Out-Law Guide 6 min. read

Enforcing dispute board decisions by emergency arbitration


Over the last 10 years, many leading arbitral institutions have amended their rules to make arbitration more responsive to users needs, resulting in the introduction of emergency arbitrator procedures.

Various editions of the FIDIC Red Book give guidance on resolving construction disputes, while the 2017 FIDIC Red Book aims to resolve the inherent issues of enforcing dispute adjudication board decisions (DAB) associated with the 1999 FIDIC Red Book and its enforcement of decisions.

Sub-Clause 21.4.3 of 2017 FIDIC Red Book provides that a dispute board decision “shall be binding on both Parties, who shall promptly comply with it whether or not a Party gives a Notice of Dissatisfaction (NOD) with respect to such decision under this Sub-Clause”. A similar provision, without reference to NOD, is found at Sub-Clause 20.4 of the 1999 FIDIC Red Book.

In practice, however, it is not uncommon for the debtor to fail to honour the DAB’s or DAAB’s decision. In this situation, it is important to understand what the creditor can do to enforce the debtor’s compliance.

Avenues available when a party fails to comply with a decision

The final stage of the multi-tiered dispute resolution procedure provided under the FIDIC Red Book is arbitration. In many cases, however, the time required for a final award to be rendered could be extensive. This is not ideal for parties that need immediate relief, for example if a party needs to urgently stop the disposing of assets or prevent a breach of contract pending the final resolution of the dispute. In these cases, emergency arbitration can provide an effective solution.

Emergency arbitration allows parties to obtain interim relief without waiting for the constitution of the arbitral tribunal that is to finally determine the issue, which can often take several months. Parties can commence emergency arbitration before the request for arbitration is filed or in between the filing of the request and the constitution of the arbitral tribunal. This procedure is designed to provide a fast, cost-effective and efficient way of obtaining urgent interim measures.

The emergency arbitrator has the power to issue preliminary orders and make other interim measures necessary to preserve the status quo, pending the constitution of the arbitral tribunal. This is done in a manner similar to an application for interlocutory/interim relief before a court.

The relief sought in emergency arbitration is primarily injunctive in nature, both prohibitive and mandatory. Examples include orders:

  • to maintain or restore the status quo;
  • to preserve evidence or assets; 
  • to prevent a party from calling on performance bonds/guarantees;
  • for the counterparty to continue performing its obligations under a purportedly terminated contract; and
  • for the award of security for costs.

Relevant considerations when initiating emergency arbitration

The procedure will depend on the arbitral rules. Using the International Chamber of Commerce (ICC) Rules as an example, Article 29(6) stipulates that emergency arbitration is not available if the arbitration agreement was executed before 1 January 2012 when the emergency arbitrator procedure was introduced, the parties have expressly opted out of the provision, or the arbitration agreement arises from a treaty. 

Besides these restricting factors, parties must also meet an urgency threshold to successfully commence an emergency arbitration. Such threshold is outlined in Article 29(1) of the ICC Rules, which provides a party must prove that it requires “urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal”. This point was considered by a ruling in Gerald Metals v Timis (21-page / 145KB PDF), which found that “the test of what counts as an emergency must be whether the relief is needed more urgently than the time it would take for the expedited formation of an arbitral award”.

Other rules may provide further or different factors to be taken into account. For example, the emergency arbitration procedures under the HKIAC Administered Arbitration Rules provide a non-exhaustive list of considerations, including whether “harm not adequately reparable by an award of damages is likely to result” and whether “such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted” under Article 23.4(a).

Timeframe for commencing an emergency arbitration

The ICC, Singapore International Arbitration Centre (SIAC) and Hong Kong International Arbitration Centre (HKIAC) rules all set out different time frames for emergency arbitration.

ICC

The emergency arbitrator will be appointed within two days of the secretariat receiving the application and a decision will be rendered no later than 16 days from the date the file was transferred to the emergency arbitrator. These provisions are found in article 29 and appendix V of the ICC rules.

