The purpose of this bulletin, the fifth in our "Dispute Resolution Clauses - Two Minute Drafting Tips" series, is to provide parties involved in negotiating commercial agreements with quick, actionable tips for crafting effective dispute resolution clauses. This bulletin discusses the importance of considering, at the time of drafting, the potential need for swift action to prevent irreparable harm. Providing for an emergency arbitrator is one answer.
The Role of Emergency Arbitrators
Emergency arbitrators are appointed to provide urgent interim relief before the constitution of the full arbitral tribunal. Their role is to ensure any immediate issues are addressed promptly, thereby preserving the status quo and preventing further damage until the dispute can be fully resolved. This mechanism is particularly valuable in situations where time is of the essence, such as in cases involving asset sales, breach of confidentiality, document destruction, or other actions that could cause significant harm if not immediately restrained.
Institutional Rules and Sample Clauses
The easiest way to adopt emergency arbitrator procedures is to incorporate them by reference. Many arbitral institutions, such as the International Centre for Dispute Resolution, International Chamber of Commerce, Vancouver International Arbitration Centre (VanIAC) and the ADR Institute of Canada, have established rules to address the appointment and powers of emergency arbitrators. Using a model clause from one of these institutions will have the effect of incorporating these institutional rules by reference, unless parties expressly opt out.
For instance, Rule 14 of the VanIAC Domestic Arbitration Rules addresses the issuance of emergency awards and orders. This rule allows an emergency arbitrator to grant interim measures necessary to protect the rights of the parties or to prevent irreparable harm before the full arbitral tribunal is constituted. The emergency arbitrator has the authority to issue orders that may include, but are not limited to, preserving assets, maintaining the status quo, or providing security for costs. These orders are binding and enforceable. The rule also stipulates the emergency arbitrator must issue a decision within a specified timeframe, typically within 15 days of their appointment.
As the rules for emergency arbitrators vary among institutions, it is worthwhile to review them to ensure the timelines and scope of relief align with the subject matter of the contract and the specific needs of the parties.
Detailed Protocols for Appointment and Powers
In the absence of incorporating the rules of an arbitral institution by reference, parties should consider including detailed protocols for the appointment and powers of emergency arbitrators within the dispute resolution clause itself. These protocols should specify:
- Appointment Process: Clearly outline the procedure for appointing an emergency arbitrator, including the timeframe within which the appointment must be made. This helps avoid delays and ensures the parties know exactly what steps to take in an emergency.
- Powers of the Arbitrator: Define the scope of the emergency arbitrator's powers. This includes the types of interim measures they may grant, such as injunctions, asset freezes, or orders to preserve evidence. Clearly delineating these powers helps prevent disputes over the arbitrator's authority and ensures the relief granted is enforceable.
- Duration and Review: Specify the duration of the emergency measures and the process for their review by the full arbitral tribunal once constituted. This ensures the interim relief remains temporary and subject to further scrutiny, maintaining a balance between urgent action and due process.
Conclusion
Including detailed protocols for the appointment and powers of emergency arbitrators can help avoid significant irreparable harm and contribute to the overall efficiency and fairness of the arbitration process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
