Emergency Arbitration Awards and Global Enforcement

Gunnar Larson g at xny.io
Wed Nov 24 09:45:34 PST 2021

Global economic and supply chain pressures caused by the pandemic have not
only led to an increasing numbers of international arbitrations, but an
increasing number of emergency arbitrations as well, particularly in the
life sciences, technology, and hospitality sectors. This article examines
some of the key benefits that emergency arbitration offers in cross-border
disputes, as well as some of the enforcement challenges that emergency
awards can face.

Emergency arbitration, which is now an option under all well-known
international arbitration rules, is an invaluable tool that allows parties
to get fast interim and conservatory relief from an emergency arbitrator
before a full merits tribunal is appointed, which can frequently take
several weeks or months. The virtual process, which does not rely on
physical appearances in national courts that are subject to closures and
backlogs for a variety of reasons, can oftentimes be concurrently enforced
in multiple jurisdictions around the globe under the 1958 United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(New York Convention), and can therefore have significantly greater reach
than a national court judgment granting similar relief. Consequently,
emergency arbitration offers an excellent solution when parties need quick,
confidential relief, particularly when they need that relief in more than
one jurisdiction, and particularly when any one of those jurisdictions is
facing delays caused by COVID-19.
Key Features

While there are differences in emergency arbitration procedures under
different institutional rules, there are several features that are common
to every emergency arbitration conducted under all major institutional
rules. Those features include:

   - Quick Processes: Emergency arbitration is designed to provide quick
   results, so most institutions seek to appoint emergency arbitrators within
   24 to 48 hours of the emergency request being filed (and the filing fee
   being paid), and generally require those arbitrators to issue emergency
   awards within two weeks of the application being registered. Those quick
   timelines mean that emergency arbitrators will impose aggressive written
   submission schedules, and will generally focus any oral hearings they might
   hold (and there is no general requirement that hold any) on legal
   arguments, rather than witness examination.
   - Single Emergency Arbitrator: Regardless of the number of arbitrators
   the arbitration clause calls for or the appointment method, emergency
   arbitrations are conducted by a sole emergency arbitrator that is appointed
   by the relevant institution, which is something to which parties consent by
   selecting the arbitral rules in question.
   - Little or No Disclosure: The compressed timelines for issuing
   emergency awards generally precludes disclosure from the opposing party, so
   parties bringing emergency applications must already generally possess the
   evidence they need to support their emergency application.
   - Results Do Not Bind the Merits Tribunal: Emergency arbitral awards do
   not bind the merits arbitrators, which can accept, modify or vacate
   emergency awards, which means that emergency awards and orders are
   inherently interim in nature.
   - No Ex Parte Relief: With the exception of the Swiss Rules of
   International Arbitration, institutional rules require emergency
   applications to be on notice, as ex parte relief is generally considered
   impermissible under Article V of the New York Convention.
   - Results Do Not Bind Third Parties: Arbitration is a consensual form of
   dispute resolution that only binds the parties to the arbitration
   agreement, so emergency arbitration awards cannot legally bind third
   parties, like banks, customers, or other third-parties that hold
   counterparty assets.

Emergency arbitration is therefore a quick process that affords parties
urgent relief in the frequently long period before a full merits tribunal
is appointed. While parties can approach national courts for that relief in
many instances, as the following section explains, emergency arbitration
frequently offers significant advantages over interim judicial relief in
appropriate circumstances.
Advantages Over Interim Judicial Relief

Emergency arbitration provides several advantages over interim judicial
relief in appropriate situations. Those advantages include:

   - Single Forum Relief: Emergency arbitration is ideally suited for
   resolving multijurisdictional disputes, like IP and trade secrets issues,
   because it allows parties to present their case through one set of counsel
   to one commercially-minded adjudicator that will apply one set of
   procedural rules and (generally) one governing law, instead of forcing
   parties to simultaneously approach multiple national courts through
   multiple sets counsel in proceedings that will follow different procedures,
   move at different speeds, and apply different national laws that may not
   offer different remedies.
   - Confidentiality: Emergency arbitration is generally confidential,
   which allows applicants to quietly seek interim relief without alerting the
   world to its dispute (unless enforcement in a court with public rights of
   access becomes necessary), which not only helps protect sensitive
   commercial information, but which facilitates possible settlement.
   - Speed: Emergency arbitration provides an excellent alternative to
   those courts around that world that cannot grant quick interim relief, or
   to courts that cannot granted interim relief in the two week timeframe that
   most institutional rules envision, particularly during challenging time
   periods like the pandemic.
   - Varied Remedies: Emergency arbitration allows applicants to obtain
   interim remedies that may not be available in every jurisdiction in which
   they might need relief—such as a worldwide freezing order or an injunction
   when money damages might still compensate the applicant—but which can
   nevertheless be enforced in those jurisdictions as a New York Convention
   - Global Enforceability: The New York Convention currently has 170
   signatories, and while not every country will enforce an emergency award,
   enough do that emergency arbitration offers a credible possibility for
   global enforcement.

