Emergency process would modernise and improve LCIA arbitration, says expert

Out-Law Analysis | 28 May 2014 | 12:36 pm | 2 min. read

FOCUS: Emergency arbitration provisions being considered by the London Court of International Arbitration (LCIA) would be welcomed by businesses and would help to modernise the LCIA procedures, bringing its processes in line with other arbitration centres.

The LCIA is considering a number of revisions to its rules (28-page / 351KB PDF) but the one that seems to be the subject of the most doubt and uncertainty is the creation of provision for emergency arbitration. It is the only part of the revised document in square brackets, which indicates that it does not yet have total support.

The LCIA should adopt the provisions, though, because they are useful and will help London compete with other major international arbitration centres such as Paris and Singapore.

Under the proposed changes a party may apply for the appointment of an Emergency Arbitrator in circumstances of “exceptional urgency” and on a “temporary” basis.

The Emergency Arbitrator will decide claims for emergency relief, such as an order freezing assets or preserving documents, no later than 20 days following the appointment. The Emergency Arbitrator is not required to hold any hearing with the parties and may decide the claim for emergency relief on any available documentation.

Once the Arbitral Tribunal has been constituted, interim measures that may be available from a court may only be sought in “exceptional cases” with the Tribunal’s authorisation.

The inclusion of this process in its rules would bring the LCIA into line with the rules used by other leading arbitration centres including the International Centre for Dispute Resolution (ICDR), the International Chamber of Commerce (ICC), the Hong Kong International Arbitration Centre and the Singapore International Arbitration Centre.

Emergency relief is often needed when one party appears to be moving assets out of the jurisdiction so that they would not be available if the case went against them, or when one party appears to be destroying documents. Emergency Arbitrators are most commonly asked to freeze assets or issue document preservation orders.

There is ongoing debate about whether Emergency Arbitrator's decisions are fully legally enforceable, but the international experience is that parties to arbitrations abide by them mostly because companies do not want to go against the wishes of arbitrators at the outset of their case. So though perhaps not fully legally binding the rulings of Emergency Arbitrators are effective.

Crucially for the parties involved in an arbitration, the process also keeps the issues private. The alternative is to go to local courts for freezing or preservation orders but the court process is open and the confidentiality which is so much of the appeal of arbitration disappears.

The fact that arbitrations increasingly cover international, multi-jurisdictional business activity is another reason that a single application to an Emergency Arbitrator is preferable to a court process, where multiple applications for interim relief might be needed in various courts and jurisdictions.

While the fact that an Emergency Arbitrator process does not have all the checks and balances as the full process or a court action, parties should not be overly concerned about the potential for abuse of the process as arbitrators are appointed by the LCIA, which also has a role in deciding whether one should be appointed at all.

The LCIA Court met on 9 May to consider the revisions and a decision is due soon on the issue, which could help the LCIA further establish itself as  a modern, effective arbitration centre. 

Alistair Calvert
 is an arbitration expert at Pinsent Masons, the law firm behind Out-Law.com

Editor's note 02.06.14: LCIA president William Park subsequently said that the emergency arbitration provision would "definitely" be included in LCIA's plans.