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Supreme Court of India paves way for enforcement of emergency arbitration awards in India-seated arbitrations

The Supreme Court of India has ruled that an award made by an Emergency Arbitrator under the SIAC Arbitration Rules is enforceable under the Arbitration and Conciliation Act 1996, and that no appeal would lie against a court order enforcing such emergency awards. This ruling brings the Indian approach in line with international practice favouring the recognition and enforcement of emergency awards. 

 

Background

The Indian Arbitration and Conciliation Act 1996 ("Arbitration Act") provides Indian courts and arbitral tribunals seated in India with identical powers under Sections 9(1) and 17(1) respectively to make orders for interim measures during the course of arbitration proceedings. Section 17(2) of the Arbitration Act allows an Indian court to enforce an interim order made by the arbitral tribunal under Section 17(1) in the same manner as if it were an order made by the court itself. However, neither Section 9(1) nor Section 17(1) of the Arbitration Act expressly mentions an interim order or award made by an emergency arbitrator. It has, therefore, been unclear whether an award made by an emergency arbitrator in an India-seated arbitration would fit within the legislative scheme of the Arbitration Act and if so, how it would be enforced under the Arbitration Act. The Supreme Court's decision in Amazon.Com NV Investment Holdings LLC v. Future Retail Limited & others1 has now provided much-needed clarity on these questions in the context of an award made by the Emergency Arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre ("SIAC Rules") in an India-seated arbitration.

Issues

The Supreme Court considered the following two issues in the context of an India-seated arbitration where the enforcement of an award made by the Emergency Arbitrator under the SIAC Rules was resisted under the Arbitration Act:

  • Whether an "award" made by an emergency arbitrator under the SIAC Rules can be said to be an interim order made by an arbitral tribunal under Section 17(1) of the Arbitration Act; and
  • Whether an order passed by an Indian court under Section 17(2) of the Arbitration Act in enforcement of the "award" of an emergency arbitrator is appealable under the Arbitration Act.

Factual Background

The case concerned Amazon.Com NV Investment Holdings LLC ("Amazon"), on the one hand, and Future Retail Limited ("FRL"), India's second-largest offline retailer, and its shareholders, including Future Coupons Private Limited ("FCPL") and the members of the Biyani family (together, the "Biyani Group"), on the other hand. Amazon agreed to invest a sum of approximately USD 190 million in FCPL, on the condition that FRL could not transfer its retail assets to certain "restricted persons" (including the Mukesh Dhirubhai Ambani ("MDA") group) without Amazon's consent. A dispute arose when the Biyani Group entered into a transaction for the amalgamation of FRL with the MDA group without Amazon's consent (the "Impugned Transaction").

Amazon initiated arbitration proceedings against the Biyani Group under the SIAC Rules and an Emergency Arbitrator was appointed who, by way of an award, granted a stay on the Impugned Transaction. Despite this award, Biyani Group proceeded with the Impugned Transaction. Amazon then filed an application under Section 17(2) of the Arbitration Act before a single judge of the Delhi High Court requesting the enforcement of the Emergency Arbitrator's award. The single judge initially passed a status-quo order in which he restrained the Biyani Group from concluding the Impugned Transaction.2 This was followed by a detailed judgment where the single judge held, among other things, that the Emergency Arbitrator's award was an order under Section 17(1) of the Arbitration Act and was enforceable by the court under Section 17(2) of the Arbitration Act.3 FRL filed separate appeals against the initial status-quo order as well as the judgment of the single judge before a two-judge appellate bench of the Delhi High Court. The appellate bench, by way of separate orders, stayed the executions of the status-quo order and the judgment of the single judge.4 Amazon then challenged these orders before the Supreme Court.

Holding

The Supreme Court found in favour of Amazon and ruled that:

  • an award made by an emergency arbitrator is an order made under Section 17(1) of the Arbitration Act and can be enforced by Indian courts under Section 17(2); and
  • no appeal would lie under the Arbitration Act against an order made under Section 17(2) of the Arbitration Act for enforcement of an emergency arbitrator's award.

