[Ayush is a student at National Law School of India University.]
Recently, the Department of Legal Affairs invited comments on the draft Arbitration and Conciliation (Amendment) Bill 2024 (Amendment Bill). The Amendment Bill focuses on institutional and emergency arbitration and introduces digital arbitration, among other relevant changes. The incorporation of emergency arbitration in the Arbitration and Conciliation Act 1996 (Act) has been pending since the 246th Law Commission Report in 2014. The Amendment Bill defines 'emergency arbitrator' under Section 2(ea) as ‘an arbitrator appointed under Section 9A of the Act.’ The proposed Section 9A of the Act:
allows constitution of emergency arbitral tribunal (Clause 1);
specifies the conduct of the proceeding (Clause 2);
allows the enforcement of the award made by the emergency tribunal (Clause 3); and
allows modification, confirmation, or vacation of the emergency award by the arbitral tribunal post its formation (Clause 4)
Unfortunately, the Amendment Bill does not make any amendment in Part II of the Act with regard to the enforcement of foreign-seated emergency arbitration awards. Therefore, the inapplicability of Section 9A would mean the long-drawn vagueness in enforcing a foreign seated emergency arbitration award in India would continue to persist.
In this blog, the author seeks to highlight the difficulty in enforcing a foreign-seated emergency arbitration in India. The author argues that the Amendment Bill has the option, through Section 9A (3) and Section 17, to draw a mechanism to make the enforcement of foreign seated emergency awards easier and how such options must be necessarily applied in order to allow arbitration in India in accordance with international practices.
Enforcing the Emergency Award in India and the Draft Amendment Bill
Domestic seated
In Amazon.com NV Investment Holding v. Future Retail Limited, the Supreme Court (SC) answered whether an emergency award can be enforced under the Act. In essence, the SC held that an emergency arbitrator can be treated as an 'arbitral tribunal' under Section 2(1)(d) of the Act, and its decision can be enforced in India under Section 17 (2) of the Act. Section 17 sets a mechanism to allow interim measures by the arbitral tribunal, and Section 17(2) treats the award by the arbitral tribunal as equivalent to an order of the court for its enforcement.
Foreign seated
The Amazon NV Investment case deals with domestic arbitration and, therefore, does not apply to foreign seated arbitrations. There is, in effect, no direct mechanism to enforce a foreign seated emergency award. The courts have used Section 9 to remedy this vacuum. In Raffles Design International v. Edu comp Professional Education, which was a Singapore-seated arbitration, the court granted an order that Raffles sought to enforce using Part I of the Act. The High Court (HC) said that it could not enforce a foreign-seated emergency arbitrator's award. However, it identified an alternative approach, stating that it could independently grant interim relief since the parties had not opted to exclude Part I's applicability to a foreign-seated arbitration.
Further, in HSBC v. Avitel Post Studio, the Bombay HC stated that the applications filed under Section 9 of the Act cannot be for enforcement of the interim award rendered by the arbitral tribunal but for seeking interim measures against the respondents independently. Similarly, in Ashok Kumar Goel v. EbixCash Limited, where the seat of arbitration was Singapore, the court granted interim relief, which was similar to the one granted by the emergency tribunal under the Singapore International Arbitration Centre.
Section 9 gives the court the power to grant interim relief, but it is not a provision that enforces an arbitral award. However, in all these cases, the courts have indirectly enforced the award of the arbitral tribunal by granting an interim relief independently, which is similar to, or mirrors, the emergency award under Section 9 of the Act.
The practice, therefore, is that once an emergency arbitrator passes an award, it is enforced under Section 9 of the Act. Herein, the process of enforcement is the same as that of an order under Section 17(2). Nonetheless, in case the parties have, through an agreement, chosen to exclude the applicability of Section 9, a party only has the option to file a fresh suit under the Civil Procedure Code 1908. Both these mechanisms not only make the process more hectic for the parties but also take away party autonomy, which is the cornerstone of arbitration, as the courts have full discretion in altering the reliefs provided by the emergency tribunal.
