Introduction
The use of Emergency Arbitration as a means of securing urgent relief has seen a great increase in the past decade. India has been regarded as an emerging arbitration hub, with the government making conscious policy decisions to forward this development. It is generally considered that India would need to strengthen its stance with regard to emergency arbitrations in foreign seated arbitrations to truly compete with arbitration heavyweight jurisdictions such as London, Singapore, Paris, Hong Kong, etc.
Recently, the Mumbai Centre for International Arbitration (hereinafter ‘MCIA’) celebrated the 100th matter that it had received. This invites our attention to take a closer look at its rules to determine their international competence. Such an analysis might point us towards existing hurdles, the resolution of which would bring it closer to current institutions dominating arbitration, such as the Singapore International Arbitration Centre (hereinafter ‘SIAC’), London Court of International Arbitration, International Chamber of Commerce, etc.
In terms of picking an arbitral institute for comparison, the SIAC becomes a logical choice. This is so because the MCIA Rules are significantly influenced by the SIAC ones. Moreover, India emerged as one of the top three foreign nations to utilize SIAC services, according to their 2023 Annual Report. This indicates a familiarity and preference amongst Indians towards the SIAC Rules.
This blog provides a comparative analysis of the SIAC and MCIA Rules to highlight differences and suggest changes to the Mumbai Centre’s Rules. Additionally, it hopes to serve as a guide to parties deciding between the arbitral centres to administer their potential dispute.
Emergency Arbitration and India- A Brief Highlight
Emergency arbitration essentially refers to the interim proceedings that take place before the actual arbitral tribunal in a dispute is formally constituted. As the phrase suggests, it involves an application for urgent relief. It could be paralleled with court proceedings seeking interim relief before a Tribunal has been formally constituted, e.g., an application under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter ‘A&C Act’).
Emergency arbitration is well established in the rules of various arbitral institutions. The point of contention arises with the enforceability of the award by an emergency arbitrator. Though criticised, the position with respect to the enforcement of emergency arbitral awards has attained a degree of certainty in India. The Delhi High Court in its judgment in Raffles Design International India Pvt. Ltd. v. Educomp Professional Education Ltd.,[i] derecognised the value of foreign seated emergency arbitral awards by holding that such an award cannot be enforced directly. It stated that the Applicant would have to proceed for interim relief under Section 9 of the A&C Act, where the Court would “independently apply its mind” to grant interim relief [¶105]. For domestic seated emergency arbitrations, the Delhi HC recognised their enforceability as an award by a regular tribunal under Section 17 of the A&C Act in its decision in Amazon v. Future Retail[ii] [¶150-151].
In conclusion, a domestic emergency arbitral award enjoys a considerable degree of certainty compared to its foreign seated counterpart. This incentivises Indian parties to utilise the services of the MCIA and other domestic arbitral institutions over foreign ones. Such incentives increase the commercial utility of this comparative analysis.
Emergency Arbitration under MCIA and SIAC Rules- A Considerable Deviance
To begin with, emergency arbitration is solely dealt under Rule 14 of the MCIA Rules. The SIAC Rules, however, provide for a separate schedule (Schedule 1). Though both sets of rules, in substance, are majorly similar, the MCIA Rules are silent on certain fronts that are covered by the SIAC Rules. These deviances could potentially lead to material differences in the post-award stage and should be adequately considered by parties and their legal representatives before picking an arbitral institution.
First, we can analyse the structure and timeline for emergency arbitrations provided by both institutes. Both Rules provide for the concerned authority (Registrar and Chairman) to seek to appoint an emergency arbitrator within a single day of receiving the requisite application and fees. The emergency arbitrator sought to be appointed is mandated to disclose any circumstances which might give rise to “justifiable doubts” as to their impartiality. The MCIA Rules give parties a single day after such disclosure to protest the appointment of the emergency arbitrator,[iii] while the SIAC Rules provide for two days.[iv]
After the appointment, both rules require the emergency arbitrator to pass an award within 14 days of the appointment unless precluded by exceptional circumstances.[v] Notably, the SIAC Rules mandate that the emergency arbitrator creates a schedule for the proceedings and arguments of the Parties within two days of their appointment.[vi] Such a mandate provides more structure and expediency to the SIAC emergency arbitration compared to an MCIA one.