SIAC

The emergency arbitrator will be appointed within 24 hours from the later of the date of the receipt by the registrar of the application or the date of the receipt of payment of the emergency arbitration filing fee and deposits, and a decision will be rendered no later than 14 days from the date the emergency arbitrator was appointed. These provisions are found in articles 12 and 45, and schedule 1 of the SIAC rules.

HKIAC

The emergency arbitrator within 24 hours of the registrar receiving the application and the application deposit, and a decision will be rendered no later than 14 days from the date the file was transferred to the emergency arbitrator. These provisions are found in article 29 and appendix V of the ICC rules. These provisions are found in article 23 and schedule 4 of the HKIAC rules.

These timelines highlight the brevity of the process, with the request to commence to the resulting emergency arbitration award being typically just over two weeks, demonstrating why emergency arbitration can provide a timely solution in the case of urgency.

Enforceability of emergency arbitration rulings

Despite the proliferation of institutions offering the procedure, there may be uncertainties in some jurisdictions surrounding the enforceability of interim awards issued by an emergency arbitrator. This factor should be a consideration before embarking on the process and may be one of the main reasons deterring or discouraging parties from commencing emergency arbitration.

It is unclear whether an award obtained pursuant to an emergency arbitration falls within the ambit of the New York Convention (NYC) as the treaty only governs awards that are “final and binding”. There remain doubts as to whether the emergency arbitration award will be considered “final and binding” given its interim nature.

 In addition, the enforceability of an interim award will depend on the laws specific to the jurisdiction in which enforcement is sought. Although some countries have specifically amended their legislation to recognise and enforce emergency arbitration awards, most countries have not yet stated their positions.

The approach of various popular jurisdictions in respect of the enforceability of emergency arbitration awards is set out below:

United Kingdom

The Arbitration Act 1996 does not refer to emergency arbitrator and as a result, there is a concern as to whether an emergency arbitrator is deemed to be an arbitrator under the governing legislation.

Enforcement under section 66 is only available in respect of “an award pursuant to an arbitration agreement”.

Despite this, an award issued by an emergency arbitrator is in principle capable of being enforced under section 66.

Singapore

Under the International Arbitration (Amendment) Act 2012, an emergency arbitrator has the equivalent status to a properly constituted arbitral tribunal.

Consequently, the emergency arbitrator's order or award will be enforceable in Singapore.

Hong Kong

Under the Arbitration Ordinance (Cap. 609), the court has the power to enforce any award made by an emergency arbitrator.

Emergency relief is enforceable with leave of the court, whether the relief is granted by an emergency arbitrator within Hong Kong or in another jurisdiction.

However, the court can only grant leave to enforce an emergency relief granted outside of Hong Kong if certain requirements are met.

China

The PRC Arbitration Law does not include provisions for emergency arbitrators.

If a party seeks emergency relief in China, it must apply to a Chinese court to obtain the necessary relief.

CIETAC's emergency arbitrator provisions are mainly applicable to arbitrations administered by the CIETAC Hong Kong Arbitration Centre.

Dubai

Although the Federal Arbitration Law of the UAE does not make specific provisions for emergency arbitration, it recognizes the arbitral tribunal's power to grant interim awards.

A party to arbitration can apply for the court to enforce an interim arbitral order within 15 days of the order.

The recent introduction of emergency arbitration also means that case law on enforcement is relatively limited. This lack of clarity can create uncertainty for parties and potentially undermine the effectiveness of the emergency arbitration process. As an alternative, parties may seek the assistance of a local court for interlocutory relief, if that is available, although this is not always ideal as parties need to rely upon local law remedies, and local court systems may not be well developed or entirely impartial towards foreign parties.

In our recent experience, however, we have found that parties do tend to comply with emergency arbitration interim awards, and therefore the issue of enforceability has fallen away. This is because parties seek to avoid any negative impression of their conduct when the dispute is raised to the arbitral tribunal that finally determines the issue.

As emergency arbitration becomes more frequently used, national legislation and governing institutions will likely provide clearer guidance as to the status of emergency awards and the powers of emergency arbitrators to promote the use and effectiveness of this dispute resolution mechanism.

Co-written by Grace Fok of Pinsent Masons.

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