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The ongoing dispute between Amazon and Future Group before the Apex Court regarding the sale of assets worth 24000 Cr by Future Group to Reliance Industries has sparked legal debate over a concept in arbitration that is pretty much brushed under the carpet - the legal sanctity of Emergency Arbitral Awards.

Amazon has obtained an Emergency Award against Future Group restraining the group from going ahead with the sale of its assets to Reliance. This sale, Amazon claims, is in breach of the Share Purchase Agreement between Amazon and Future Group. The Future group has filed an action in the Supreme Court against Amazon to inter alia restrain them from approaching the regulatory authorities in India to enforce the emergency decision. What will be the outcome and final decision of the Supreme Court is yet to be seen. But what are these emergency awards – here are five basic points one must know -

1. Only for Institutional Arbitrations- Emergency Arbitrations as a concept only appears in the rules of most arbitral institutions. Emergency arbitration, as a concept does not exist for non – institutional arbitrations. Emergency Arbitrations are invoked by a party to obtain urgent interim reliefs in the arbitration including the grant of an injunction, safeguarding property or securing an amount to be paid.

2. Emergency Arbitration awards are not recognised or enforceable under the New York Convention– Emergency Arbitral Awards are not recognised under the New York Convention on Recognition and Enforcement of Awards, 1958 since the definition of an. The UNCITRAL Model Law is also silent on the recognition of emergency awards. Consequently, they are also not recognised by the Indian Arbitration and Conciliation Act, 1996. There will necessarily have to be an amendment made to the definition of an ‘award’ to include emergency award. The current definition does not include awards which have not attained finality. While the 246th law commission report recognised this lacuna in the law, the subsequent arbitration amendment act did not take it into account. Therefore, in India, a section 9 petition before the High court is the only recourse that can be taken by a party to secure interim reliefs. Interestingly, both Singapore and Hong Kong have passed amendments to their respective arbitration statutes to provide for express recognition of emergency arbitral awards.

3. The Emergency arbitrator does not go on to be appointed as the Arbitral Tribunal- The powers of the emergency arbitrator lapses as soon as the tribunal is appointed. Most Institutions provide that the emergency decision ceases to be binding if the arbitration is not commenced within 90 days of the emergency decision. This is also another reason why emergency awards are not considered to be ‘final’ and hence do not find recognition under the New York Convention.

4. Time-bound decision- The Emergency Arbitrator, is in most cases appointed within 1-5 days of the application being made for urgent interim reliefs to the institution. The award must be rendered usually in a limited time frame. In the Singapore International Arbitration Centre, the emergency arbitration must be rendered within 14 days of the application. In contrast, as per the rules of the Stockholm chamber of commerce, the decision must be given within 5 days of the date of the application. For the Hong Kong International Arbitration Centre, the emergency award must be rendered within 15 days. This is a hallmark feature of such arbitrations in contrast with the application for interim reliefs made before the courts since the latter has no time-bound limit. However, the price that has to be paid is that the fees charged for emergency arbitrations are quite high. For, e.g. for the International Chamber of Commerce, the fee for emergency arbitration is 40,000 USD which is approximately 28 lac INR.

5. Effect of an Emergency Arbitration Award- Among others, SIAC emergency arbitrators have issued asset freezing orders, both prohibitive and mandatory injunctions, orders for the preservation and inspection of evidence as well as anti-suit injunctions in the past. However, it must be kept in mind that the emergency arbitration reliefs are not available against a third party unlike interim reliefs granted by the courts.