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The rise of emergency arbitrator provisions in arbitral institutional rules

Until relatively recently, where a dispute was subject to arbitration, a party in need of emergency interim relief would have to apply to the relevant national courts for an interim order, or alternatively await the constitution of the arbitral tribunal. The resultant delay in obtaining relief from the court or tribunal could potentially result in severe prejudice to the applicant party (by giving the respondent sufficient time and notice to dissipate assets, or otherwise affect the status quo in a way that would frustrate or render ineffective any interim relief).

In order to address these issues, a number of arbitral institutions have recently adopted "emergency arbitrator" provisions into their rules. These provisions seek to provide a non-judicial mechanism for obtaining urgently-needed provisional relief at the outset of arbitral proceedings.

The ICDR was the first major arbitral institution to introduce emergency arbitrator provisions, as part of its amended rules in 2006. Since then, many other major arbitral institutions have followed suit, including the ICC, SIAC and HKIAC. The LCIA's recently published final draft of its new Rules also includes emergency arbitrator provisions for the first time.

Each of these sets of rules takes a broadly similar approach to emergency arbitrators. They provide for the appointment of a sole emergency arbitrator by the arbitral institution within one or two business days of receiving an application from one of the parties. In contrast to certain ex parte interim court applications (like freezing injunctions in many Commonwealth jurisdictions), the respondent party is always given notice of the emergency arbitrator application. The emergency arbitrator will usually have broad discretion to determine the conduct of any proceeding, including determining whether any kind of hearing is appropriate, and his/her decision will take the form of a temporary order or an award, which automatically lapses within 30 to 90 days after constitution of the tribunal. Some institutions (the ICC, SCC, SIAC/Swiss and draft LCIA Rules) require the emergency arbitrator to issue his/her award or order within a defined period of time (ranging from 5 to 20 days from receipt of the file). Other institutions (such as SIAC, ICDR/AAA and CANACO) have no such timing provision. As soon as the full tribunal is constituted, the emergency arbitrator ceases to play any further role in the arbitral proceedings.

An alternative approach to obtaining expeditious tribunal-ordered provisional measures has been adopted by many arbitral institutions, which allow for the expedited constitution of arbitral tribunals in appropriate cases (see, for example, the LCIA Rules, the JAMS Rules, the DIFC Rules and the DIA Rules). These expedited procedures are offered in conjunction with, or as alternative to, emergency arbitrator provisions. While these expedited appointment mechanisms can be useful in circumstances where time is of the essence in resolving the parties' dispute, they are generally not appropriate in circumstances where provisional relief is required as a matter of exceptional urgency. In those circumstances, emergency arbitrator provisions offer a better option for the parties.

Although emergency arbitrator mechanisms can ensure that the applicant is granted fast and effective interim relief, it is important to be aware that these mechanisms also require very prompt and professional action by the arbitral institution and emergency arbitrator, which imposes burdens and risks on the institution, and thus, the parties. Most obviously, the emergency arbitrator is being required to make his/her decision within a matter of days of receiving the file, usually without the benefit of receiving and considering each party's fully particularized arguments and evidence on the relevant issues. In such circumstances, there is obviously an increased risk of the emergency arbitrator getting it "wrong."

When deciding whether to utilize emergency arbitrator provisions, parties should also bear in mind certain other considerations. Specifically, the emergency arbitrator procedures are unlikely to be suitable when relief is being sought against a third party to the arbitration agreement, where enforceability of any award or order may be impossible. Additionally, these procedures may also not be suitable where interim relief application needs to be made ex parte.

More general questions as to the enforceability of emergency arbitrator awards/orders also remain to be resolved, primarily whether such relief can be deemed sufficiently final and dispositive to qualify as an enforceable award for the purposes of the New York Convention (which ensures the enforceability of international arbitral awards in all 149 signatory countries).

Certain states (such as Singapore and Hong Kong) have specifically amended their national arbitration laws to confirm the enforceability of emergency arbitrator awards/orders, whereas the courts of the US have confirmed in a series of recent judgments that they are also likely to recognize the enforceability of any emergency arbitrator relief. While these are welcome developments, uncertainty remains as the enforceability of emergency arbitrator orders and awards outside these jurisdictions. These enforceability questions will only be resolved in time.

The growing popularity of emergency arbitrator provisions appears to be a sensible step towards improving the arbitral process, by offering parties a realistic alternative to the courts when urgent interim relief is required. Nevertheless, parties should be mindful of its limitations and risks, and carefully consider whether it may be an appropriate option bearing in mind the particular circumstances of the case.