Introduction of emergency arbitrator procedures

By Ada Zhang, Martin Hu & Partners
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The emergency arbitrator procedure refers to a system that provides emergency relief to the parties before the formation of the arbitral tribunal through the adoption of provisional measures by the emergency arbitrator. Emergency arbitrator procedures have been laid down by major international arbitration institutions. In China, the Arbitration Rules of the China (Shanghai) Pilot Free Trade Zone (2014) took the lead in introducing this mechanism. Soon afterwards, the China International Economic and Trade Arbitration Commission (CIETAC) and Beijing Arbitration Commission (BAC) also specified the procedures in their 2015 arbitration rules, respectively.

Ada Zhang Associate Martin Hu & Partners
Ada Zhang
Associate
Martin Hu & Partners

In accordance with established practice, arbitration institutions must, upon or after acceptance of relevant applications from the parties, designate an emergency arbitrator who will make decisions on emergency interim relief based on the particular circumstances of the parties. The decision shall be binding upon both parties. If the law provisions of the state where the award was issued or executed empower enforceability to the decisions of emergency arbitrators, the applicant may seek further enforcement of the emergency relief via a competent court. The operational mechanism of the emergency arbitrator procedures of major international arbitration institutions are summarized below:

The start of procedures. In practice, it may take a month or more from the filing of the arbitration application to the formation of the arbitral tribunal. In the meantime, it is important to seek effective relief if the evidence is being eliminated or the legitimate rights and interests of a party are being unlawfully infringed.

In case of emergency, the parties may, before the formation of the arbitral tribunal, file an application for the emergency arbitrator procedure and submit the application documents and corresponding evidence.

If the application is accepted, the president of the arbitration institution must appoint an emergency arbitrator within one or two days upon receipt of the application documents, and advance payment of the costs for the emergency arbitrator procedures.

The emergency arbitrator shall establish a reasonable work schedule within two days of his/her acceptance of the appointment, and give the parties an opportunity to make presentations.

The authority of emergency arbitrators. In order to balance the interests of the parties concerned and protect the legitimate rights and interests of the parties to the interim measures, the emergency arbitrator may require the applicant to provide a corresponding guarantee before making a decision. Meanwhile, the emergency arbitrator must preserve a strictly neutral position. In order to ensure impartiality, emergency arbitrators are generally not allowed to act as members of the arbitral tribunal.

The decision of emergency arbitrators. Generally speaking, the decision of the emergency arbitrator must be made within 15 days of the date of the arbitrator’s acceptance of the appointment, and must be binding upon both parties. The decision of the emergency arbitrator must be effective until the rendering of a final award by the arbitral tribunal or occurrence of other circumstances (for example, the applicant withdraws the arbitration claims, or the arbitral tribunal is not formed within the prescribed period).

However, the decision made by the emergency arbitrator in the emergency arbitrator procedure is an interim measure, and the enforcement of the interim measure becomes a major issue under the procedure. The decision of the emergency arbitrator is binding upon both parties. However, such binding force theoretically depends on the relevant law provisions of the state where the award was issued or executed.

The New York Convention in 1958 has clarified the enforcement of foreign arbitral awards. But whether the interim measures for foreign arbitral awards can be enforced has been a controversial issue.

The UNCITRAL Model Law on International Commercial Arbitration, as amended in 2006, clearly stipulates the enforcement of interim measures on foreign arbitration. Paragraph 1 of article 17 H (recognition and enforcement) of the above-mentioned law provides that an interim measure issued by an arbitral tribunal shall be recognized as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which it was issued, subject to the provisions of article 17 I.

In order to limit the circumstances in which the court may refuse to enforce an interim measure, article 17 I(1) of the 2006 amendment provides the circumstances under which recognition or enforcement of an interim measure may be refused, and article 17 I(2) specifies that the court where recognition or enforcement is sought must not, in making that determination, undertake a review of the substance of the interim measure.

In recent years, a number of countries and regions including Australia, Singapore and Hong Kong, etc., have gradually begun to recognize and enforce such interim measures. The Singapore International Arbitration Act provides that the arbitral tribunal is entitled to issue temporary injunctions and any other interim relief measures. Just like the court orders, the orders of arbitral tribunal are also enforceable.

However, there are few legislations concerning interim measures in China, and related laws mainly include articles 81 and 101 of the Civil Procedure Law, and articles 28, 46 and 68 of the Arbitration Law.

In judicial practice, the interim preservation measures are enforced by the court, and the arbitration institution itself does not have the right to enforce interim preservation measures. Meanwhile, according to article 272 of the Civil Procedure Law, where the parties apply for preservation, the foreign-related arbitration institutions in the People’s Republic of China must submit the application of the parties to the intermediate people’s court of the place where the respondent resides, or where the property is located.

Therefore, the arbitral tribunal is not entitled to make relevant preservation measures or take other interim measures under the existing Chinese law. There is no legal basis for China’s courts to recognize and enforce the emergency interim measures made by the arbitral tribunal. Although there are restrictions on the enforcement of the emergency arbitrator’s decision under the current judicial system in China, the introduction of emergency arbitrator procedures plays a positive role in the promotion of the development of international commercial arbitration.

Ada Zhang is an associate of Martin Hu & Partners

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