Arbitration has long proven to be an effective means of resolving disputes of a commercial nature, being an alternative to making recourse to traditional courts for various kinds of relief. However, developments in the last two decades have necessitated the evolution of a compelling subset of arbitration, because of the increased need for parties to safeguard their interests before the commencement of the main arbitral proceedings. This article seeks to critically examine this subset, known as emergency arbitration, the interim reliefs parties to an emergency arbitration often seek, the conditions that must be met for a successful relief application, emergency arbitration in global practice, the Nigerian legal framework on emergency arbitration and the general limitations of the subject matter.
1.0 EMERGENCY ARBITRATION: MEANING, CONDITIONS AND RELIEFS
An emergency arbitrator has been described as an arbitrator appointed by an arbitral institution on an urgent basis to deal with an application for interim relief which cannot wait for the constitution of the tribunal that is to deal with the substantive dispute between the parties.1 The concept of emergency arbitration came into being in response to the growing need to resolve disputes faster in arbitration, especially when there is a high likelihood that parties would suffer irreversible damage before the constitution of an arbitral tribunal–which can take months in some instances.2
Interim reliefs granted by an emergency arbitrator or arbitral tribunal could be in the form of a preliminary order, a procedural order, a direction, an interim award or a partial award. While the International Chamber of Commerce3 requires that an emergency arbitrator’s decisions take the form of an order, the Stockholm Chamber of Commerce4 and the International Centre for Dispute Resolution of the American Arbitration Association5 permit a decision in the form of either an order or an award.6
The reliefs commonly sought by parties in emergency arbitrator procedures include asset freezing orders, prohibitive and mandatory injunctions, orders for the preservation and inspection of evidence, preventive orders to avoid misuse of intellectual property or confidential information, as well as anti-suit injunctions. While an emergency arbitrator’s interim orders are not binding on the arbitral tribunal, with respect to any question, issue or dispute determined, they have to be varied, discharged or revoked, partly or wholly, by a subsequent order or award made by the arbitral tribunal upon application by any party or upon its own initiative.7
The success of a party’s application for an interim relief through an emergency arbitrator is dependent on two main factors. One is fumus boni iuris, which is the reasonable possibility that the party seeking interim relief will succeed on the merits, while the other is periculum in mora, which is the likelihood that damages will not suffice to compensate for the loss, if the measure is not granted immediately.8 These factors are reflected in Article 26(3) of the CIArb Arbitration Rules 2019.
2.0 EMERGENCY ARBITRATION IN GLOBAL PRACTICE
Notable international arbitral institutions which have included emergency arbitrator procedures in their various rules include the following: the International Chamber of Commerce (ICC), the Stockholm Chamber of Commerce (SCC), the Singapore International Arbitration Centre (SIAC), the Swiss Chambers Arbitration Institute (SCAI), the Hong Kong International Arbitration Centre (HKIAC), the International Centre for Dispute Resolution of the American Arbitration Association (ICDR/AAA), the London Court of International Arbitration (LCIA), the Netherlands Arbitration Institute (NAI) and the Mexico City National Chamber of Commerce (CANACO).
Article 29(1) of the ICC Arbitration Rules 2017 provides that a party in need of urgent interim or conservatory measures, that cannot await the constitution of an arbitral tribunal, may make an application for such measures pursuant to the Emergency Arbitrator Rules in Appendix V of the ICC Arbitration Rules. A similar provision is contained in Article 1(1), Appendix II of the Stockholm Chamber of Commerce Arbitration Rules 2010. Regarding the duration, Article 1(2) of the ICC Arbitration Rules 2017 provides, inter alia, that the powers of the emergency arbitrator shall terminate when the case has been referred to an arbitral tribunal pursuant to Article 18 of the ICC Arbitration Rules or when an emergency decision ceases to be binding according to Article 9(4) of the Appendix. Unlike the preceding provisions, Article 26 of the CIArb Arbitration Rules 2019 provides for interim measures without making mention of the term, ‘emergency arbitrator’. Rather, Article 26(1) vests the power to grant interim measures in the arbitral tribunal.
