EAP

The emergency arbitrator procedure (EAP) is a mechanism in the field of international commercial arbitration available to parties seeking interim relief. To fill the gap between the outset of the arbitration and the constitution of the arbitral tribunal, interim relief from an EAP can elevate parties’ procedural capacity without bothering state court proceedings.

Several major international arbitration institutions have incorporated EAPs into their arbitration rules since the first one came into practice at the International Centre for Dispute Resolution (ICDR) in 2006.

Although the EAP has existed for more than a decade, the enforceability of emergency arbitrator (EA) orders has no universal assurance so far. Two embedded thresholds in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), which is made for recognizing and enforcing arbitral awards, were to be crossed before it could play a role: (1) whether an EA constitutes an “arbitrator” within the meaning of the New York Convention; and (2) whether an EA’s order (in the form of a decision, order or award) constitutes an “arbitral award” within the meaning of the New York Convention.

Due to the different approaches to these two tests, especially considering the implied test of the “finality” of an arbitral award, the uncertainties promise no universal assurance unless lawmakers take an aggressive approach to interpreting the New York Convention in contracting states.

The attitude to enforceability varies from jurisdiction to jurisdiction. Except for a few jurisdictions such as Singapore and Hong Kong, which explicitly gave legislative teeth to EA orders, the answer is far from straightforward.

However, the significance of EAPs has been widely recognized by the users and institutions among the international arbitration community.

Enforcement of EA orders

The enforcement of EA orders is not necessarily being restricted by the legislation of the seat, and thus parties are always able to seek enforcement elsewhere. In the case of mainland China, while the legislation is silent on EAPs, parties find no prohibition from seeking interim relief from an EAP prior to the arbitral tribunal being constituted, as long as the enforcement takes place outside mainland China. It is a better approach for emergency relief, and for effective dispute resolution.

For instance, at the end of 2017, Beijing Arbitration Commission/Beijing International Arbitration Center (BAC/BIAC) administered the first EAP case ever requested in mainland China. In that case, the EA rendered a decision partially granting the interim relief requested by the claimants. Since emergency relief was enforceable in light of the Hong Kong Arbitration Ordinance, even if it was granted elsewhere, the claimants successfully sought enforcement of the EA decision in Hong Kong High Court.

Voluntary compliance

The uncertainty of enforceability does not necessarily frustrate the expectation of initiating and conducting an EAP. According to available data, the majority of users of an EAP tend to voluntarily comply with the EA orders, so court assistance is not necessary for enforcement.

In the Commission Report on EAP issued by the International Chamber of Commerce (ICC) in April 2019, only three out of the 23 EA orders issued by the ICC, partially or fully granting the interim relief requested, were not voluntarily complied with.

Similarly, after a decade of EAP practice, the ICDR has also observed that, for most of its EAP cases, court proceedings are not a must. The parties usually are subject to the jurisdiction of the EA and obligated to abide with EA orders. For one thing, most arbitration rules themselves provide that the EA orders shall be binding on the parties.

More importantly, the parties do not wish to cause any adverse impact on their subsequent arbitral proceedings in any way, due to their non-compliance. There are instances where non-compliance with an EA order may materially affect the arbitral award.

In certain jurisdictions, the arbitral tribunal is empowered to award damages for non-compliance, or to take it into account in deciding the costs, or even to impose penalties/sanctions for non-compliance. Meanwhile, the non-complying party bears the potential risk that the arbitral tribunal may draw adverse inference from its non-compliance.

Settlement promotion

In addition, the uncertainty of the enforceability does not block the light of settlement promotion, which serves as a “side effect” of EAPs. According to the above-mentioned ICC report, out of 80 EAP cases administered by the ICC, 25 were settled before the final arbitral awards were issued, and four of that 25 were settled even before the EA order was issued.

Similar to the implications of the ICC report, in the BAC/BIAC’s EAP case, the parties also actively negotiated after the formal constitution of the arbitral tribunal, and finally concluded the case by settlement. Taking this case as an example, in its analysis to make the decision, the EA highlighted the matter of “reasonable possibility to succeed on the merits”. Although this was only the EA’s prima facie analysis, and shall not bind the arbitral tribunal, it might help the parties to build consensus on some factual as well as legal issues of the case at an early stage of the arbitration proceeding.

Thus, even if the parties of that case did present more persuasive defences and strategically raised procedural objections in subsequent arbitration proceedings, the EA’s preliminary analysis of the merits can still serve as a basis for adjusting the parties’ expectations, and thus promote settlement.

Although it may be too early to address the certainty of an EAP’s enforcement under the New York Convention, it is fair to say that the practice relating to EAPs across main arbitration hubs and institutions thrives.

In the context of mainland China, bold ideas of connecting courts and arbitration institutions will respond to calls for better dispute resolution, while co-ordinating their roles in making and enforcing interim relief will help promote mainland China as a more appealing seat of arbitration.

Jolie Guo is a case manager at Beijing Arbitration Commission/Beijing International Arbitration CenterBAC/BIAC

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