Emergency arbitration--what's it all about?

More and more international arbitration institutions are providing for emergency arbitration procedures in their rules. Philip Clifford, partner in Latham & Watkin's litigation department and international arbitration practice and member of the Lexis®PSL's Consulting Editorial Board for Arbitration, considers the nature of such procedures as well as their advantages and disadvantages.

What is an emergency arbitrator?

An emergency arbitrator is an arbitrator appointed by an arbitral institution on an urgent basis specifically to deal with an application for interim relief which cannot wait for the constitution of the tribunal that is to deal with the substantive dispute between the parties. For example because absent relief assets will be transferred by a party before the tribunal has been appointed. In the absence of an emergency arbitrator procedure, parties wanting urgent interim relief must apply to a relevant national court.

Why is this a hot topic?

Until recently, prior to the appointment of a tribunal, parties were only able to seek urgent interim relief from a court. However, some parties, having agreed that their disputes must be referred to arbitration, would prefer their application for urgent interim relief would also be dealt with by an arbitrator. Such a preference might arise, for example, for reasons of confidentiality and/or neutrality.

Some arbitration institutions have now included an emergency arbitrator procedure in the latest editions of their rules. As arbitration institutions compete for users this has attracted a great deal of publicity and comment. Institutions whose rules do not yet provide for an emergency arbitrator service are under pressure to follow suit. On the other hand, there is considerable debate about the utility of an emergency arbitrator service as compared to seeking redress from the appropriate court.

Which institutions have an emergency arbitrator procedure in their rules?

Most notably:

• the International Chamber of Commerce (ICC)
• the Netherlands Arbitration Institute (NAI)
• the Swiss Chambers' Arbitration Institute (SCAI)
• the Stockholm Chamber of Commerce (SCC)
• the International Centre for Dispute Resolution (ICDR)/American Arbitration Association (AAA)
• the Hong Kong International Arbitration Centre (HKIAC)
• the Singapore International Arbitration Centre (SIAC)

These institutions have all made provision for an emergency arbitrator procedure in their arbitration rules. It is likely that, as other institutions update their rules, they will also consider including an emergency arbitrator procedure.

How does an emergency arbitrator process fit with the role of the tribunal?

Each set of rules has its own emergency arbitrator procedure but, in general terms the emergency arbitrator is separately from the tribunal that is to resolve the substantive dispute. It is therefore different from procedures (such as those under the London Court of International Arbitration (LCIA) Rules) for the expedited formation of the tribunal which is to resolve the substantive dispute. Once the tribunal that is to resolve the substantive dispute has been appointed, it takes over from the emergency arbitrator and may continue, amend or dismiss any order made by the emergency arbitrator.

Have there been applications to emergency arbitrators in practice?

There have been a few applications to emergency arbitrators but only a limited number. This is because many parties seeking urgent interim relief prefer to do so before the appropriate national court due to the practical issues discussed below.

What issues should practitioners be aware of in relation to emergency arbitrator procedures?

Practical issues in using emergency arbitrators include:

Sanctions

Unlike a judge, the emergency arbitrator has no power to impose a sanction equivalent to contempt of court. This can be a major advantage of interim relief from a court. The primary force of an order from an emergency arbitrator is likely to be a party's wish to remain upstanding in the eyes of the tribunal when constituted. An order from an emergency arbitrator is not generally enforceable like an award but, in any event, given the urgency underlying an application to an emergency arbitrator the normal routes for enforcing an award would most likely be too slow to be meaningful in any event.

Third parties

Unlike a judge, the emergency arbitrator has no power over third parties (such as banks holding funds for a party).

Costs

Unlike an English judge, the emergency arbitrator (and administrative services of the institution) must be paid for (the standard ICC fee is US$40,000).

Arbitrator

As with a judge, there is no ability for the parties to select the emergency arbitrator in the way that parties can often nominate members of the tribunal to resolve the substantive dispute.

Philip Clifford is the London chair of Latham & Watkin's litigation department and international arbitration practice. He has 20 years' experience in resolving disputes through arbitration, litigation and mediation. He specialises in complex cross border disputes and is a Fellow of the Chartered Institute of Arbitrators and a Solicitor-Advocate. He also sits as an arbitrator.

Interviewed by Yacine von Welczeck.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.