Enforcement of Emergency Arbitration – the Challenges

Enforcement of Emergency Arbitration – the Challenges

1.Introduction

Institutions globally have varied thresholds for granting emergency relief. The Singapore International Arbitration Centre [“SIAC”] and the Court of Arbitration of the International Chamber of Commerce [“ICC”] have granted free reign to the emergency arbitrator to order ‘any interim relief that he deems necessary’.[1] In contrast, Hong Kong International Arbitration Centre [“HKIAC”]  lays down guidelines such as ‘irreparable harm’ or ‘likelihood of success on the merits’ of the case as qualifications for relief under emergency arbitration [“EA”].[2] HKIAC’s approach is more in synch with Article 17A of the UNCITRAL Model Law, which requires similarly for issuing interim relief.[3] Such a threshold would make EA similar to an interim relief, as EA is not otherwise mentioned in the UNCITRAL Model Law.

In an arbitration proceeding, post intimation, the Respondent may choose not to participate in the proceedings, which then go on parte. In such circumstances, it is necessary that the EA proceed on ex parte basis as otherwise it would render the EA mechanism inconsequential. These ex parte awards admittedly do not fall within the strict sense of the term ex parte, however, the courts globally have scrutinised such awards to determine whether notice was adequately provided and what obligations, if any, must be discharged while sending a notice. The below discussion deals with enforcing ex parte awards and not ex parte EA awards as in the opinion of the author, there would not be a significant difference between the treatment accorded to ex parte awards and ex parte EA awards. Three decisions of the Swedish, German and English courts are considered, which arrived at varied conclusions.

2.Enforcement of EA Awards from a Global perspective

First, the Swedish Court, in the case of Lenmorniiproekt OAO v. Arne Larsson & Partner Leasing AB,[4] held that proper notification was crucial to arbitral proceedings. The award was rendered against Arne Larsson, who resisted enforcement before the Swedish Courts. The objection of Arne Larsson was that it did not receive a proper notification regarding the proceedings. However, the Russian Federation Chamber of Commerce and Industry (ICAC) that was administering the arbitration had sent the notice of arbitration to the last known address of the Respondent. The Respondent had, admittedly, failed to notify the other parties of its change of address, even though it was contractually required to do so. However, the Court noted that these objections would be immaterial as the Respondent was simply not aware of the arbitration proceedings. Thus, the Court refused enforcement. This is problematic and would give rise to a slippery slope. The Respondent may be able to sabotage the arbitration proceedings simply by a change of address, for which it has no obligation to disclose such change.[5] The idea is to showcase the latitude that courts may grant if the party is simply unaware of the proceedings.

Contrary to this view, the English High Court of Justice in the case of Bernuth Lines Ltd v. High Seas Shipping Ltd (The Eastern Navigator),[6] placed the burden on the applicant in the case to prove that proper notice was not served. On facts, the applicant in the case alleged that the arbitration proceedings had not been brought to its notice and thus the ex parte award against it must be set aside. The record showed that several emails were sent from the solicitors of the respondent in the case, the arbitrator and the London Maritime Arbitrators Association [“LMAA”], under whose Rules the arbitration was administered. The applicant in the case argued that the emails were not sent to the right person within the organisation. Further, the letters sent by the arbitrators, including the award, were dismissed by the filing staff as unsolicited, under the impression that serious legal communication would have gone through more appropriate means. Refusing the application, the Court held that the fact that emails and letters were not received by the appropriate personnel was an internal filing issue. This did not invalidate service.

A similar conclusion was reached by the German court.[7] The case concerned enforcement of an ex parte award between a charterer and the owner of the shipping vessel ordering dues to be paid under a time charter. The charterer claimed that it had received no notice of the arbitration. The charterer claimed that its director was on business