ICC Emergency Arbitrator Proceedings
By Rebecca Ardagh, Associate, Fenwick Elliott
In 2015, the ICC established a Task Force on Emergency Arbitrator Proceedings to examine the use of the ICC Emergency Arbitrator Procedure and try to identify any trends and issues that may have emerged. Earlier this year, the Task Force released its Report entitled Emergency Arbitrator Proceedings – ICC Arbitration and ADR Commission Report.
Background to the Emergency Arbitrator Procedure
Having long recognised the value of providing pre-arbitral relief where the circumstances call for it, the ICC first introduced Emergency Arbitrator (“EA”) proceedings as part of its 2012 revision of the ICC International Arbitration Rules.1The purpose of the EA Procedure is to allow applicants to obtain urgent interim relief, where necessary and appropriate, without having to resort to state courts or await the constitution of the arbitral tribunal. Using state courts might mean using local law, even where this is not the law provided for by the arbitration agreement, as well as losing other benefits associated with arbitration, such as confidentiality. On the other hand, any delays whilst awaiting the formation of the tribunal in situations where urgent interim relief is required may cause harmful consequences to one or both of the parties, which could otherwise have been avoided.
To this end, the intention behind EA proceedings is to fill a void that had previously existed in the system and to allow applicants to obtain urgent interim relief whilst still maintaining the benefits of the arbitration process and the arbitration agreement which the parties had agreed to. The ICC Report sheds light on whether or not users see it that way too.
What does the Report say?
One recurring point in the Report is that there is little guidance as to the appropriate application of the EA provisions within the ICC Rules themselves. The Task Force notes that this was a deliberate measure taken when drafting the ICC Rules to ensure that the EAs were afforded as much flexibility as possible.
This flexibility provides the EAs with the ability to freely assess the circumstances of a particular case and lend as much weight to the relevant issues as is necessary to ensure that the relief granted, or the refusal to grant such relief, as the case may be, is appropriate for those particular circumstances. One of the disadvantages to providing such flexibility, however, is that the approach by EAs to each application is so case specific that there is very little uniformity between EAs that can be used to provide predictability for the user or transparency across the procedure.
The general findings of the Report were positive; there has been increasing use of the procedure over the years. This signals that it is a course of action that users are finding meets their needs more fully than other urgent interim relief options that are available. It also tends to confirm that it was a necessary addition to the ICC framework.
Relief is only offered in a minority of cases but, perhaps given the nature of urgent interim relief, this is to be expected.
The process is also quick, with almost all cases concluded within or very shortly after the 15-day deadline contained in the ICC Rules. The fact that the process consistently meets the prescribed expedited time frame is something that is likely to be very attractive to potential users who turn to the Report when assessing the ICC EA procedure as a potential course of action.
The Task Force did not consider that the process has been abused, and attributes this to the preventative measures in the ICC Rules (such as the relatively high application fee, for example). In saying this, it did appear some users may have been making applications strategically in an attempt to assess the strength of the merits of their cases.2What can be seen from the data is that a high number of the applications analysed by the Task Force ended up settling on the merits before a final award was issued.
As of 1 March 2019, 95 EA applications had been filed under the ICC’s EA procedure. The Report analyses 80 of these, namely those that had been filed by 30 April 2018, and breaks its findings into 4 key issues:
- Threshold issues.
- Procedural matters.
- Substantive standards.
- Post-emergency arbitration considerations.
The Task Force notes that generally, when it comes to threshold issues, EAs will strictly apply the criteria set out in the ICC Rules. Articles 29(5) and 29(6) are used by the President of the ICC International Court of Arbitration to determine whether the procedure is applicable to the application. The same Articles, and sometimes Article 29(1), are then used by most EAs to determine both applicability of the procedure and whether the EA has the jurisdiction to hear the application.
Twenty-one of the 80 applications considered by the Task Force were rejected wholly or in part on the grounds of threshold issues.
