Delhi High Court Upholds Legal Status Of Emergency ArbitratorsDecember 21, 2020
The Delhi High Court, hearing the Future Retail Ltd. vs Amazon.com Inc. case, ruled that the concept of an emergency arbitrator is not alien to Indian law.
While it did not go into the merits of the Singapore International Arbitration Centre’s emergency award in favour or Amazon, the Delhi High Court in its judgment held:
- The Singapore International Arbitration Centre rules allow parties to either approach an emergency arbitrator or a judicial forum for grant of any interim relief.
- Both parties agreed to abide by the SIAC rules as the governing rules for the arbitration procedure.
- The fact that the Indian Parliament did not accept Law Commission’s recommendation of including an emergency arbitrator would not mean a complete exclusion of emergency arbitrators in Indian law.
Through this conclusion, the bench of Justice Mukta Gupta rejected the arguments by Future Retail’s counsel who had called the emergency award a mere piece of paper that had no recognition under Indian arbitration law.
Parties Voluntarily Chose SIAC Rules: Delhi High Court
Senior Advocate Harish Salve, appearing for Future Retail, had argued that the concept of an emergency arbitrator lacked legal status under the Arbitration and Conciliation Act. Salve also pointed out that the 246th Law Commission had suggested specific inclusion of emergency arbitrators in the Indian Arbitration and Conciliation Act but the parliament in its wisdom decided against it
Amazon’s counsel had countered saying the parties under the agreement had voluntarily chosen the arbitration to be governed by the SIAC rules which have a provision for approaching an emergency arbitrator for interim relief.
The Delhi High Court agreed with Amazon. It pointed to the shareholder agreement between Amazon and Future Coupon Private Ltd. and noted that while the arbitration was to be governed by provisions of Indian law, both parties had agreed on following the SIAC rules as procedural law.
It pointed to the Supreme Court’s judgment in NTPC vs. Singer Company & Ors upholding the parties’ right to choose different governing and procedural law for arbitration proceedings. An emergency arbitral award would be valid as long as the rules governing the arbitration proceedings are not against India’s public policy or the mandatory requirements of the procedural law under the Arbitration and Conciliation Act, 1996, the court said.
In this case, the high court found that Rule 30 of the SIAC allows parties to either approach a judicial authority or an emergency arbitrator for interim relief before the arbitral tribunal is constituted. Thus, they do not take away the right of the parties to approach courts in India for interim relief, said the high court.
Emergency Arbitrator Is Not Contrary To Arbitration And Conciliation Act
The Delhi High Court chose to adopt an expansive definition of section 2(1)(d) of the Arbitration and Conciliation Act which defines an arbitral tribunal.
In doing so, the high court held, the authority of the emergency arbitrator cannot be held to be invalid because it is not strictly defined under section 2(1)(d).
It also rejected the argument that the parliament chose not to include an emergency arbitrator under the definition of arbitral tribunal under the act despite the recommendation of the law commission. The court cited the apex court’s ruling in Avitel Post where it was held that the development of law cannot be thwarted merely because a certain provision recommended in a Law Commission Report is not enacted by parliament.
The high court said it is not necessary that the choice of forum to decide a certain issue must fulfill the condition that such a forum must be expressly recognised by the Arbitration and Conciliation Act.
Finally, the high court concluded that by mutual consent, parties can decide on the inapplicability of certain provisions of the act which includes Section 9. This exception can also apply to arbitrations whose seat is in India. Section 9 of the Arbitration and Conciliation Act lays down the procedure for parties to approach Indian courts for interim relief.
Amazon, which invested in Future Coupons Pvt. Ltd., a promoter company of Future Retail, had won a temporary stay in October on the Future Group-Reliance Retail deal. This was an interim order passed by the Emergency Arbitrator at the Singapore International Arbitration Centre.
Amazon then wrote to market regulator and stock exchanges to consider the interim order while reviewing the scheme of arrangement and the deal with Reliance Retail. The two Future Group companies then moved the Delhi High Court seeking to stop Amazon from writing to statutory authorities against granting approval to the transaction.