When a business deal goes wrong, waiting months for a tribunal can be too late. This case asked whether an emergency arbitrator’s quick order can be enforced in India.
The dispute
Amazon invested about ₹1,431 crore in Future Coupons Pvt. Ltd., which held a stake in Future Retail Ltd. The agreements of 2019 restricted Future Retail from dealing with certain “restricted persons”. In August 2020 Future Retail agreed to a deal with Reliance Retail. Amazon said this broke the agreements. It began arbitration under the Singapore International Arbitration Centre (SIAC) rules, with New Delhi as the seat. An emergency arbitrator granted interim relief that stopped the deal from going ahead.
What the Supreme Court decided
The Court decided on 6 August 2021. It held the following.
- An emergency arbitrator’s order counts. Parties may agree to institutional rules that provide for one. Such an order is treated as an order under section 17(1) of the Arbitration and Conciliation Act, 1996.
- It can be enforced. The order can be enforced under section 17(2), in the same way as an order of a civil court.
- The stay was set aside. The Court set aside the Delhi High Court Division Bench’s stay orders. It held that they did not weigh the legal position properly.
Why it matters to you
- Investors can rely on institutional rules for urgent protection before a full tribunal is formed.
- Companies should treat covenants against dealing with named parties as enforceable commitments.
- Drafters should check whether the chosen arbitration rules provide for an emergency arbitrator. Also check the seat, since the ruling concerned an arbitration seated in India.
Why emergency arbitration exists
Forming a full arbitral tribunal can take months. Some steps cannot wait, such as stopping a sale or a transfer of shares. Institutional rules therefore let a party ask for an emergency arbitrator, who can be appointed within days. The arbitrator decides only urgent, temporary relief. The final dispute is decided later by the tribunal.
A short drafting checklist
- Name the institution and its rules, and check that they provide for emergency relief.
- State the seat of arbitration clearly.
- Write restrictions on dealing with named parties in precise terms.
- Set a notice process, so that a breach can be raised without delay.
Limits to keep in mind
The case turns on the wording of the agreements and the arbitration rules chosen. Other clauses may lead to a different result. See our practice note on contract drafting and review.
Key takeaway
An emergency arbitrator’s order can be enforced in India. If a contract may need urgent relief, say so in the arbitration clause.