What’s an Emergency Arbitrator? And Should I Appoint One?

What is an emergency arbitrator?

In the early 2000s, arbitral institutions began to introduce rules allowing for the appointment of an emergency arbitrator – a sole arbitrator appointed on an expedited basis to deal with claims for interim relief that cannot wait until the tribunal is constituted. While an arbitral tribunal can generally grant interim relief, it can take weeks, or even months, to constitute an arbitral tribunal. Without the option to appoint an emergency arbitrator, parties were forced to either wait for the tribunal to be constituted and risk severe harm, or to seek relief from domestic courts.

Most major arbitral institutions now provide for emergency arbitrators in their rules, including the International Centre for Dispute Resolution (ICDR), the American Arbitration Association (AAA), the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC).

An emergency arbitrator can step in immediately to provide interim remedies to prevent irreparable damage and protect a party’s claim in an upcoming arbitration. There are many reasons to apply for emergency relief. For example, a party may want to prevent the dissipation of disputed assets by the opposing party. Or it may want to preserve the status quo and prevent the other party from committing a specific action, like breaching a confidentiality agreement. In these instances, lack of a timely remedy may result in serious damage to a party’s rights or property.

How can I appoint an emergency arbitrator?

While the rules vary depending on the arbitral institution, the process for appointing an emergency arbitrator usually begins by filing a request with the relevant arbitral institution (along with payment of a fee) for the appointment of an emergency arbitrator. Some institutions allow appointment of an emergency arbitrator before notice of the arbitration is filed (see, for example, Article 29(1) of the ICC Rules), while others require the application to be filed either simultaneously or after filing notice of the arbitration (for example, Article 7(1) of the ICDR Rules). Typically, the arbitral institution will appoint an emergency arbitrator within just a few days of the request.

Once appointed, emergency arbitrators will generally make decisions within a short period of time. In fact, some arbitral institutions provide a limit to the time an emergency arbitrator can take to issue a decision. For example, Appendix II, Article 8(1) of the Stockholm Chamber of Commerce Rules requires the emergency arbitrator to issue a decision within five days of the application for relief.

What kind of relief can an emergency arbitrator grant?

Emergency arbitrators generally have wide discretion to grant relief in a variety of forms. An emergency arbitrator is independent from the full tribunal and, under most rules, cannot become a member of the tribunal unless the parties specifically so agree. This keeps the emergency arbitration separate from the proceedings on the merits. Notably, emergency decisions are not binding on the arbitral tribunal. Rather, emergency decisions can be amended, modified, or vacated, both by the emergency arbitrator and by the full tribunal once formed. After constitution, the tribunal replaces the emergency arbitrator. Under the rules of some arbitral institutions, the emergency arbitrator loses all authority to act upon formation of the full tribunal (see, for example, Article 7(5) of the ICDR Rules). For others, if the emergency proceedings are still pending, then it is possible for the emergency arbitrator to finish making a decision (see, for example, Appendix V, Article 2 of the ICC Rules).

Why would I appoint an emergency arbitrator instead of seeking relief in domestic courts?

There are a number of reasons why opting for an emergency arbitrator may be preferable to taking a request for emergency relief before a domestic court. First, court proceedings lack the privacy and confidentiality that arbitration proceedings can provide. Second, going through the courts can be comparatively lengthy, costly, and rigid compared to arbitration. Third, in some cases, the requested interim relief may simply not be available in the relevant court jurisdiction. An emergency arbitrator may have more flexibility to provide relief that would not be available domestically. Fourth, an international arbitration can also be simpler and more streamlined compared to a court proceeding. Lastly, in cases involving relief that spans multiple jurisdictions, an emergency arbitrator may be able to decide the issue without the parties being forced to seek relief from multiple domestic courts across jurisdictions.

