Srishti Dongre is a final-year law student at Maharashtra National Law University, Aurangabad with an interest in arbitration and dispute resolution.
Emergency arbitration came into existence to solve a problem: how could there be a prompt solution in the form of a freezing order or an injunction in the absence of the arbitral tribunal that was supposed to decide the matter at hand? Many institutions across the globe have tried to plug this lacuna in their procedural framework by allowing the parties to go to the emergency arbitrator shortly after making the application. Until nearly two decades ago, the Indian Arbitration and Conciliation Act, 1996 did not take note of this arbitrator in any way at all. It is only in 2021 that the Supreme Court has finally come out with some guidelines as to whether an order passed by this arbitrator would be enforceable in an Indian arbitration. This issue has finally been settled.
The Gap in the Statute
This Act was formulated in an era where there was no concept of emergency arbitration at all. It is indeed true that until even 2006, there were certain provisions regarding emergency arbitrator in the International Centre for Dispute Resolution. The most part of Indian lawyers, who knew about emergency arbitration, came to know about it only after this Act was enacted. According to this Act, the “arbitral tribunal” has the power to take any interim measures after its establishment. In this respect, however, it would be apt to mention that it is the term ’emergency arbitrator’ which has been included in the above definition of arbitral tribunal as recommended by the Law Commission of India in its 246th Report for removing the confusion that had emerged sometime due to litigation in this regard. However, it may be mentioned at this juncture that Indian Parliament, when amending the said Act in 2015, ignored this recommendation. Therefore, it remained the sole prerogative of the courts of India to decide on a case-to-case basis whether there could be any need to recognize the decision made by the emergency arbitrator. For example, in some cases, like Avitel, where Bombay High Court decided to enforce the decision made by emergency arbitrator on account of the inherent powers of the court, the Delhi High Court took a different approach.
Even though the court could not accept the foreign emergency arbitral award as directly enforceable, yet they were ready to analyze the issue independently under Section 9, as in Raffles Design International v. Educomp Professional Education. Even more so, the decision taken in the case of Ashwani Minda v. U-Shin Ltd. even went to the extent of not accepting any award made by the emergency arbitrator on the basis that “there is no place for such a concept in the statute.” It was clear that some form of fragmentation was taking place.
Amazon v. Future Retail and the Turning Point
The matter was taken up in the jurisdiction of the Apex court only due to some controversies worth Rs. 24,713 crores. In the year 2019, Amazon Corporation had invested in Future Coupons Private Limited. According to the conditions stated in the contract between the two, no retail assets of Future Retail Limited could be transferred to the restricted party without the prior permission of Amazon. The dispute between Future Retail and Reliance, in the year 2020, was referred to the emergency arbitration process of SIAC with New Delhi being the seat of arbitration. However, in the judgment delivered on 6 August 2021 in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. & Ors., the Supreme Court held a different opinion in this matter. An arbitration tribunal appointed under the rules agreed upon by the parties, including provisions for appointment of an emergency arbitrator, shall come within the purview of Section 17(1), and the orders made thereunder may be enforced in the same manner as an order passed by the court under Section 17(2). The aforementioned judgment was given solely based on the idea of party autonomy as after agreeing to follow the rules of SIAC, which included provisions relating to an emergency arbitrator, the parties cannot go back on their stance. The Supreme Court has also referred to the Report of the Srikrishna Committee, according to which Section 17(2) may be interpreted in such a way as to enable the enforcement of an emergency award without amendment to Section 17(2). In relation to the appeals, the Supreme Court has further ruled out any further delays in determining the issue that no appeal could be filed against an order for enforcement of the award made by an emergency arbitrator under Section 37 as Section 37 is a complete code for appeals.
This has been and remains a heavy decision to make. This is one of the decisions that made the inclusion of one particular element possible, which is even there in all of the other competing centers of arbitration, but without the need for another act to be introduced through the legislature because they did not include it in the Act. The view about this decision is mostly that it has been very liberal towards the Act (see commentary from Debevoise & Plimpton and Nishith Desai Associates).
Where the Difficulty Begins
Unfortunately, the decision in Amazon v. Future Retail case led to a solution of a very narrow problem which it was aimed to solve initially. Because of this decision, the conclusion was drawn that an order passed by an emergency arbitrator within an arbitration process taking place in India will be viewed as an enforceable one under Section 17(2) of the Act. At the same time, this decision did not lead to a creation of any mechanisms for enforcing the orders of emergency arbitrators and, thus, did not solve many practical problems.
