Most arbitration rules of the leading arbitration institutions have today introduced the possibility of appointing an Emergency Arbitrator who will decide on Interim Measures (including the ICC, the LCIA, the SIAC, the HKIAC and the SCC).
These rules are being increasingly used by parties to request interim measures. The Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) has recently seen a significant increase in the number of requests for SCC Emergency Arbitrator. According to the institution, over the first six months of 2016, the SCC has seen a record number of applications for the appointment of an Emergency Arbitrator. A total of 9 applications have been filed, of which two were based on investment treaty protection agreements. If a decision on interim measures is needed to provisionally ensure a party’s claim, prior to the commencement of an arbitration, the party may apply to the SCC for the appointment of an Emergency Arbitrator in accordance with the SCC Rules. Between 2014 and 2015, the SCC received a total of only five applications for an Emergency Arbitrator. For all applications filed between 1 January and 30 June 2016, the appointment of an emergency arbitrator was made within 24 hours from when the request was filed. The time between referral and the decision varied between 5 and 8 days. Three cases were concluded within 5 days. Six cases were concluded within 6 and 8 days.
The recent Evrobalt LLC versus the Republic of Moldova Respondent Award on Emergency Measures sheds light on when interim relief will be granted by Emergency Arbitrators.
An Emergency Arbitrator Dismisses a Request for Emergency Measures Against Moldova
Evrobalt LLC, a Russian company, had sought to halt an administrative decision adopted in March 2016 by Moldova’s National Bank that suspended the rights of certain shareholders in Moldova Agroindbank and gave them 3 months to divest their interests in the bank. Evrobalt applied to the SCC for emergency relief in late May, only eight days after filing a notice of dispute under the Russia-Moldova bilateral investment treaty.
While noting that Article 32 of the SCC Rules affords the Emergency Arbitrator the power to issue interim measures in broad terms: “any interim measures . . . deem[ed] appropriate”, the Emergency Arbitrator indicated that Article 32 of the SCC Rules does not spell out the requirements that must be satisfied in order to issue interim measures; nor does Appendix II of the SCC Rules. According to the Emergency Arbitrator, these requirements are, nevertheless, substantially uncontroversial, whether one applies Swedish law (as the law of the seat of the present Appendix II proceedings) or international law (as the law which governs the Treaty claims asserted by the Claimant). Articles 17-17A of the UNCITRAL Model Law on International Commercial Rules 2010 codify these requirements. Article 26 of the UNCITRAL Rules reads in material part as follows:
“2. An interim measure is any temporary measure by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party, for example and without limitation, to:
(a) Maintain or restore the status quo pending determination of the dispute;
(b) Take action that would prevent, or refrain from taking action that is likely to cause, (i) current or imminent harm or (ii) prejudice to the arbitral process itself;
(c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or
(d) Preserve evidence that may be relevant and material to the resolution of the dispute.
3. The party requesting an interim measure under paragraphs 2 (a) to (c) shall satisfy the arbitral tribunal that:
(a) Harm not adequately reparable by an award of damages is likely to result if the measure is not ordered, and such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted; and
(b) There is a reasonable possibility that the requesting party will succeed on the merits of the claim. The determination on this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination.”
Regarding admissibility, the Emergency Arbitrator indicated that measures with effects equivalent to the definitive relief sought in the main proceedings cannot be sought by way of interim relief. That would amount to disposing of the claim on the merits, which is of course impermissible under the emergency proceedings. The Emergency Arbitrator retained that Evrobalt’s requests do not amount to any such disposition, given the explicitly temporary character which they have, and they are therefore admissible.
However, the Emergency Arbitrator found that the criteria of risk of irrevocable harm or enforceability of the award was not met. The Claimant had asserted that unless the relief requested was granted, it “will irrevocably lose its rights as a shareholder of the Bank (which rights are at the very centre of the Dispute) and any subsequent award in the Claimant’s favour will be rendered effectively unenforceable”. The question that the Emergency Arbitrator found to be central was whether the harm that the injunctions sought by the Claimant sought to avert were or were not “adequately reparable by an award of damages”. It appeared that all of the harm, actual and imminent, associated with the Claimant’s investment could be made good by an award of damages. And the Emergency Arbitrator saw no reason why that harm could not be properly assessed by the Tribunal in the main proceedings.
The Emergency Arbitrator reached this decision, which is available below, and therefore dismissed Claimant’s request without the participation of the Respondent in the proceedings.