Just a few weeks ago, the International Chamber of Commerce (“ICC”) revealed its new Arbitration Rules, which will enter into force on January 1st, 2012 (the “Rules”). With the revised Rules comes the introduction of a new Emergency Arbitrator Procedure, a concept previously known to other institutional arbitration rules such as those of SCC, SIAC or AAA ICDR, yet new to the arbitral process under the rules of the ICC. The framework of the new procedure is Article 29 of the Rules, which is accompanied by Appendix V setting out the procedure for obtaining relief from an emergency arbitrator.
The Need for Pre-Arbitral Interim Relief
It is generally known that the constitution of an arbitral tribunal can take a considerable amount of time. Before the arbitral tribunal is constituted, a party seeking to apply for interim relief will usually have no option other than turn to a competent state court.
In many cases, that party will find its needs met if the court grants the relief requested and such relief can be enforced accordingly. In other cases, however, applying to a state court may not be a valid option. In some instances, it might be impossible, e.g. where the parties have validly excluded any state court jurisdiction, including the power to grant interim relief.
Yet, even when not impossible, it may prove inconvenient or otherwise undesirable for a party to apply to a state court for interim relief. Applying to a state court is arguably against the parties’ initial intention to exclude such courts from their disputes, i.e. against the very reason why they entered into an arbitration agreement in the first place. This holds true especially in cases where the parties opted for arbitration because they have a particular desire for confidentiality, or chose arbitration because the nature of their relationship calls for special expertise which a state court may not have. In other instances, the relief sought may not be available from the competent state court, which will usually be bound by its own lex fori when determining the content of interim measures. Finally, the party seeking interim relief may be unwilling to resort to the state courts in the territory of its adversary and to the laws of such state after having avoided such a situation by opting for arbitration on “neutral” terrain and under “neutral” laws. This is where the ICC’s new emergency arbitrator comes in. Pursuant to Article 29(1) of the Rules, a party in need of urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal (defined as “Emergency Measures”) may make an application for such measures pursuant to the Emergency Arbitrator Rules in Appendix V.
The Key Principles governing the New ICC Emergency Arbitrator Rules
The new ICC Emergency Arbitrator Rules can be summarized in five key principles:
The first key principle of the new emergency arbitrator rules is that they apply automatically to parties having opted to arbitrate their dispute under the ICC Rules. There are, however, specific requirements that must be met in order for the “Emergency Arbitrator Provisions” as defined in Article 29(5) of the Rules (“EAP”) to apply automatically, namely that (a) the application is submitted prior to the transmission of the file to the arbitral tribunal in terms of Article 16 of the Rules (Article 29(1) of the Rules), (b) the arbitration agreement was concluded after 1 January 2012 (Article 29(6)(a) of the Rules), (c) there is no agreement on another pre-arbitral procedure providing for similar relief (Article 29(6)(c) of the Rules), and (d) there is no agreement of the parties to opt-out of the EAP (Article 29(6)(b) of the Rules). In order to allude the parties to the latter possibility, the ICC has added a new Standard Arbitration Clause to its repertoire which includes the respective “opt-out wording”.
A second key principle is that the ICC emergency arbitrator is an additional option available to the parties to an ICC arbitration agreement which corresponds to their chosen means of dispute resolution. Article 29(7) of the Rules expressly provides that the EAP are not intended to prevent any party from seeking urgent interim or conservatory measures from a competent judicial authority. This rule applies without restriction before an application has been made for Emergency Measures and “in appropriate circumstances” even thereafter.
A third key principle is that Emergency Measures are only obtainable in cases of “true” urgency. Because it was decided to apply an opt-out system for the ICC’s emergency arbitrator, it was felt necessary in order to avoid abuse of the EAP to narrow the scope of application of such rules to situations where a measure truly cannot await the constitution of an arbitral tribunal, and to explicitly stipulate such substantive prerequisite in Article 29(1) of the Rules.
The fourth key principle is that the application of the EAP is limited to signatories to the arbitration agreement or successors thereof (Article 29(5) of the Rules). The main purposes of this limitation are to provide the responding party faced with an application for Emergency Measures with a certain degree of protection and to provide an easy substitution test for the prima facie test under Article 6 of the Rules (see Article 1(5) of Appendix V). An additional benefit is that the application of the EAP to treaty-based arbitrations is excluded.
And finally, the fifth key principle is the protection of the responding party. This principle is reflected in the fact that there is no default answer to the application for Emergency Measures within a certain short deadline, that the applicant must pay a fee for the emergency arbitrator procedure to the ICC upfront (Articles 1(3)(h), 7 of Appendix V), but also that the applicant must, as a rule, file a request for arbitration within 10 days from the application, absent which the President will terminate the emergency arbitrator proceedings (Article 1(6) of Appendix V).
The emergency arbitrator’s decision is rendered in the form of an order (the “Order”; Article 29(2) of the Rules, 6(1) of Appendix V) which is binding on the Parties and which the parties undertake to comply with (Article 29(2) of the Rules, Article 6(6) of Appendix V). The Rules and Appendix V are silent on the question of enforcement of the Emergency Arbitrator’s Order. It is submitted that the Order has the same legal nature as an order for interim measures by an arbitral tribunal under Article 28(1) of the Rules. Therefore, it should be enforceable in state courts under provisions such as Articles 17H and 17I of the UNCITRAL Model Law providing for the recognition and enforcement of interim measures granted by arbitral tribunals. Whether – applying a “substance-over-form” approach – the Order could qualify as an award so as to be enforceable under the New York Convention or national legislation based thereupon, is questionable.
In sum, the new Emergency Arbitrator Rules are a well-drafted, well-balanced, tailor-made solution for an emergency arbitrator procedure under the auspices of the ICC. The ICC has succeeded in drafting a tool which will further the attractiveness of ICC arbitration and which will serve the parties to ICC arbitration by effectively protecting their rights for years to come.
Dr. Christopher Boog is a partner elect in Schellenberg Wittmer in Zurich and a member of its International Arbitration Practice Group. He is a member of the Zurich bar and a graduate from the Law Schools of the Universities of Fribourg (Master of Law, with honors), Amsterdam (International Law Certificate) and Zurich, where he obtained his doctorate summa cum laude. Christopher Boog was a research fellow at Columbia Law School in New York and regularly publishes and speaks on topics of international arbitration and transnational litigation.