[Rishav Sen is a 4th Year B.A., LL.B. (Hons.) student at Jindal Global Law School, Sonipat. He is grateful to Abhijeet Shrivastava and Anujay Shrivastava for providing their valuable feedback on this post]
One of the primary objectives of international commercial arbitration is to ensure the enforceability of arbitral awards. To achieve this in practice, once the legal requirements for enforceability are met, the award debtor must have sufficient assets to ensure that the award is satisfied in favour of the award creditor. For this purpose, parties to the arbitration can take recourse to interim reliefs from domestic courts, in the form of injunctive measures, which restrain the other party from diluting their assets. Alternatively, due to the time-sensitive nature of such a relief, parties can rely on emergency arbitration procedures, which have been incorporated by several arbitral institutions within their rules for granting urgent relief prior to the constitution of an arbitral tribunal.
Recently, the Supreme Court of India in Amazon v. Future Retail held that an award delivered by an emergency arbitrator in a domestic-seated arbitration is enforceable under section 17 of the Arbitration and Conciliation Act, 1996 (the “Act”). However, this judgement did not delve into the enforceability of a foreign-seated emergency award. Consequently, relying on the broader principles in the Supreme Court’s holding, I shall analyse the enforceability of a foreign-seated emergency award under Part II Chapter I of the Act. Moreover, I shall attempt to determine whether a court order granting or refusing to grant enforcement of such an award could be appealed under section 50 of the Act.
Enforceability of a Foreign-Seated Emergency Award in India
The Delhi High Court in Raffles v. Educomp held that a foreign-seated emergency award cannot be enforced in India. The court reasoned that the Act does not have a provision corresponding to Article 17H of the Model Law, which allows for the enforcement of an interim award, irrespective of the country in which it was issued. However, this reasoning fails on two counts. First, I shall establish that an interim award falls within the scope of a ‘foreign award’ under section 44 of the Act. Second, an emergency award is an ‘interim award’ within the broader framework of the Act. Proving the above two premises would lead us to conclude that a foreign-seated emergency award is a foreign award within the scope of section 44 and, consequently, it can be enforced under section 48.
Beginning with the first premise, the scope of a foreign award under section 44 extends to arbitral awards made in pursuance of an arbitration to which the New York Convention applies. However, this provision does not offer us a definition for an arbitral award. Moreover, we cannot rely on the definition of an arbitral award under section 2(1)(c) of the Act, which includes an interim award within its scope. This is because the applicability of Part I of the Act to foreign-seated arbitrations was excluded following the Supreme Court’s decision in Bharat Aluminium v. Kaiser Aluminium. Therefore, we need to turn our attention to the New York Convention, which does not provide an explicit definition for an arbitral award. Nevertheless, authors have interpreted Article III to limit enforceability under the New York Convention to awards that are final and binding on the parties. Hence, the question that needs to be addressed is whether an interim award is final and binding on the parties.
Authors such as Albert Jan van den Berg have answered the above question in the affirmative due to the following reasons. First, keeping in mind the pro-enforcement objectives of the New York Convention, interim awards should not be excluded from the scope of arbitral awards capable of being enforced. This is because, due to the rarity of interim measures in 1958, there is no reason to believe that the drafters of the New York Convention deliberately excluded interim awards from its scope. Second, an interim award provides a final and definitive conclusion to an evidently self-contained issue of whether interim measures are justified.
Herein, a concern could be raised that the order of an emergency arbitrator could be superseded by the arbitral tribunal once it is constituted. However, this does not affect the finality of the emergency award since it can still be enforced until it is rescinded by the award of an arbitral tribunal, in which case the subsequent interim award can be enforced. The above contention is further supported by the decision of various foreign courts, including in the United States, Singapore, Ukraine, and Egypt. Therefore, due to its final and binding nature, an interim award that is foreign-seated falls within the scope of section 44.
Coming to the second premise, the Supreme Court in Amazon emphasized at great length the principle of party autonomy. The Court held that a conjoint reading of sections 2(6), 2(8), 19(2), and 21 of the Act dictates that parties have the freedom to choose a set of arbitral institutional rules to govern their dispute. Presently, the parties had agreed to the application of the SIAC Rules, which allow for emergency arbitration proceedings. Therefore, an emergency award would be recognised by the Court since there is no express or implied bar against it under the Act. Thus, having established the two central premises, it is possible conclude that an emergency award falls within the scope of section 44, if it is foreign-seated, and it can consequently be enforced under section 48.
Maintainability of an Appeal Against a Foreign-Seated Emergency Award
Having addressed the more fundamental question of whether foreign-seated emergency awards are enforceable in India, the follow-up question would be whether a court order granting or refusing to grant enforcement of a foreign-seated emergency award is appealable. The Supreme Court in Amazon held that section 37 is a complete code for dealing with an appeal against any orders and awards made under the Act. Accordingly, the Supreme Court noted that an appeal against an interim award made under section 17(1) is maintainable under section 37(2)(b). However, there is no scope for an appeal against an order of the court under section 17(2). Therefore, the Supreme Court concluded that a court order granting or refusing to grant enforcement of a domestic-seated emergency award cannot be appealed by relying on section 37 or the Code of Civil Procedure, 1908.
Nevertheless, it is important to note that the applicability of Part I of the Act is excluded in case of a foreign-seated emergency award. I have previously sought to establish that a foreign-seated emergency award can be enforced under section 48 in Part II. Therefore, an appeal against a court order granting or refusing enforcement of a foreign-seated emergency award will be maintainable under section 50(1)(b).
The difference in outcome between the maintainability of an appeal against a court order granting or refusing to grant enforcement of a domestic-seated vis-à-vis a foreign-seated emergency award is due to the fact that a domestic-seated emergency award is treated as an ‘interim award’ under section 17(1). Accordingly, it is enforced under section 17(2). However, in the absence of a provision corresponding to section 17 in Part II, I have argued that a foreign-seated emergency award is a foreign award under section 44, and consequently it can be enforced under section 48. Section 48 in Part II corresponds to section 34 in Part I of the Act, instead of Section 17(2). Similar to section 48, a court order passed under section 34 can be appealed by relying on section 37(1)(c). However, the same recourse is not available against a court order passed under section 17(2).
We have seen that a foreign-seated emergency award is a foreign award under section 44, which can consequently be enforced under section 48. Given the absence of a judicial pronouncement confirming this legal position, Parliament should take up this opportunity to insert a self-contained provision corresponding to section 17 in Part II of the Act. This would ensure that a court order confirming or refusing enforcement of a foreign-seated emergency award cannot be appealed under section 50, in line with the Supreme Court’s decision in Amazon. Moreover, this would further the broader objective of the Act to provide speedy resolution to disputes. Additionally, enabling the enforcement of foreign-seated emergency awards would provide due recognition to the larger institutional acceptance of emergency arbitrations across different jurisdictions.
– Rishav Sen