Law Times

Page 12 April 8, 2013 Law Times • FOCUS ADR in a hurry Emergency arbitration procedures off to tentative start BY JuDY VAN RHIJN For Law Times W hen matters are time sensitive, arbitration organizations need to be able to constitute a panel or get a seasoned arbitrator on the case within a matter of hours. While there are concerns that limitations on new emergency procedures render them less effective than expedited court orders, disputing parties and their lawyers are willing to give emergency arbitration a try in the right cases. It has been a traditional criticism of arbitration that it's not well suited to dealing with urgent preliminary issues because of the time it takes to constitute an arbitral tribunal. In recent years, many international arbitration organizations have introduced new rules containing an emergency procedure. Centres in Sweden, Singapore, Australia, and Hong Kong and at the International Chamber of Commerce now provide an effective alternative to seeking pre-arbitration emergency relief in court. However, it's only available prior to the constitution of the arbitral tribunal, reflecting the fact that after that point, there are arbitrators on board to make interim decisions. While arbitration groups aim to reduce the role of the courts in arbitral proceedings, they also have to compete against each other for global arbitrations. "It is standard rather than special to offer it now," says Eric Morgan of Osler Hoskin & Harcourt LLP. "But we haven't seen a lot of it. It's not a question of how frequently it's used. We appreciate the security of knowing that it's there, knowing that institutions have the capability to offer arbitrators quickly. It makes arbitration full service for dispute resolution." In fact, according to Sylvie Picard Renaut, a lawyer at the International Court of Arbitration, there have been only two applications for emergency measures. Similarly, in a School of International Arbitration survey released in October 2012, 95 per cent of respondents either had no experience with fast-track arbitrations or had participated in only one to five of them. However, 65 per cent of respondents indicated a willingness to use fast-track clauses for future contracts. David Alderson, vice chairman of litigation at Heydary Hamilton Professional Corp. in Toronto, isn't surprised that lawyers continue to gravitate to the processes they know but believes the new options are desirable. "They mimic what exists in the courts in most jurisdictions. I can envisage cases where it might be a better option, for example, where the arbitration is governed by laws that are different from the local laws. An arbitrator might be more inclined to issue the order." Alderson notes there's a process to go through to determine whether someone might wish to use the new procedures. "I would be concerned about a few things. Firstly, you can probably not proceed ex parte, so it's not suited to a Mareva injunction where you don't want to give notice. Lawyers appreciate the security of knowing emergency procedures are available, says Eric Morgan. Secondly, unlike a judicial intervention order, it will probably not affect third parties. It is more suited to a mandatory order for something to be done than for something to be frozen. It requires a caseby-case analysis." Alderson also recommends considering enforcement issues. "In most jurisdictions, there would be a question as to whether a court order or an arbitration order would be more enforceable." He gives an example of a dispute between Canada and Dubai, countries that are both signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. "If there were a dispute between those two jurisdictions, an emergency arbitrator's order might be better." He also urges those considering the emergency arbitration route to consider the expense. "We know that the ICC fees alone are $40,000," says Alderson. Lawyers must work through all of these considerations at the point of drafting the arbitration agreement. Most procedures are available by default and parties must specifically opt out or agree to another pre-arbitration process. The School of International Arbitration survey found that exactly half of fast-track arbitrations arise from the arbitration clauses. According to Morgan, they should generally apply to every aspect of an agreement. "It's hard when drafting an arbitration clause to know what the disputes are likely to be, so we include it for everything," he says. "They are mostly used to preserve assets and preserve evidence." Morgan believes some of the limitations on the procedure may not apply in the future. "The institutions are waiting for customer feedback when they have seen how these first ones do," he says. Alderson would like to see the removal of the restriction that stops the emergency arbitrator from becoming part of the tribunal. "If you get an order that is issued and not challenged, that can set up an adverse inference. It would be helpful to have the same arbitrator on the panel." 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