Emergency Arbitration: The Unsung Hero of International Arbitration

Emergency arbitration. You know it, you…probably don’t think much about it, honestly. But the introduction of emergency arbitration is one of the most important recent changes in the field of international arbitration.

Many parties agree to international arbitration because they would prefer to avoid local or national courts, some because bringing a case to court can be a long, drawn-out process, others because they hope to preserve some measure of confidentiality. However, prior to 2012, parties who sought to procure interim measures had no recourse other than to appeal to a court. The necessity of an alternative to courts for those seeking interim measures gave rise to Article 29 of the International Chamber of Commerce (ICC) Rules of Arbitration, which was introduced in 2012 and established emergency arbitration.

Article 29 provides a way to obtain access to an arbitrator before the arbitral tribunal is in place. Article 29 states that “[a] party that needs 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.” For all agreements into which parties entered after January 1, 2012, emergency arbitration is automatically available without any sort of opt-in procedure: parties may simply use the emergency arbitrator when and if they choose to do so. However, those who entered into their clauses prior to January 1, 2012, are also able to make use of the emergency arbitrator so long as both parties opt in.

Emergency arbitration offers numerous benefits to those who choose to participate in it, including the remarkable speed of the emergency arbitration process. An emergency arbitrator is appointed shortly after submission of the application, and this appointment can sometimes be faster than finding a judge, although this is not always the case. Due to the speed of the proceedings, cases are often decided solely on the basis of written documentation, without the need for a hearing. There may sometimes be a telephonic conference, but this is not a necessary aspect of emergency arbitration. Finally, the arbitrator must issue an order by no later than 15 days after receipt of the file. A recent report noted that most emergency arbitration cases settle within or just outside of the 15-day window, solidifying emergency arbitration’s reputation as an efficient negotiation tool.

Another benefit of emergency arbitration is that, unlike an appeal to a court, it ensures that your case will be heard before the arbitral tribunal is formed, as a judge to whom one applies for interim measures could note that the parties were engaged in arbitration and refuse to hear the case, instead directing the parties back to arbitration. Further, while a judge may be a more appropriate resource if your client has a simple, easily comprehensible case, an emergency arbitrator could be a more appropriate resource in cases such as complicated commercial disputes, where the arbitrator’s expertise would mean that they were particularly qualified to wade through the complexities of the case.

Emergency arbitration also allows you to test the merits of your case, and often leads to settlement. Andrea Carlevaris and José Ricardo Feris argue that “not just the content of the order, but also the mere availability of emergency arbitrator proceedings may contribute to, and even facilitate, the amicable resolution of the dispute.” Additionally, the emergency arbitrator’s decision isn’t binding, as the arbitral tribunal may amend or reverse the arbitrator’s decision. This provides a second level of accountability that ensures that decisions arising from emergency arbitration are well-reasoned and fair.

Emergency arbitration is not without its flaws; for example, due process concerns mean that emergency arbitration does not allow for ex parte applications. This prevents parties from taking advantage of certain forms of interim relief, and removes one possible avenue that parties could use to preserve confidentiality. Additionally, as previously mentioned, the emergency arbitrator’s decision is an interim—not final—order that must be approved by the tribunal, thus making it unenforceable in a number of jurisdictions. Fortunately, emergency arbitration decisions have a compliance rate of nearly 87 percent, which means that it is unlikely that enforcement will be a consideration in the average emergency arbitration case. With a price tag of $40,000, emergency arbitration is far from cheap, although that seemingly high price could be a drop in the bucket compared to the sums at play in the relevant case, and could be mitigated by the ability of emergency arbitration to encourage settlement. Finally, the likelihood of receiving relief from an emergency arbitration is fairly low. Only 28.75 percent (23 of 80) cases noted in the ICC Commission Report on Emergency Arbitrator Proceedings resulted in relief. This admittedly disheartening number can, however, be at least partially explained by the fact that “the nature of interim relief is such that urgent relief is justified only in exceptional circumstances.”

Despite a few minor issues, the development of emergency arbitration is, by and large, a valuable addition to the ICC’s Arbitration Rules. It provides an alternative option for the resolution of issues without the need to wait for the formation of the tribunal or involvement with local courts, thus protecting parties’ privacy and allowing for the efficient resolution of disputes. It allows parties to appeal to emergency arbitrators who may be far more familiar with the specialized subject of a case than a judge, and lets parties test out their cases before completing the arbitration process. Finally, the multiple layers of accountability in emergency arbitration cases helps ensure that any relief granted is reasonable and fair. When you consider its many benefits and few detractions, it is clear that emergency arbitration is one of the most positive recent additions to the realm of international arbitration.

By Amy E. Allen, Junior Staffer

Sources:

The Arbitration Brief

Emergency Arbitration: The Unsung Hero of International Arbitration

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