Thought leadership from our experts

Interim Relief and the Court’s Role

Arbitration provides parties with a unique opportunity to prospectively choose a private system of justice. Parties who elect to arbitrate have enormous latitude to select which arbitration rules to follow, the language to be used, and even the applicable law. In recent years a number of international arbitration institutions have amended their respective rules to facilitate both obtaining interim relief from the tribunal and appointing emergency arbitrators where the issue is raised prior to the tribunal's appointment. However, even with these amendments, an arbitral tribunal is not a fully self-contained forum. National courts continue to play a vital role before, during, and after arbitration proceedings. In many respects effective arbitration depends on national courts, particularly for enforcement.

The ICC is one example of an institution that has taken steps toward modifying their rulesto allow for emergency measures of protection. According to the rules of the ICC, an emergency arbitrator may be appointed in order to deal with matters of interim relief. A party is able to seek relief before an arbitral tribunal is in session if the party is able to demonstrate the urgency of a matter. The party is thus provided with a relatively quick alternative to state courts for seeking interim measures, without the delay that sometimes accompanies the appointment process of the arbitral tribunal.

The International Centre for Dispute Resolution (ICDR) is another well-known arbitral institution. The ICDR international rules have had similar emergency measures available since 2006 and, in that time, the ICDR reports that they have had a number of rulings under its emergency arbitrator provisions, with an average decision time in the range of 20 days from filing.

A more recent example of an arbitration institution trying to make it easier for parties to obtain interim relief from an arbitral tribunal arises out of the July 2013 Hong Kong Arbitration (Amendment) Ordinance (HKAAO). Through the HKAAO, Hong Kong's Administered Arbitration Rules changed such that there are now clearer procedures for emergency applications for interim relief and more well-defined powers of emergency arbitrators.

If a matter is deemed to be urgent, the rules specify that an emergency arbitrator will be appointed within two days after receipt of an application. The emergency arbitrator will then make an order or award within 15 days, a period which may be extended by agreement of the parties.

With the HKAAO, emergency relief granted inside Hong Kong is enforceable in the same manner as an order or direction of the court. However, relief granted outside Hong Kong will only be approved if the party seeking to enforce the relief can demonstrate that it is temporary and designed to serve one of six delineated purposes. The ability of a party to enforce emergency relief therefore varies greatly if it was not granted inside Hong Kong. These types of enforcement issues need to be considered when making the decision to apply for interim relief from an arbitral tribunal or from a local court.

When a party is faced with the risk of assets dissipating or evidence vanishing, the party generally has the choice of two avenues to seek preventative relief: (i) within the arbitral framework, or (ii) outside of the arbitral framework. The role of national courts is not limited to exercising facilitative and supervisory oversight of an arbitration proceeding; instead, in some instances, national courts are an indispensable forum outside the arbitral framework where emergency relief is sought and granted.

A party may elect to pursue emergency relief through national courts for a number of reasons. The most significant considerations are: (i) the relief may be obtained more quickly; (ii) the relief is more directly enforceable; and (iii) the relief may be more cost effective.

If it is critical to freeze assets or preserve evidence, a day can make all the difference. National courts generally can provide more expedient relief because notice requirements may be waived, and in some instances, orders are granted immediately. In contrast, if an arbitral tribunal has not been constituted, there remains the potential for delay in the time before an emergency arbitrator is appointed and the interim or conservatory order is made. Even if arbitral proceedings are ongoing and no emergency appointment is necessary, the party who obtains interim relief must have a national court recognize and enforce the arbitral order, assuming there is a risk that the opposing party will not voluntarily comply with the order. This two-step process of obtaining an emergency order and then seeking to have it recognized and enforced by a national court takes time and is more circuitous than applying to a national court directly. An arbitrator also has no jurisdiction to bind third parties in the enforcement of the order.

There are, however, potential disadvantages for the party who chooses to pursue interim relief from a national court instead of through the arbitral framework.

Because national courts are public forums, a party who desires or requires confidentiality may elect to resolve interim issues solely within the arbitral framework. In contrast to the relative certainty of selected arbitral rules, some national courts may apply unfavourable foreign procedural and substantive law. This problem is particular acute when state or national companies are party to the dispute. Another consideration is reliance on foreign counsel. Once an arbitral order is obtained, foreign counsel need only be retained to assist with seeking recognition and enforcement; in contrast, foreign counsel play a more central role in obtaining an order directly from a national court. While a party's level of confidence in the foreign counsel may not be an issue in some circumstances, in other circumstances, newly retained foreign counsel may lack familiarity with the procedural history of the dispute, the relationship between the disputing parties, and the business needs of their client.

In some cases involving a high degree of urgency, parties seek relief though both interim arbitral proceedings and the courts concurrently in order to prevent assets from dissipating or evidence disappearing. In those situations, a court order may be necessary to obtain relief that is effective immediately in the local forum. Once the interim arbitration proceedings are concluded and an arbitral order is (hopefully) granted, the arbitral order becomes an effective bargaining chip in the arbitration proceedings itself. Most of the institutional rules provide either expressly or otherwise for the tribunal to address breaches of interim arbitral orders (see, for example, ICC Rules, Article 29(4)).

In short, there are a number of considerations and options that must be evaluated when assets are at risk of dissipating or other situations arise that require urgent relief in international arbitrations. Whether an application is made before an emergency arbitrator, the tribunal or the courts, when a case calls for interim relief national courts assistance is a necessary part of the strategy.