tribunals. In other words, the arbitral tribunal has no power to compel compliance, especially where it impacts third parties. Whereas the court’s decision as a part of public law compels compliance, not only with the parties but even third parties, including banks, by imposing even criminal sanctions.
Interim measures and emergency arbitrators
Most leading arbitral institutional rules now contain provisions that allow for the appointment of an emergency arbitrator. This mechanism is intended to fill the vacuum between the making of the arbitration agreement and the constitution of the tribunal.
The emergency arbitrator is appointed very quickly, usually between one and three business days from the time the application is received by the institution. In the construction practice, it may be requested to prevent the employer from making a call on an on-demand bond, preventing contractors from opposing call security for an unpaid certificate or binding but not final DAB decisions, Injunction to continue with the works, evidence, or order to deliver documents.
Notably, the powers of the emergency arbitrator to grant interim measures depend on the particular institutional rules under which the arbitration is conducted. In general, the emergency arbitrator has the power to order whatever interim relief they consider necessary, but any application for an order or award will usually have to be made on notice to the other party and will normally have to be supported by some form of security for costs.
Emergency arbitrators also do not normally have any power to bind the arbitral tribunal, so any order made may be set aside or varied by the tribunal once it has been constituted. In addition, as with any order or award made by an arbitral tribunal, an emergency arbitrator does not have any powers to compel the performance of their order or award. Whether a court will enforce the order of an emergency arbitrator depends on the national arbitration laws of the country in which enforcement is sought.
As an alternative to an application for expedited formation, and unless otherwise agreed, prior to the formation of the tribunal, a party may, in the case of emergency, apply to the LCIA Court for the immediate appointment of a sole temporary arbitrator under Article 9B. The LCIA will determine the application as soon as possible, and if granted, the LCIA Court will appoint an emergency arbitrator within three days of receipt of the application or as soon as possible thereafter.
The emergency arbitrator will decide the claim for emergency relief as soon as possible, but no later than 14 days following his/her appointment (the deadline can be extended by the LCIA Court in exceptional circumstances or by the parties’ written agreement). No hearing is necessary, and the decision may take the form of an order or award, but the arbitrator must give reasons for their decision.
The order or award of an Emergency Arbitrator (except any order for an adjournment to the arbitral tribunal of any part of a claim for interim relief) may be confirmed, discharged, varied, or revoked by the arbitral tribunal when formed.
The ICC Rules, 2017, also include provisions allowing the appointment of an emergency arbitrator to deal with applications for urgent interim or conservatory measures (“emergency measures”) before the constitution of a tribunal.
Additionally, Article 9A of the LCIA 2014 Rules provides for the urgent formation of the tribunal. Accordingly, if a party needs to apply for interim measures before the tribunal has been constituted, they should consider applying under this provision.
It may be argued that EA orders are binding but inherently incapable of being final and, without finality, are not enforceable under New York Convention. But can they be enforced indirectly? This is again dependent on the jurisdictional laws related to such orders.
Which venue is better: An arbitral tribunal, an emergency arbitrator or the court?
As mentioned earlier, either the court, arbitral tribunal or emergency arbitrator has the power to grant interim measures depending on the specific situation of the case. Today, many believe courts and arbitral tribunals have concurrent jurisdiction to grant interim measures in international arbitration.
Although it may be argued that the parties have agreed on arbitration to contract out the court’s intervention, in some cases where the matter is quite urgent, and the tribunal is unable to act effectively, by virtue of s.44(4) of the Act and case law, the judicial interference is unavoidable. This is also reflected in Gig Sky v Vodafone.
The AA96 has presumed that the court exercises its power and grants interim measures only where the tribunal lacks the power or it is unable to act effectively for the time (s.44(5)). The instance could be wherever the case is urgent (s.44(3)) or it is not one of urgency, but the tribunal permission or the parties’ written agreement exists. Therefore, in some particular circumstances, both the courts and arbitral tribunals are legally empowered to grant the interim measure, and it depends on the applicant to select one.
In Model Law jurisdictions, according to Article 17J, courts have the same power of issuing an interim measure in relation to arbitration proceedings. Nonetheless, the courts may be unwilling to intervene if the arbitral tribunal is constituted. This is also emphasized in Leviathan Shipping v Sky Sailing Overseas case.
According to LCIA rules, the power of the Arbitral Tribunal under Article 25.1 shall not prejudice any party’s right to apply to a state court or other legal authority for interim or conservatory measures to similar effect: (i) before the formation of the Arbitral Tribunal; and (ii) after the formation of the Arbitral Tribunal, in exceptional cases and with the Arbitral Tribunal’s authorization, until the final award.