An Emergency Arbitration award is recognised and enforceable under the Arbitration Act

As a starting point, the Supreme Court noted that parties to an arbitration agreement are free to agree on a procedure administered by an arbitral institution, like SIAC. It held that the arbitral proceedings had already commenced in this case as per Rule 3.3 of the SIAC Rules with the receipt of Amazon's Notice of Arbitration by SIAC. Given that Section 17(1) of the Arbitration Act empowers an arbitral tribunal to order interim measures on a party's application "during the arbitral proceedings", the Supreme Court observed that an order made by an emergency arbitrator under the SIAC Rules is covered under Section 17(1) and is, therefore, enforceable under Section 17(2) of the Arbitration Act. This, in the Supreme Court's view, is further confirmed by the absence of any express or implied bar against emergency arbitration proceedings in the Arbitration Act.

The Supreme Court also noted that the legislative history of Section 17(2) favours a pro-enforcement approach for emergency awards in India-seated arbitrations. Enforcing emergency awards, the Supreme Court opined, would increase efficacy in granting interim reliefs and decongest the clogged court system in India. Thus, having agreed to arbitrate under the SIAC Rules and participated in the proceedings before the Emergency Arbitrator, the Supreme Court held that the Biyani Group could not ignore compliance with the Emergency Arbitrator's award.

An order enforcing Emergency Arbitration award is not appealable under the Arbitration Act

In the Supreme Court's view, Section 37 of the Arbitration Act provides an exhaustive, self-contained code for appeals from orders made under the Arbitration Act. The Supreme Court held that Section 37 provides for appeals only from orders made by an arbitral tribunal granting or refusing to grant interim measures under Section 17(1), but not against orders made by an Indian court under Section 17(2) of the Arbitration Act for the enforcement of a tribunal's interim order. Therefore, the Supreme Court held that an appeal against an order enforcing an emergency award under Section 17(2) would not be maintainable. 

Significance

The Supreme Court's decision in Amazon v. Future sets an important precedent giving primacy to party autonomy as one of the pillars of arbitration in India. In the context of an India-seated arbitration, the decision gives legitimacy to an emergency award made under the rules of an arbitral institution (such as SIAC) by treating it on par with an interim order made by an arbitral tribunal seated in India. The decision, thus, paves the way for an emergency arbitration award in an India-seated arbitration to be enforced by Indian courts in the same way as if it were a decree of an Indian court. In addition, given that the order for enforcement of such emergency award would be final and non-appealable, parties can expect the enforcement proceedings to be more efficacious and less time consuming. Parties choosing to arbitrate in India should view this decision as a welcome step that brings the Indian approach in line with the international practice of recognition and enforcement of emergency awards.

 

1 Civil Appeals No. 4492-4497 of 2021, Supreme Court of India, Judgment dated 6 August 2021 ("Amazon v. Future").
2 Amazon.Com NV Investment Holdings LLC v. Future Coupons Private Limited & others (Delhi High Court, OMP(ENF)(COMM) 17 of 2021, Order dated 2 February 2021).
3 Amazon.Com NV Investment Holdings LLC v. Future Coupons Private Limited & others (Delhi High Court, OMP(ENF)(COMM) 17 of 2021, Judgment dated 18 March 2021).
4 Future Retail Limited v. Amazon.Com NV Investment Holdings LLC & others (Delhi High Court, FAO(OS)(COMM) 21 of 2021, Order dated 8 February 2021); Future Retail Limited v. Amazon.Com NV Investment Holdings LLC & others (Delhi High Court, FAO(OS)(COMM) 51 of 2021, Order dated 22 March 2021).

 

Subhiksh Vasudev (Law Clerk, White & Case, Paris) contributed to the development of this publication.

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