There is no prescribed method for the EA Procedure in the ICC Rules, and this has led to various approaches to procedural matters amongst EAs. Despite the lack of prescription in the ICC Rules, however, the Task Force encourages the EAs to refer to ICC guidance in the form of:
The ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (specifically the section on “Emergency Arbitrator”) and ICC Emergency Arbitrator Order Checklist.
The ICC Expedited Procedures Provisions in Appendix VI to the ICC Rules.
The suggestion from the Task Force is that there is a large amount of guidance within the broader ICC Rules and notes that provide a framework that can be used by the EAs to establish a more uniform approach to procedural matters. The EA still has enough flexibility, however, to tailor the procedure to the specific needs of each case, if required.
The Task Force also suggested holding an initial case management conference by telephone (which in fact was done by EAs in a number of cases), which can address not only initial procedural issues but also the following:
- Identify any temporary orders required in advance of the final order.
- Determine how evidence will be presented.
- Determine the substantive standard that will be applied.
Ultimately, the benefit of the flexibility when it comes to procedural matters is that EAs are able to implement a procedure that is most suitable for the specific case: many will have case management, where others will not; some will have oral hearings but no witnesses, where others will be decided on the papers. The ability to tailor a suitable but time-efficient process is of value in expedited proceedings such as these.
The Task Force acknowledged that there is no prescribed approach in the ICC Rules nor broader guidance from the ICC. From its analysis, however, the Task Force has concluded that the EAs have mostly been guided by international practice and principles of international arbitration when it comes to applicable standards. The Task Force considers this a positive approach as guidance from established standards in this way assists with predictability for parties and transparency when it comes to the EA procedure.
The most frequently used standard identified by the Task Force is “urgency”, which is a common basis for denial of relief in the EA process. In addition to the ability of the matter to await the constitution of a tribunal (which is considered as a threshold issue), EAs also consider other urgency issues such as imminent or irreparable harm.
Other standards that the Task Force observed are considered by EAs include:
- Likelihood of success on the merits.
- The risk of aggravation of the dispute.
- The absence of pre-judgment on the merits.
- Proportionality/balance of equities.
Again, the Task Force observed that the EAs’ consideration of these standards and the weight afforded to them is heavily influenced by the specific circumstances of each case and so, even though the standards generally applied by EAs could be identified, there is no uniform approach in the application of these standards.
Post-emergency arbitration considerations
In addition to trends in approach to and application of the EA provisions, the Task Force also considered issues arising post-emergency arbitration, particularly in so far as enforcement may be concerned.
The Task Force concluded that most EA orders are complied with by the Parties voluntarily. As with most interim relief, this may be something that the parties do out of concern for the way non-compliance would be treated by the tribunal when it comes to the arbitration on the merits. However, there are concerns when it comes to enforceability in the rare circumstances in which this may be necessary.
Ultimately, the Task Force found that the enforceability of EA orders is not certain. In some jurisdictions, a party seeking compliance could turn to the domestic courts (particularly, it notes, in jurisdictions inspired by UNITRAL Model Law). The issue in many cases, however, is the fact that these orders will be classified as interim measures and therefore be seen as not as enforceable as a final award. This is, however, a universal concern with orders for interim relief and, to a certain extent, expected when it comes to this procedure.
Despite this, the Task Force notes that the use of this procedure is increasing and so concludes that any concerns about enforceability are not deterring parties from making an application.
The use of the ICC EA Procedure is increasing worldwide and the Report confirms that it is working as quickly as it was intended to do. The intentional flexibility put into the rules means that users cannot anticipate the approach that an EA will take, but ensures that the application can be considered in light of its specific circumstances and the process adjusted where necessary to make it as efficient as possible.
Although there is no guidance when it comes to substantive standards, the Report does offer users some insight into the standards that are more consistently applied by the EAs, providing an element of predictability and transparency that the Task Force set out to achieve.
In all, the findings in the Report are positive and show that the introduction of the EA procedure in the ICC Rules has succeeded in providing a necessary avenue for urgent interim relief that was otherwise unavailable.