When deciding to seek interim measures, the following observations should be taken into consideration:
- Determining the power of an arbitral tribunal to grant such measures
- The notice-related requirements and their impact on the capability of the relief (In other words, are ex-parte applications recognized or not)
- The possibility of execution by a third party to an arbitral tribunal
- The effectiveness of Injunction, especially in international anti‐suit injunctions
- The importance of enforceability of the relief
Enforceability of measure
Needless to say, parties must have the ability to enforce interim awards. Enforceability of the measure is a challenging issue that depends on the law of the seat, as arbitration is a private dispute resolution mechanism and in contrast with the court’s order that must be executed otherwise, could have criminal consequences; the interim measures are mainly supported by contractual remedies such as entitlement for damages.
Accordingly, the tribunal cannot compel compliance with any order but may be able to impose procedural sanctions for non-compliance, as is mentioned in s.41(5) of the AA96, which enables the arbitrator to issue a peremptory order for compliance within a prescribed time. The breach of the peremptory order, as is recognized in T v V&W, entitles the tribunal to apply sanction in accordance with s.41 (5)(6)(7) in, which may adversely affect the merits of the case.
Moreover, the peremptory order of the tribunal may be enforced by the court under s.42 of the act. It is worth noting that it has the discretion to enforce peremptory orders and does not merely rubber-stamp the tribunal’s order, as mentioned at the top line of the s.42 through the implementation of ‘may’ as was mentioned in John Forster Emmott v Michael Wilson ; Pearl Petroleum v Kurdistan Regional Government of Iraq. Hence, the language of the rules when addressing interim measures can impact their enforceability.
The necessity of enforceability of the interim awards is also highlighted by the number of case law. It is stated that it is reasonable to assume that parties, in agreeing to arbitration, implicitly intended that the arbitration not be fruitless and that interim orders to preserve the status quo or to make meaningful relief possible would be proper.
A number of cases deal with this situation in other jurisdictions, the instance such as Charles Construction Co v Derderian, Sperry Int’l Trade Inc v Israel; Arrowhead Global Solutions Inc v Datapath; Publicis Communications v True N Communications; Yasuda Fire & Marine Ins Co of Europe v Cont’l Cas Co. However, some commentators believe interim measures cannot be confirmed under the New York Convention.
It is worth mentioning that the enforceability of any award may be questioned and even resisted under article V.1(b) of the New York Convention in which one party arguably “was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case”.
However, “Ex parte” applications are made without notice to the other party. With the exception of Swiss Rules of International Arbitration in exceptional situations, an arbitral tribunal is unlikely to grant interim measures where these are applied for without giving notice to the other party. This is a quite significant distinction or even a drawback of requesting relief from the arbitral tribunal.
It is absolutely a practical need to act urgently in some cases without prior notice to the other party to save evidence or assets in which almost all arbitral rules restrict the ability of the tribunal to grant reliefs to the circumstances notice, which has been duly served to the parties. It would cause late action, which may make the interim measure meaningless. By contrast, it is a concrete practice of courts to allow an applicant to proceed without notice in urgent cases, especially in freezing injunctions.
Practical considerations for enforcement of interim arbitral measures
There might be situations where even though the relevant court agrees to enforce the interim arbitral measure obtained, however, the party seeking the relief might still be required to attend to the form of relief eventually sought. This helps in maximizing the likelihood of effective enforcement. Usually, the efficacy of injunctive relief obtained is dependent on the jurisdictional tools that might be available to help enforce compliance with the Injunction and sanction the parties for failure towards such enforcement.
In certain jurisdictions, the parties have faced contempt of court charges for refusing to enforce interim measures. A classic example of this is the CE International Resources case.
On the other hand, things are different for civil law jurisdictions. This is because they do not have an equivalent to the concept of contempt of court. This makes the courts in such jurisdictions powerless when parties refuse to comply with interim injunctions since there is no other alternative of imposing a non-monetary relief. For example, France has the concept of ‘astreinte’, wherein the court orders the payment of a daily fine for each day of compliance delay. Similar forms of compliance mechanisms are followed by other jurisdictions, such as Belgium, Italy, Luxembourg, and the Netherlands. In Germany, fines are paid directly to the state instead of the petitioner.
In Switzerland, instead of using separate compliance measures to enforce the interim injunction order, the court ends up issuing its own provisional order, which mirrors the interim order provided before by the tribunal.
Therefore, depending on the coercive tools and compliances available in each jurisdiction, injunctive relief compliance can be sought.
In sum, in this article, different forums applicants can seek provisional measures were summarized. As mentioned earlier, applicants can seek interim measures from an arbitral tribunal, an Emergency Arbitrator, or a court. Presently, arbitral tribunals have the power to grant interim relief, which is considered an established practice in the arbitration community. Also, it was examined that the arbitral institutions have addressed the issue of interim measures in their own rules differently.