Regarding tight timeframes, the ICC, LCIA, SIAC, HKIAC and the SCC all aim to have an emergency arbitrator appointed within three working days of an application for emergency arbitration, and an award rendered within fifteen days of such appointment. The SCC has the most compact timeline, such that an emergency arbitrator is to be appointed within twenty-four hours of receipt of application and the arbitrator must render their award within five days of their referral.9 On average, an emergency arbitrator takes about eight to ten days to render its award or order after having heard the parties. However, it is not uncommon to see an emergency award or order passed in as little as two days in certain cases.10
Most arbitration rules across all nations follow an ‘opt-out’ policy with respect to emergency arbitration, which means that only if the agreement between the parties specifically excludes “Emergency Arbitrator Provisions” would these provisions not apply in toto.11
3.0 THE NIGERIAN LEGAL FRAMEWORK ON EMERGENCY ARBITRATION
The Arbitration & Conciliation Act12 is the primary legislation on arbitration in Nigeria. This is supplemented by the various Arbitration Laws of the different states of the federation.
Unlike the standard procedure, where a party to an arbitration approaches the relevant arbitral institution before the constitution of the arbitral tribunal and the commencement of the main arbitration, Section 13 empowers the arbitral tribunal to order any party to the arbitration, before or during an arbitral proceeding, to take such interim measure of protection as the tribunal may deem necessary in respect of the subject matter of the dispute, as well as require any party to provide appropriate security in connection with any measure taken by the ordered party. Regarding form, Section 26 provides that any award made by the arbitral tribunal shall be in writing and signed by the arbitrator or arbitrators.
Like the CIArb Arbitration Rules, the Nigerian Arbitration & Conciliation Act vests the power to grant interim measures in an arbitral tribunal. However, unlike the former, the Nigerian Arbitration & Conciliation Act makes no clear mention of the terms, ‘emergency relief’, ‘emergency arbitrator’ or ‘emergency arbitrator proceedings’. Notwithstanding Section 57(1), which defines an arbitral tribunal as a sole arbitrator or a panel of arbitrators, it is still unclear whether the arbitral tribunal envisioned by Section 13 is distinct from the one presiding over the main arbitral proceedings. An emergency arbitrator could fit into the context of Section 26 as a ‘sole arbitrator’, but Section 13 is more problematic since emergency arbitrators can only exercise their powers before the main arbitral proceedings.
Section 29 of the Lagos State Arbitration Law 2009 deals with the recognition and enforcement of interim measures by the court. Section 29(2) provides that an interim measure issued by an Arbitral Tribunal shall be binding, unless otherwise provided by the Arbitral Tribunal and may be recognized and enforced upon application to the Court, irrespective of the jurisdiction or territory. The concept of an emergency arbitrator in this context is strengthened by Section 7(1), which provides that the parties are free to agree on the number of arbitrators to constitute Number of the Arbitral Tribunal. However, the fact that parties, as opposed to arbitral institutions, appear empowered by this Law to choose their emergency arbitrators remains an issue.
While the Arbitration & Conciliation Act and the Lagos State Arbitration Law 2009 merely hint at the emergency arbitrator procedure, the Rivers State Arbitration Law 2019 and its Arbitration Application Rules recognise and provide for emergency arbitration. Consistent with the principle of party autonomy, parties outside Rivers State can adopt the provisions of the Law as the governing arbitration law.13 Given the ambiguity surrounding the current Nigerian legal framework on emergency arbitration, this is a welcome development and a step in the right direction.
4.0 LIMITATIONS OF EMERGENCY ARBITRATION
4.1 Enforcement of emergency arbitrators’ decisions
Despite the continuous ascent of emergency arbitration provisions to widespread status, their use has been marred by internationally inconsistent enforcement of emergency arbitrator’s decisions. As a result, enforceability is the primary concern of parties about emergency arbitration. It is also the principal reason why parties overwhelmingly seek urgent relief from national courts.14
While several states such as Singapore, New Zealand, Hong Kong and the Netherlands have amended their national arbitration laws to enable the enforceability of emergency arbitrator’s decisions, other states, notably Russia, Australia and France, are yet to specifically address the enforceability of emergency arbitrator’s decisions. These states are thus likely to adopt the traditional approach under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, of enforcing awards that are final as to the relevant issue, to the exclusion of interim awards or orders.15
4.2 Exemption of third parties
The interim reliefs granted in emergency arbitration proceedings are generally not applicable to third parties to the arbitration agreement and thus, are restricted to the parties directly involved in the arbitral proceedings and their successors. Article 29(5) of the ICC Arbitration Rules 2017 provides that its Emergency Arbitrator Provisions shall apply only to parties that are either signatories of the arbitration agreement under the Rules that is relied upon for the application or successors to such signatories. Hence, parties seeking urgent interim reliefs against third parties may have to apply to national courts.