The use of the emergency arbitration mechanism does have limits. For instance, under the rules of most arbitral institutions emergency arbitrators cannot order ex parte relief (one notable exception is Article 29(3) of the Swiss Rules, allowing for ex parte rulings in “exceptional circumstances”). Rather, parties are generally required to provide one another notice of the emergency arbitration. Emergency arbitrators also have no power over third parties and cannot normally bind those who are not signatories (or successors to signatories) to the arbitration agreement (see, for example, Article 29(5) of the ICC Rules, applying the emergency arbitrator provisions “only to parties that are either signatories of the arbitration agreement … or successors to such signatories.”). In addition, emergency arbitration does not come without a cost (for example, the ICC charges $40,000 for an emergency arbitrator proceeding), and parties should weigh that cost against the benefits. Lastly, unlike a judge, emergency arbitrators cannot impose sanctions such as contempt of court.

Nevertheless, the fact that emergency arbitration has been requested does not prohibit a party from seeking relief before domestic courts. In fact, most arbitral institutions expressly provide for the right to pursue interim relief from the national courts or a “competent judicial authority.” Thus, parties have the option to choose whether to turn to an emergency arbitrator, the national courts, or both, for interim relief.

Are emergency arbitration decisions enforceable?

Since the introduction of emergency arbitration, there has been debate over the enforceability of emergency decisions. After all, the nature of an emergency decision is that of a temporary stopgap to prevent irreparable harm pending the formation of the full arbitral tribunal. Most rules have a clause noting that the parties agree to voluntarily comply with the outcome of the emergency arbitration. The SCC Rules, for example, provide: “By agreeing to arbitration under the Arbitration Rules, the parties undertake to comply with any emergency decision without delay.” However, when a party chooses not to comply, it may be necessary to seek enforcement through a domestic court.

Whether a court will enforce the decision of an emergency arbitrator depends, in part, on the jurisdiction. A few jurisdictions – including Hong Kong, New Zealand and Singapore – have expressly enacted legislation establishing that emergency arbitration decisions may be enforced by courts. Others, like the United States, do not have such legislation, but can point to examples of cases in which a court recognized and enforced interim measures ordered by an emergency arbitrator (see, for example, Yahoo! v Microsoft Corporation, 983 F. Supp. 2d 310 (S.D.N.Y. 2013)).

For most other jurisdictions, the issue remains unsettled, and the case law is sparse. The uncertainty stems from a variety of factors. For one, it is not clear in most jurisdictions what the status of an emergency arbitrator is, whether as an “arbitral tribunal” or simply an adjudicator. In fact, most jurisdictions do not explicitly refer to emergency arbitration at all in their laws or statutes. Thus, even when jurisdictions allow for courts to enforce arbitral decisions, it is unclear whether an emergency arbitrator’s decision falls within that definition.

The terminology used by the relevant arbitral institution can also affect how a court views the decision. Generally, an “award” is better received than a simple “order” when it comes to enforcement. The ICDR Rules give the emergency arbitrator the option of issuing an order or an award, which permits the emergency arbitrator to signal to a court whether the emergency arbitrator considers that the decision should be immediately enforceable. In any case, the provisional nature of an emergency award means that, even if the decision is labeled as an “award,” it is unsettled whether it is considered “final” under the New York Convention, which is one of the main enforcement mechanisms for arbitral awards.

Despite the legal ambiguity, history and practice have shown that the majority of parties tend to comply voluntarily with emergency decisions because non-compliance can reflect poorly on a party later during the merits phase of the arbitration. Indeed, under Article 29(4) of the ICC rules “[t]he arbitral tribunal shall decide upon any party’s requests or claims related to the emergency arbitrator proceedings, including … non-compliance with the order.” Should a party disobey the order, the other party may ultimately request the arbitral tribunal to rectify the damage caused.

Non-compliance can also have repercussions in domestic courts. In some jurisdictions, courts may be able to indirectly enforce the emergency decision under theories like breach of contract. Domestic courts may also impose sanctions or fines, or otherwise take the original emergency decision into account when issuing any related court orders. Thus, although there remains legal uncertainty, there are several practical reasons why a party should be incentivized to comply with the decision of an emergency arbitrator.

Conclusion

If a party has a time-sensitive need and cannot wait for the full tribunal to be appointed, an emergency arbitrator can be a useful and efficient option. Parties considering emergency arbitration should retain counsel and consult their specific institution’s arbitration rules for the precise requirements.