The Draft Amendment Bill
The Amendment Bill is an important step for emergency arbitration in India, a much-appreciated reform that both the bar and the bench have been looking forward to. Section 9A aims to direct the enforcement of emergency awards instead of continuing the strategic workaround proposed by the SC in the Amazon case. However, like the Amazon judgment, even a liberal reading of the Amendment Bill would not help efficiently enforce a foreign-seated emergency arbitration.
The Amendment Bill proposes to amend the proviso of Section 2(2) of the Act to include Sub-section (2) of Section 9A. The proviso to Section 2(2) lists the provisions that apply to arbitrations seated outside India (Part II of the Act) unless the parties expressly exclude their jurisdiction. This amendment would, in effect, recognize emergency arbitration under Part II of the Act. However, Sub-section (3) of Section 9A, which deals with the enforcement of emergency arbitral awards, has been excluded from application to Part II. On the other hand, Sub-section (2) of Section 9A, which is included in Part II, merely addresses the conduct of proceedings. This creates a gap, as the amendment does nothing to develop the law on enforcing foreign-seated emergency arbitration awards.
Inclusion of Section 9A and Section 17 Under the Proviso of Section 2(2)
The 2015 amendment to the Act added a proviso to Section 2(2), extending specific provisions of Part I—Sections 9, 27, 37(1)(b), and 37(3)—to arbitrations seated outside India, provided the arbitral award is enforceable under Part II. This change allowed Indian courts limited jurisdiction in such cases, focusing on interim measures, evidence assistance, and appeals.
The Amendment Bill recognizes emergency arbitration, effectively solving the problem of enforcement of domestic seated emergency awards by providing Section 9A(3) to this effect. In the case of a foreign seated emergency award, no provision in Part II enforces an emergency award. This vacuum can be filled simply by adding Sections 9A(3) and 17 under the proviso of Section 2(2). Section 9A(3) clearly states that an order passed by the emergency arbitrator shall be enforced in the same manner as if it is an order of an arbitral tribunal under Section 17(2). The inclusion of this subsection in Part II of the Act would allow a party from a foreign seated arbitration where the assets are located in India to resort to Section 9A(3) to get interim relief as determined by the emergency arbitrator.
Including Section 9A under Part II of the Act would inevitably require the inclusion of Section 17 under the same part as Section 9A(3). Section 9A(3) creates a legal fiction by considering the interim relief provided by the emergency tribunal as if it is an order of arbitral tribunal under section 17(2) of the Act. An argument to bring Section 17 under the purview of Part II of the Act has already been made extensively and has been acknowledged. It has been argued that Section 17(1) mirrors Section 9(1), equipping arbitral tribunals, including emergency arbitrators, under institutional rules, with powers comparable to courts for granting interim reliefs. Such reliefs could then be enforced directly under Section 17(2), bringing foreign-seated arbitrations in line with domestic ones. Under the Amendment Bill, the incorporation becomes more feasible according to Section 9A. Section 9A(3) directs the enforcement directly under Section 17.
It is submitted that amending the proviso of Section 2(2) of the Act to include Sections 9A(3) and 17 is all that is required to provide an efficient mechanism to enforce a foreign seated emergency arbitral award.
Recognizing the enforceability of foreign-seated tribunal orders, as seen in jurisdictions like Singapore and Hong Kong, would align India with international arbitration standards. Expanding the scope of Sections 9A and 17 to include foreign-seated arbitrations would secure assets or disputes located in India more efficiently, preventing delays and ensuring the effectiveness of interim reliefs. As India aspires to become a global arbitration hub, such reforms are essential to uphold the principles of speed, efficiency, and minimal judicial interference while fostering a robust arbitration framework.
Conclusion
In conclusion, the Amendment Bill is a noteworthy step toward institutionalizing emergency arbitration in India, addressing the long-pending need for its recognition under Section 9A. While the Bill simplifies the enforcement of domestic-seated emergency awards through Section 9A (3), it fails to provide a mechanism for enforcing foreign-seated emergency awards. Courts have relied on Section 9 to grant reliefs mirroring emergency awards, but this workaround undermines party autonomy and adds procedural complexities. By amending the proviso to Section 2(2) to include Sections 9A (3) and 17, India can ensure the seamless enforcement of foreign-seated emergency awards, aligning its arbitration framework with international best practices.
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