4.3 Ex parte reliefs
Judging by Articles 1(5), Appendix V of the ICC Arbitration Rules 2017, which, inter alia, mandates the Secretariat to transmit a copy of the application for emergency measures in question and the accompanying documents to the responding party, if and to the extent that the President of the Court considers, on the basis of the information contained in the application, that the Emergency Arbitrator Provisions apply with reference to Article 29(5) and Article 29(6) of the Rules, and Article 2(3), Appendix V, which mandates the Secretariat, inter alia, to notify the parties and transmit the file to the emergency arbitrator once the emergency arbitrator has been appointed, it can reasonably be inferred that emergency arbitration is not suitable for ex parte reliefs. Again, parties seeking such may have to apply to national courts.
Emergency arbitration, when applicable, is a viable alternative with strong merits. Coupled with the guarantee of parties’ confidentiality and the involvement of experts, it is cost-effective and time-saving. Emergency arbitration provisions also reduce the strain on national courts and support international investment by reducing international investment risk.16 With emergency arbitration procedures poised to be incorporated in the proposed amendment to the Arbitration and Conciliation Act,17 it is hoped that the provisions of the Act would vest their appointment in arbitral institutions and make their interim orders enforceable. Finally, given the recognition of emergency arbitration by the Rivers State Arbitration Law 2019, it is the writer’s earnest hope that other states of the federation will follow suit in the subsequent amendments to their respective Arbitration Laws.
About the Author
Clinton C. Durueke is a 400 Level Student of the Faculty of Law, University of Lagos. He is also the current Head of Chambers of the Gani Fawehinmi Students’ Chambers, University of Lagos. He is a prolific writer, with interests in Alternative Dispute Resolution, Intellectual Property Law and Energy Law. He hopes to write further on these areas of Law in the near future.
1 P Clifford “Emergency arbitration–what’s it all about?” available at https://www.lexisnexis.co.uk/blog/dispute-resolution/emergency-arbitration-whats-it-all-about (accessed 9 August 2020).
2 M Valasek, J de Jong “Enforceability of interim measures and emergency arbitrator decisions” available at https://www.nortonrosefulbright.com/en/knowledge/publications/6651d077/enforceability-of-interim-measures-and-emergency-arbitrator-decisions (accessed 9 August 2020).
3 International Chamber of Commerce (ICC) Arbitration Rules, 2017, Art. 29(2).
4 Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, Art. 32(3).
5 International Centre for Dispute Resolution Arbitration Rules, Art. 24(2).
6 ibid., 2.
7 M Sweta, K Tandon “Emergency Arbitration In India: Concept And Beginning” available at https://www.mondaq.com/india/trials-appeals-compensation/547970/emergency-arbitration-in-india-concept-and-beginning (accessed 9 August 2020).
8 ibid., 7.
9 R Abu-Manneh “Emergency arbitrators: the case for enforcement” available at https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=C39CA4AB-724F-4B30-BCD2-041CD0B9CC14 (accessed 9 August 2020).
10 Singapore International Arbitration Centre “The Emergency Arbitrator and Expedited Procedure in SIAC: A New Direction for Arbitration in Asia” available at https://www.siac.org.sg/2013-09-18-01-57-20/2013-09-22-00-27-02/articles/420-the-emergency-arbitrator-and-expedited-procedure-in-siac-a-new-direction-for-arbitration-in-asia (accessed 9 August 2020).
11 ibid., 7.
12 Cap. A18, Laws of the Federation of Nigeria, 2004.
13 T Krukrubo, I Ozuo, M Odeh “Emergency Arbitrator and the new Rivers State Arbitration Law 2019” available at https://www.aluko-oyebode.com/insights/emergency-arbitrator-and-the-new-rivers-state-arbitration-law-2019-law/ (accessed 11 August 2020).
14 ibid., 9.
15 ibid., 9.
16 ibid., 9.
17 Lagos Chamber Of Commerce International Arbitration Centre “Appellate Arbitration, Emergency Procedures and Third Party Funding – Significant Features in the Reform of Nigerian Arbitration Law” available at http://www.laciac.org/appellate-arbitration-emergency-procedures-and-third-party-funding-significant-features-in-the-reform-of-nigerian-arbitration-law/ (accessed 9 August 2020).