In the first place, it should be mentioned that this decision relates to cases when an arbitration process is conducted in India. If foreign-seated arbitration takes place, the orders passed by emergency arbitrators will not be recognized as an interim measure since there is no provision in the Act dealing with foreign awards. In such cases, the aggrieved party can only use Section 9 of the Act. The second point is the manner in which enforcement is carried out under Section 17(2) is non-self-enforcing even where the arbitral award comes from India. In no way is it possible for the arbitrator and the emergency arbitrator to enforce the order on his own. There must be recourse to court for enforcement in accordance with the provisions of the Code of Civil Procedure, just as it is in Section 9. But the procedure involves filing and notice and even the ability of the respondent to challenge the process. If the respondent is well-resourced and wants to challenge everything, enforcement of the process will take weeks, despite the ruling of the emergency arbitrator. This is all in light of the broader context of the Amazon-Future case, where even after the ruling was made at the Supreme Court, Reliance proceeded to seize control of the Future Retail stores at the start of 2022, putting Future Retail into insolvency and ultimately liquidation.
Nonetheless, in all scenarios, there still remains the problem of costs and accessibility as tangible impediments for successful resolution of issues via emergency arbitrations. The tribunals that have the capacity to successfully conduct such emergency arbitrations include SIAC, ICC, LCIA, along with Mumbai Centre for International Arbitration and Delhi International Arbitration Center, whose costs are relatively affordable for a well-funded multinational company, but not Indian corporates. That is the reason why most local commercial companies which do not have an arbitration clause in their agreements seek help from Section 9 of the civil court.
Fourthly, one should take into account that the ad hoc arbitration system is given no consideration at all. In relation to the Amazon v. Future Retail case, institutional arbitration is considered since there are rules in the SIAC Rules which define how the arbitrator should be chosen and when the decision should be taken by the arbitrator. However, ad hoc arbitration does not have such a mechanism and, moreover, ad hoc arbitration is prevalent in India.
The 2024 Draft Bill: A Second Attempt at Codification
Some loopholes were observed by the Government as well. Consequently, in October 2024, the Ministry of Law produced the draft for the “Arbitration and Conciliation (Amendment) Bill, 2024”, based on the recommendations of a report written by a panel of experts headed by Dr. T. K. Viswanathan in February 2024. Section 9-A is included in the bill, according to which, it is stated that the arbitral institution will have the power to designate an emergency arbitrator before the formation of the arbitral tribunal and the definition of “Emergency Arbitrator” is defined under Section 2(1)(ea). The order passed by the emergency arbitrator will bind the parties with the same force as the one passed under Section 17(2) and may be affirmed, varied, or set aside by the arbitral tribunal under Section 17(da).
This will be a way whereby the Act will establish an emergency arbitration system through legislation for the very first time and not through the interpretation of any legislation that was never intended to establish such a system. This is a better approach. Nevertheless, just like what has occurred in the Amazon decision, the proposed Act too has faced criticism due to its reliance on institutional arbitration and ignoring of ad hoc arbitration that is predominant in arbitration cases conducted in India (see commentary from Majmudar & Partners and Bar and Bench). Until June 2026, the Bill has not been presented in Parliament; therefore, the current law is the one enacted in 1996.
What This Means for Parties in Practice
In case the parties choose to enter into the arbitration agreement which includes provision of arbitration clause, the result can be clearly predicted. If the parties choose to settle the dispute according to procedural law which allows for emergency arbitration, they should be sure that the process will be carried out in a way that it won’t be unenforceable as in the case of Amazon v Future Retail on Indian arbitration procedure. But in case the parties choose ad hoc arbitration or arbitration forum which does not have the provision of emergency arbitration, the parties should refer to section 9 of the act and start the proceedings in the court if there is an urgent need to take some action before establishing the arbitral tribunal. Even if the possibility of emergency arbitration is available for the parties to conduct, just the decision of taking an order from the emergency arbitrator is not sufficient.
Conclusion
The Amazon v. Future Retail decision achieved what two-and-a-half decades of case law failed to achieve: it made it clear that emergency arbitration has a place in India’s arbitration system, founded on party autonomy and a purposive interpretation of Section 17. This is far from a trivial accomplishment, and it rightly stands as one of the most significant decisions of the Supreme Court on arbitration rendered in recent years. But this was an answer to a question of principle and not practice. For one, foreign emergency awards cannot be enforced under it. For another, the process of enforcement still goes through the usual channels of court proceedings, which takes time. Costs continue to make it impractical for many domestic parties to access institutional emergency arbitration. Moreover, ad hoc emergency arbitration, still quite common in India, lacks a clear procedure. While the 2024 draft of the bill will hopefully fill in those blanks, it is still a proposal, not a law, and there are still issues that it will not answer. Emergency arbitration in India is now in a peculiar position, being enforceable in principle and increasingly regarded as a valid method of dispute resolution both by judges and lawmakers.
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