A&O’s view on the Law Commission’s final report on reform of the Arbitration Act 1996: emergency arbitration (Part 4 of 5)
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Enforcement of emergency arbitrator awards
Emergency arbitration did not exist when the Act was passed in 1996. In recent years, numerous arbitration institutions have introduced rules providing for emergency arbitration. This caters for instances where emergency relief (such as preservation of evidence) is required before an arbitral tribunal is constituted. This accelerated process results in an interim decision from an emergency arbitrator, which can be later modified by the arbitral tribunal once that tribunal is fully constituted.
A question considered by the Law Commission was whether, and if so how, the Act should be amended to take into account emergency arbitration.
The Law Commission ultimately concluded that only one amendment is required. It considered that the Act should provide for the enforcement of emergency arbitrator decisions, in two ways:
- providing emergency arbitrators with the power to issue a peremptory order (which, if ignored, could be enforced by the tribunal or the court under sections 41 and 42); and
- allowing emergency arbitrators to give permission to a party for an application to the court for emergency interim relief under s. 44(4).
Act otherwise untouched
The Law Commission otherwise decided that statutory intervention was not required.
First, the Law Commission briefly raised, but quickly dismissed, the idea of a statutory scheme for emergency arbitrators. If parties wish for emergency arbitration to be available, they should agree to a set of arbitration rules which provides for it.
Secondly, the Law Commission considered whether provisions of the Act should apply to emergency arbitrators as much as to ‘full’ arbitrators. For example, s. 33 of the Act requires ‘full’ arbitrators to observe due process. Should this also apply to emergency arbitrators? The Law Commission concluded that the Act should not regulate emergency arbitration. This should be left to the institutional rules which otherwise govern emergency arbitration. It was deemed too uncertain to delineate which provisions of the Act should apply to emergency arbitration and which should not.
Thirdly, the final report addressed whether a clarification was needed as to the availability of court support in urgent situations under s. 44 of the Act when the parties also have access to emergency arbitration. Following Gerald Metals SA v Timis, there has been uncertainty as to whether parties could use s. 44 to obtain interim relief from the court if emergency arbitration is available to them.
Whilst numerous consultees raised this uncertainty, the Law Commission ultimately concluded that Gerald Metals did not exclude court support even where emergency arbitration was available. As a result, it found that no clarification was needed.
The Law Commission’s targeted recommendations pragmatically envisage a ‘hands-off’ approach, reflecting that emergency arbitration typically (1) requires significant (and time-sensitive) management, for which the court is not well suited, and (2) is regulated by arbitral institutions under their rules.
Emergency arbitration can be a useful tool for parties that need urgent relief. That urgency will heighten the need for prompt compliance. Bolstering the enforceability of emergency arbitrators’ decisions will therefore provide welcome support for the process.
In our fifth and final post, we consider some of the proposed reforms that failed to make it into the Draft Bill.