© Eric S. Sherby 2020
One of the “hottest” topics in international institutional arbitration over the past fifteen years or so has been the use of “emergency” arbitrators to grant temporary relief in aid of arbitration. Many arbitral institutions have adopted rules that authorize the institution to appoint an emergency arbitrator to adjudicate requests for temporary relief – such as a motion for an injunction or a motion for an attachment of assets.
Eric Sherby has written about this issue – most recently in an edition of the International Newsletter of the Israeli Institute of Commercial Arbitration.
As indicated in that article, one of the biggest drawbacks of the use of the emergency arbitrator procedure is the serious doubt as to the cross-border enforceability of any order issued by an emergency arbitrator.
The international enforcement of arbitral awards is governed generally by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the “New York Convention”). It is commonly understood that finality is an element of the term “award” as used in the Convention. In this context, it is worth noting that Article V.1 of the New York Convention sets forth various grounds under which a court may refuse to recognize and enforce an award from another contracting nation. One of those grounds is as follows:
(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
Not many court decisions from common law jurisdictions have dealt directly with the issue of the enforceability internationally of an award given by an emergency arbitrator, but one case from a federal court in California is particularly illuminating.
In Chinmax Medical Systems v. Alere San Diego, Inc., 2011 U.S. Dist. LEXIS 57889 (S.D. Cal 2011), the issue was whether an emergency interim award pursuant to Article 37 of the American Arbitration Association’s International Dispute Resolution Procedures constituted a final award. The Chinmax court observed that Article 37, regarding emergency measures, includes the following provision:
Once the tribunal has been constituted, the tribunal may reconsider, modify or vacate the interim award or order of emergency relief issued by the emergency arbitrator.
The court concluded that the substance of Article 37 leads to the conclusion that the interim order issued by the emergency arbitrator was not a final one. 2011 U.S. Dist. LEXIS 57889 at **14-15.
In 2017, Eric Sherby argued that “[t]he logic of the Chinmax case seems compelling, and it is likely that other courts, when faced with arbitral institution rules similar to Article 37, will conclude that an order issued by an emergency arbitrator is not a final one.”
Put slightly differently, the Chinmax analysis would result in denial of recognition under the New York Convention. (Subsequently a federal court case from Georgia (2019) appeared to agree with the holding in Chinmax.)
A very recent case from Singapore and India, Amazon v. Future Retail, serves to underscore Eric Sherby’s conclusion from 2017.
In an arbitral proceeding before the Singapore International Arbitration Centre, Amazon obtained a restraining order from an emergency arbitrator. Amazon then sought to enforce that award in India. However, based upon reports in multiple Indian news outlets (which our firm has not attempted to verify), under Indian law, an award from an emergency arbitrator is not enforceable.
India is a signatory to the New York Convention, and in recent years, India has been considered a pro-arbitration jurisdiction.
India’s relatively pro-arbitration reputation cannot be ignored when assessing the significance of the non-enforceability in India of an award issued by an emergency arbitrator from outside that country.
The Amazon case reinforces the view that the institution of the emergency arbitrator in international arbitration is far from perfect – if the interim award (order) cannot be enforced in the country in which enforcement is most needed, then the award might be a worthless piece of paper.
Our firm knows of no Israeli case in which the court was called upon to enforce an award (order) issued by an emergency arbitrator outside of Israel.
From an Israeli perspective, the approaches by courts in other common law countries (in particular those that are pro-arbitration) are likely to be relevant as to how Israeli courts would approach this issue.
In light of the American cases referred to above, and in light of the recent Indian case, at this stage, there is little (if any) reason to believe that an Israeli court would treat an award by a non-Israeli “emergency arbitrator” as enforceable under the New York Convention.