Amazon-Future Case: Clarity towards the Stance of Emergency Arbitrator in Arbitration and Conciliation Act, 1996

In the High Court of Judicature at Delhi
Petitioner
Amazon.com NV Investment Holdings LLC
Respondent
Future Coupons Pvt. Ltd & Ors.
Date of Judgement
18th March 2021
Bench
Hon'ble Mr. Justice J.R. Midha.

Introduction

The concept of emergency arbitrator is getting huge admiration not only among the arbitral institutions but also among the users of international arbitration. An Emergency Arbitrator [EA] is considered as a tool for obtaining the urgent interim relief before the arbitral tribunal is formed. One of the objectives of the concerned parties for appointing EA is to obtain speedier remedy than that can be obtained by the national courts under section 9 of Arbitration and Conciliation act. Thus, safeguarding rights of the parties through this expeditious mechanism. 

Earlier, the parties entering into arbitration agreements were reluctant to appoint emergency arbitrators. As, there had been doubts regarding the legal status of emergency arbitrator i.e. whether the Emergency arbitrator falls under the definition of arbitrator mentioned in section 2(1)(d) of the Act and whether the interim order passed under by the EA falls under the domain of an order mentioned in section 17(1) and is enforceable under section 17(2) of the Act or not? However, with the judgement of Amazon.com NV Investment Holdings LLC v. Future Coupons Pvt. Ltd.  The stance of emergency arbitrator in arbitration and conciliation act, is transparent now. 

Facts

Amazon.com NV Investment holdings is the petitioner, while Future Coupons Pvt. Ltd. is respondent No. 1 and Future Retail Limited (FRL) is respondent No.2. The promoters of respondent No. 1 and 2 are respondent No. 3 to 13. 

The dispute had arisen, when FRL controlled by Biyanis, in violation of contractual obligations had approved the transaction of transferring its real assets to a Restricted Person, which is against shareholders’ agreement between petitioner and respondent No.1, 3 to 13.

Therefore, as per Clause of the Shareholders Agreement, which provided for the arbitration agreement, the petitioner has initiated arbitration proceedings. One of the clauses of the Agreement mentioned that the Rules of Singapore International Arbitration Centre(SIAC) will be applicable for the resolution of disputes between the parties. Furthermore, the agreement shall be governed by the laws of India.

Thereafter, as per SIAC rules, which allows for the appointment of emergency arbitrator, the petitioner has filed the application for the appointment of EA, which leads to the appointment of the same. 

Objections to the Jurisdiction of Emergency Arbitrator

The objections raised by respondent to the jurisdiction of Emergency arbitrator are on the following grounds:-

1. No remedy can be obtained from the emergency arbitrator under Part 1 of the Arbitration and Conciliation Act.
2. No recognition of Emergency arbitrator under Indian Arbitration Framework.
3. The arbitral tribunal defined under section 2(1)(d) of the Arbitration and Conciliation Act, doesn’t include within its domain an Emergency Arbitrator. The reference of 246^th Law Commission Report was made, which recommended that, there is a need to make an amendment to the definition arbitral tribunal so that the emergency arbitrator can be included.

Thus, the order granted by the Emergency Arbitrator will not have any force of law under Arbitration and Conciliation Act.

Judgement

• The recognition of Emergency arbitrator is there in the current Indian framework and this can be manifested from readings of section 2(1)(d), 2(6), 2(8), 19(2) of the Arbitration and Conciliation act conjointly. Thus, an Emergency Arbitrator is an arbitrator for all intents and purposes under Arbitration and Conciliation Act.
• The court stated that section 2(1)(d) of Act, which defines an arbitral tribunal is wide enough to include an Emergency Arbitrator, as it is  part of sole arbitrator. Therefore, there exists the same powers to emergency arbitrator as provided to the arbitral tribunal under the Act. Thus, manifesting that Emergency arbitrator has the authority to pass not only interim order but also get it enforceable as an order of the court under Section 17(1) and (2) of the Arbitration and Conciliation Act.
• Furthermore, in the present case, the court discusses the legal status of emergency arbitrator. It stated that the concept of emergency arbitrator is based upon parties’ autonomy, as under the arbitration there exists freedom to the parties in order to decide either the arbitrator or the arbitral institution. Thus, parties are free to decide emergency arbitrator and their orders are binding upon the parties as long as subsequent arbitral tribunal reconsider, modify, terminate or annul the order/award of the emergency arbitrator.
• The court also defined the domain of Emergency Arbitrator and stated that their power is limited to dealing with only emergency relief applications, which has to be decided within the time period of 15 days.
• Moreover, the court defined the time span of emergency arbitrators and stated that they can continue till the formation of an arbitral tribunal is not constituted and thereby, manifesting that they will not be a part of the arbitral tribunal.
• In the judgement, the court has also showcased the emergence of Emergency arbitrators in India by relying upon various International Arbitration Centers, who have incorporated Emergency Arbitrator in their rules. For example:- Mumbai Centre for International Arbitration, Madras High Court Arbitration Centre etc.

Critical analysis

As, there has been inordinate delay in the disposal of cases in Indian courts, and therefore, clarity in the stance of emergency arbitrator has provided not only huge relief to the parties, who have a seat of arbitration in India but also induce other parties to adopt arbitration as a dispute resolution mechanism.

Furthermore, in order to ensure that the role of Emergency arbitrator is limited to the adjudication of emergency interim applications only, the rules of different arbitral institutions ensure that the emergency arbitrator has to satisfy himself or herself, that the party, which requested for emergency arbitrator has demonstrated the urgency or risk of irreparable harm. 

Consequently, the clarity on stance that emergency arbitrator being on the same pedestal as an arbitral tribunal manifested that award passed by Emergency arbitrator can be enforced as an award made by the courts. Thus, ensuring that the wholesome mechanism of emergency arbitrator doesn’t turn out to be redundant. 

However, caution needs to be exercised regarding the nature of the awards passed by the Emergency Arbitrator. As, awards, which could not be modified or annulled in future date should not be passed, because in that scenario, the subsequent arbitral tribunal would be powerless even after having the authority to reconsider, modify, terminate or annul the order/award of the emergency arbitrator.