Emergency arbitration allows a party to request immediate interim relief before an arbitral tribunal is established. A draft law circulated for comment in October 2024 included both of these provisions, including one allowing arbitral institutions to provide emergency arbitrators.
A part of the draft law was the addition of electronic audio-video means to the definition of arbitration proceedings.
This amendment will be the fourth amendment to the Arbitration and Conciliation Act 1996.
“There has been a lot of work on emergency arbitration, such as case analysis for major precedents,” said one of the people cited above, requesting anonymity.
One of the cases analyzed was the Supreme Court’s 2021 judgment in Amazon.com NV Investment Holdings LLC vs Future Retail Ltd and another, which forms the basis of emergency arbitration in the country’s arbitration jurisprudence.
The Supreme Court has held that an emergency arbitrator is an arbitrator, and awards made by that emergency arbitrator are enforceable. Amazon initiated an extraordinary arbitration in this case at the Singapore International Arbitration Center (SIAC).
Email queries sent to the Union Ministry of Law and Justice on Thursday remained unanswered.
Key things
- The amendment is likely to provide express legal support for emergency arbitration.
- The codification of emergency arbitration will address the current legislative loophole and ensure that interim awards made by the emergency arbitrator will have clear legal sanction and enforceability in India.
- The draft law is to formally include in the definition of arbitration electronic, audio-video means that legitimize and support the resolution of disputes using technology.
- The changes reflect India’s strategy to move away from ad-hoc processes and strengthen institutional arbitration to establish itself as a competitive global arbitration hub, similar to Singapore.
- The duties and powers of emergency arbitrators will be governed by the Arbitration Council of India, which, although enacted in 2019, has not yet been created, posing a potential hurdle to implementation.
Domain experts have previously suggested the inclusion of an emergency arbitration provision. The High Level Committee on Arbitration Reforms, chaired by former Law Secretary TK Viswanathan, proposed in 2024 that extraordinary arbitration be added to the Indian Arbitration Act.
The need for emergency arbitration
According to the High Level Committee report, emergency arbitrators are required to meet the demand for quick interim and conservative measures in commercial disputes. This mechanism allows a party in need of urgent relief to request it immediately without having to wait for the standard composition of the arbitral tribunal.
Although various arbitral institutions in India permit the use of emergency arbitrators, the awards they issue are not currently expressly authorized by law, the report said. The lack of legal recognition of extraordinary decisions is considered a significant obstacle to their enforcement.
However, the Union Government Bill stated that the powers and duties of emergency arbitrators would be notified by the Arbitration Council of India (ACI).
The establishment of the ACI was introduced in the 2019 amendment as a body to create rules of procedure for arbitration as well as guidelines for arbitrators.
But ACI has yet to be created.
Changes to the definition of arbitration that include electronic means are likely to affect dispute resolution by reducing the time it takes to reach a decision.
“In our view, the biggest catalyst for the transformational development of ODR (online dispute resolution) has been the recognition and legitimization of technology-based dispute resolution mechanisms by courts across the country,” said Mohammad Asad Saeed, who works on public policy at Presolv360, an ODR service provider.
He said technology-based dispute resolution has proliferated in various cases, including those related to capital markets and also for micro, small and medium enterprises (MSMEs).
In June 2024, the Union Government advised all government agencies, including state bodies, to shift domestic public procurement worth over ₹10 million from arbitration to mediation in order to reduce high costs and long deadlines.
The amendment to the Indian Arbitration Act assumes importance as high costs, long time-limits and problems related to judicial intervention have persisted for a long time. India is interested in strengthening institutional arbitration, that is, arbitration where the procedures are determined by a specialized institution, as opposed to ad hoc arbitration, where everything is decided by the parties to the dispute.
The promotion of institutional arbitration is essential for it to become a global arbitration center, based on Singapore’s model of establishing the Singapore International Arbitration Center (SIAC), which attracts a significant share of arbitration matters in the world.
The recognition of extraordinary arbitration in the 2024 Bill accelerates dispute resolution by “ensuring that urgent interim relief is available within the arbitration framework itself without being diverted to congested court proceedings”, said Divya Swamy, partner at D&Y Law Chambers.