Accordingly, while emergency arbitration is not ideal for every situation,
and particularly not when ex parte relief or relief against third parties
will be needed, it frequently offers significant advantages over judicial
interim measures in appropriate circumstances. As the following section
explains, those circumstances include instances where the relevant
jurisdictions will enforce an emergency award, because not every
jurisdiction will do so because of their interim nature.
Limitations on Global Enforcement

As noted above, the New York Convention, which is one of the most
successful global commercial treaties of all time, allows arbitral awards
to be concurrently enforced in any one of 170 signatory states. That fact
gives arbitral awards a significant enforcement advantage over national
court judgments, which do not enjoy any such equivalent reach. The New York
Convention, however, is generally construed to apply only to final and
binding awards, which can present difficulties when dealing with emergency
awards in certain jurisdictions, because those awards are inherently
interim in nature.

In recognition of the fact that emergency arbitration is only useful if its
results can be judicially enforced when needed, jurisdictions have come up
with a variety of solutions to the enforcement problem. Some jurisdictions,
like Singapore and Hong Kong, have enacted legislation that allows for the
enforcement of emergency awards, and Article 17 of the 2006 UNCITRAL Model
Law also makes interim awards enforceable.

Other jurisdictions, such as the United States, have found judicial
solutions to the problem by holding that emergency awards are final and
binding as to the issues they address, and are therefore enforceable under
the New York Convention.

In a decision that has generated significant attention in the international
arbitration community, the Indian Supreme Court recently reached an similar
conclusion by holding that parties are free to agree to the arbitral rules
that govern their dispute, and that if those rules include emergency
arbitration provisions, the parties should be bound by their choice (at
least when the arbitration is seated in India, for the time being).

Courts in other counties, such as the DRC, Ukraine, and Egypt, have reached
similar judicial solutions, and there appears to be a nascent trend
developing around the world for emergency awards to be enforced as a means
of ensuring their efficacy and party autonomy.

Not all countries have followed that trend, however, and some still resist
enforcing any interim awards. Some courts examine whether the emergency
award is an award (something final and enforceable) or an order (which is
interim and procedural in nature), either in name or in substance, and
others will look to see where the tribunal was seated to determine if it
had the right to issue an enforceable interim order. Some simply refuse to
enforce emergency award altogether on grounds that the merits tribunal can
modify or vacate them. Consequently, parties must consider where they will
seek to enforce emergency awards before pursing emergency arbitration over
judicial interim measures, but even some of those countries that currently
impose enforcement barriers may be changing their view, as the Indian
Supreme Court decision demonstrates.

Emergency arbitration is a valuable tool that has become increasingly
common in cross-border disputes during the pandemic. The advantages it
offers ensure that it will continue to be a common feature in appropriate
circumstances well after the pandemic is over.

J.P. Duffy* is a New York-based partner in Reed Smith’s international
arbitration practice who routinely acts as counsel and sits as an
arbitrator in emergency arbitrations.*
*Gunnar Larson - xNY.io <http://www.xny.io/> | Bank.org <http://bank.org/>*
Digital Currency
- Entrepreneurship
and Innovation (ip)

G at xNY.io
New York, New York 10001

On Wed, Nov 24, 2021 at 12:41 PM Karl <gmkarl at gmail.com> wrote:

> On Tue, Nov 23, 2021, 6:57 AM Gunnar Larson <g at xny.io> wrote:
>>  (New York Convention): This article examines some of the key benefits
>> that emergency arbitration offers in cross-border disputes, as well as some
>> of the enforcement challenges that emergency awards can face.
>> https://www.law.com/newyorklawjournal/2021/11/19/emergency-arbitration-awards-and-global-enforcement/
> I'm excited about conflict resolution and wanted to read this, but it
> appears to be behind a registration wall, and I didn't find it elsewhere
> published.  It looks it's information for training new york prosecutors?
> Are you able to paste the text?
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