Amazon-Future Case : Emergency Arbitration Recognized By Current Legal Framework; No Need For Amendment, Says Delhi High Court

An Emergency Arbitrator is an 'Arbitrator' for all intents and purposes of the Arbitration and Conciliation Act, held the Delhi High Court in the high-profile Amazon-Future case.

While allowing Amazon's plea to enforce the emergency award against the Future-Reliance deal, the High Court held that an emergency award is enforceable under Section 17(2) of the Arbitration and Conciliation Act(Amazon.Com NV Investment Holdings LLC v Future Coupons Pvt Ltd and others).

A single bench of Justice JR Midha held that the current legal framework for recognizing emergency arbitration under the Arbitration and Conciliation Act is sufficient and no amendment in the laws is necessary in this regard. The Court held that sec. 17(1) of the Act empowers the Arbitral Tribunal to pass interim orders which are enforceable under sec. 17(2) of the Act. Such order is thereafter appealable under sec. 37 of the Act.

The Court, while observing that there was no need for amending the present law on Emergency Arbitration, rejected the contention of the Respondents including Future Retail Limited(FRL) that a legislative amendment was necessary to recognize 'Emergency Arbitration'. FRL had submitted that the 246th Law Commission Report suggested that the definition of "arbitral tribunal" be amended to include an emergency arbitrator.

The Court observed:

"The current legal framework is sufficient to recognize the Emergency Arbitration and there is no necessity for an amendment in this regard. In that view of the matter, reference to 246th Law Commission Report does not help the respondents."

"The Emergency Arbitration is a very effective and expeditious mechanism to deal with the Emergency Interim Relief Application and has added a new dimension to the protection of the rights of the parties. The advantage of the Emergency Arbitration mechanism is that a litigant is able to get the justice within 15 days, which is not possible in Courts. However, if the order of the Emergency Arbitrator is not enforced, it would make the entire mechanism of Emergency Arbitration redundant." 

Legal Status of Emergency Arbitrator

The Court held that an emergency arbitrator is a sole arbitrator appointed by the Arbitration Institute for considering the emergency interim relief application in cases where parties agree to arbitrate according to the Rules of that arbitration institute containing provisions relating to emergency arbitration.

Commenting upon the status of an Emergency Arbitrator, the Court observed thus:

"The status of the Emergency Arbitrator is based on party autonomy as the law gives complete freedom to the parties to choose an arbitrator or an Arbitral Institution. The powers of the Emergency Arbitrator are the same of those of a Arbitral Tribunal to decide the interim measures. The order/award of the Emergency Arbitrator is binding on all the parties. However, they do not bind the subsequently constituted Arbitral Tribunal and the Arbitral Tribunal is empowered to reconsider, modify, terminate or annul the order/award of the Emergency Arbitrator."

Characteristics of Emergency Arbitration

The Court went ahead to observe that Emergency Arbitrator has the power to deal "only with emergency relief application" who has to decide such application within a fixed time frame of 15 days.

Moreover, the Court also held that the Emergency Arbitrator cannot continue after the formation of Arbitral Tribunal and that the award passed by such Emergency Arbitrator can be reviewed or altered by such Tribunal.

"The Emergency Arbitrator order/award can be challenged where seat of arbitration is located; and ordinarily the Emergency Arbitrator will not be a part of the Arbitral Tribunal. Institutions like SIAC appoint an Emergency Arbitrator within 24 hours of the request by a party and the Emergency Interim Relief Application is decided within 15 days." The Court held.

Tracing the Emergence of Emergency Arbitration in India

The Court while relying on various International Arbitration Centres who have incorporated Emergency Arbitration in their Rules, observed that In India, the same has been incorporated by the following:

1. Delhi International Arbitration Centre (DIAC)

2. Mumbai Centre for International Arbitration (MCIA)

3. Madras High Court Arbitration Centre (MHCAC)

4. Nani Palkhivala Arbitration Centre; Indian Council of Arbitration

5. Indian Institute of Arbitration & Mediation

6. Bangalore International Mediation, Arbitration and Conciliation Centre

In this backdrop, the Court held "Rule 2.1(c) of the Rules of Delhi International Arbitration Centre (DIAC) defines ‗Arbitral Tribunal' to include an Emergency Arbitrator. Rule 14 contains similar provisions for appointment of an Emergency Arbitrator as contained in Rules of SIAC. Rule 14.8 provides that an order or of an award of an Emergency Arbitrator shall be enforceable in the manner as provided in the Act. The Rules of Mumbai Centre for International Arbitration (MCIA) and Madras High Court Arbitration Centre (MHCAC) also contain similar provisions for appointment of an Emergency Arbitrator."

The Court thereafter held that the Emergency Arbitrator is an Arbitrator for all intents and purposes, which is clear from the conjoint reading of Sections 2(1)(d), 2(6), 2(8), 19(2) of the Arbitration and Conciliation Act and the Rules of SIAC which are part of the arbitration agreement by virtue of Section 2(8). Section 2(1)(d) is wide enough to include an Emergency Arbitrator.

In the instant case, the Court noted that the parties had agreed to follow the rules of Singapore International Arbitration Centre(SIAC), which recognized Emergency Arbitration.

"By virtue of Section 2(8) of the Arbitration and Conciliation Act, the Rules of Singapore International Arbitration Centre are incorporated in the arbitration agreement between the parties.By incorporating the Rules of SIAC into the arbitration agreement, the parties have agreed to the provisions relating to Emergency Arbitration.

This Court is of the view that the Emergency Arbitrator is an Arbitrator for all intents and purposes,which is clear from the conjoint reading of Sections 2(1)(d), 2(6), 2(8),19(2) of the Arbitration and Conciliation Act and the Rules of SIAC which are part of the arbitration agreement by virtue of Section 2(8). Section 2(1)(d) is wide enough to include an Emergency Arbitrator", the judgment of Justice J R Midha said.

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