Second, it is important to highlight the residual provision relating to the seat of emergency arbitration present in the SIAC Rules that is not parallelled by the MCIA ones. Rule 4 of Schedule 1 of the SIAC Rules states that the seat for emergency relief will be the seat of the arbitration as agreed to by the parties and, failing such an agreement, Singapore. In the absence of such a residuary provision, an emergency arbitral tribunal under the MCIA Rules would find itself undertaking an additional exercise to determine the seat of the emergency relief (in the absence of an agreement).
Even if we assume that the general provisions apply to an emergency arbitration, Rule 23 of the MCIA Rules, governing “Seat and Venue”, do not provide much guidance as it provides discretion to the Tribunal in determining the seat. The effect of this ambiguity, or Tribunal discretion, would create avenues for the party to resist a grant of emergency interim relief on non-substantial grounds, frustrating the basis of emergency arbitration.
Third, the SIAC Rules contain a specific averment to the value of a finding of jurisdiction by the emergency arbitrator. It categorically states that the Tribunal eventually constituted is not bound by any finding of jurisdiction by the emergency arbitrator. [vii] The MCIA Rules do not state so. Even though the MCIA Rules recognize the ability of the Tribunal to find its own jurisdiction ordinarily, [viii] its interaction with an emergency arbitrator’s finding (a creation of the same contract) is not clear. This creates further ambiguity and avenues for the party to frustrate the emergency arbitral proceedings in front of the eventual tribunal.
Fourth, the SIAC Rules recognise that an emergency arbitrator’s award ceases to be binding if the Tribunal is not constituted after 90 days of the passing of the award.[ix] No parallel provision exists in the MCIA Rules. Hypothetically, a Claimant can utilise their MCIA emergency award in front of an Indian court (where it would be directly enforceable due to Amazon) to gain coercive relief against the Respondent. Such could include a disclosure of assets, an injunction over assets or transactions, etc., under the Code of Civil Procedure, 1908. This allows the Claimant to delay the actual arbitration and rope the Respondent into a flurry of coercive enforcement litigation.
Finally, it is necessary to highlight the difference in costs between the two institutes for this note to be of practical assistance to contracting parties. The administration fee of an emergency arbitration at the SIAC is USD 3715 (approx.) for foreign parties,[x] compared to USD 956 (approx.) charged by the MCIA.[xi] For the emergency arbitrator’s fees, the SIAC fixes the amount at USD 18575 (approx.) unless the Registrar determines otherwise.[xii] The MCIA, however, limits the emergency arbitrator’s fees to 20% of a sole arbitrator’s fees (calculated using the regular Schedule) which cannot be lesser than USD 3585 (approx.). As can be seen, an emergency arbitration under the MCIA is significantly cheaper than the SIAC.
Conclusion
The SIAC and MCIA exist to serve the same goal of providing a platform for the efficient and effective resolution of commercial disputes. An essential tool to achieve this is the process of emergency arbitration. However, as pointed out above, there are nuanced differences in MCIA’s Rules, which creates ambiguity, leading to opportunities for frustrating the process of emergency arbitration. In light of the same, the MCIA might aid its objective of consolidating its status as a premier international arbitration institute by clarifying its provisions regarding emergency arbitration.
References
[i] 2016 SCC OnLine Del 5521.
[ii] 2021 SCC OnLine Del 1279.
[iii] MCIA Rules, 2016, R. 14.3.
[iv] SIAC Rules, 2016, Schedule 1, R. 5.
[v] MCIA Rules, 2016, R. 14.6; SIAC Rules, 2016, Schedule 1, R. 9.
[vi] SIAC Rules, 2016, Schedule 1, R. 7.
[vii] SIAC Rules, 2016, Schedule 1, R. 7.
[viii] MCIA Rules, 2016, R. 20.
[ix] SIAC Rules, 2016, Schedule 1, R. 10.
[x] SIAC Rules, 2016, Schedule of Fees.
[xi] MCIA Rules, 2016, Schedule of Fees.
[xii] SIAC Rules, 2016, Schedule of Fees.
Author(s)
Ranak Banerji
Student at WBNUJS, Kolkata