Indian Supreme Courtroom Confirms Enforceability Of India-Seated Emergency Arbitration Awards – Arbitration & Dispute Decision – India


The Supreme Courtroom of India (the
Courtroom“) has just lately handed down a
vital judgment in Amazon.com NV Funding Holdings LLC v. Future
Retail Ltd. & Ors.
confirming that an award rendered
by an emergency arbitrator (“EA“) in an
arbitration seated in India is enforceable within the Indian courts.
The Courtroom’s judgment gives welcome readability for events
searching for pressing interim reduction in India-seated arbitrations. The
judgment, nonetheless, doesn’t deal with the enforceability of
foreign-seated EA awards within the Indian courts.

Background

In August 2019, Amazon NV Funding Holdings LLC
(“Amazon“) entered into a set of
agreements with, amongst others, Future Coupons Pvt Ltd
(“FCPL“), a ten% shareholder in Future
Retail Restricted (“FRL“), a number one Indian
retailer. Via these agreements, Amazon benefited from particular
rights in relation to FRL’s retail property. It was agreed by the
events that FRL could be prohibited from transferring its retail
property with out the consent of Amazon and FCPL, together with any
switch to an inventory of specified ‘restricted individuals’ which
included the Reliance Group, a significant Indian conglomerate. These
agreements included a dispute decision clause offering for
arbitration below the SIAC Guidelines, with its seat in New Delhi and
ruled by Indian legislation.

In August 2020, FRL and FCPL, amongst others, entered right into a
transaction with the Reliance Group meant to switch the retail
property of FRL to the Reliance Group. In consequence, Amazon initiated
EA proceedings searching for an pressing injunction restraining the
proposed switch. The EA duly issued an award to this impact in
October 2020 (the “EA Award“). Amazon
sought to implement the EA Award within the Delhi Excessive Courtroom by submitting an
software below part 17 of the Arbitration and Conciliation
Act 1996 (the “Act“).

Part 17(1) of the Act gives {that a} celebration might, in the course of the
arbitral proceedings, apply to the tribunal for interim measures
and that the tribunal shall have the identical energy to make orders as
an Indian courtroom. Part 17(2) of the Act gives that any order
issued by an arbitral tribunal shall be deemed to be enforceable as
an order handed by the Indian courts. Importantly, part 17 solely
applies to India-seated arbitrations and to not foreign-seated
arbitrations.

The Delhi Excessive Courtroom held that the EA Award was enforceable
below part 17 of the Act. Nevertheless, this order was subsequently
stayed by a Division Bench of the Delhi Excessive Courtroom. The Division
Bench’s order was the topic of an attraction to the Courtroom.

The Judgment

The important thing query for the Courtroom to contemplate was whether or not an EA
award in an India-seated arbitration could be stated to be an
“order” below part 17(1) of the Act and subsequently
enforceable. FRL argued that it couldn’t as a result of the Act is silent
on emergency arbitrations and subsequently EA awards couldn’t fall
throughout the scope of part 17. Specifically, FRL argued that the
2015 amendments to the Act failed to include a suggestion from
the Regulation Fee that emergency arbitrations needs to be
categorised as an “arbitral continuing” for the needs
of the Act.

The Courtroom rejected these arguments and held that the Act grants
events full autonomy to have a dispute determined in accordance with
institutional guidelines which might embody the supply of interim
orders by EAs. The Courtroom subsequently utilized a purposive
interpretation to the Act and held that the dearth of particular
reference to EA awards within the Act didn’t point out that such awards
ought to fall outdoors its scope. The Courtroom additionally famous that given FRL
had already consented to arbitration ruled by the SIAC Guidelines in
the transaction agreements, it was not now open to it to problem
the enforceability of an EA award issued below those self same
guidelines.

In a major remark, the Courtroom famous that EA awards are
an vital step in assist of decongesting the civil courts
and affording expeditious interim reduction to the
events
“.

The Courtroom additionally thought-about the extra query of whether or not an
order handed below part 17(2) of the Act by a courtroom in
enforcement of an EA award is appealable below part 37 of the
Act. The Courtroom held that, while orders granting or refusing to
grant interim measures below part 17(1) of the Act could be
topic to attraction, enforcement proceedings below part 17(2) are
not lined by that attraction provision. A potential consequence of
this discovering is that EA awards – which the Courtroom handled as
equal to any arbitral award or order of the courts – will now
be topic to a non-derogable proper of attraction within the Indian courts
below part 37 (no matter whether or not the related
institutional guidelines, if any, present for the waiver of any such
proper, because the SIAC Guidelines did right here).

Remark

By upholding the enforceability of EA awards in India (albeit in
the context of India-seated arbitration proceedings solely), the
Courtroom has re-confirmed the pro-arbitration angle of the Indian
judiciary.

The Courtroom’s judgment additionally gives a lot wanted clarification
to events searching for a fast-track path to acquiring interim reduction
in India-seated arbitration proceedings with out having to resort to
the home courts, and the potential delays that that will entail.
In making its choice, the Courtroom emphasised the advantages of
arbitration as a dispute decision mechanism by observing that,
from a public coverage perspective, the enforceability of EA awards
is a crucial step in granting expeditious interim reduction to
events while lowering the pressure on the native courts.

The professional-arbitration message within the judgment is considerably diluted
by the Courtroom’s indication that EA awards in India-seated
arbitrations could also be topic to attraction within the Indian courts even when
the related institutional guidelines present in any other case. It stays to
be seen how this facet of the Courtroom’s judgment will apply in
follow and, particularly, the way it reconciles with the Courtroom’s
remark that emergency arbitrations play an vital position in
decongesting the civil courts.

As famous above, the judgment was not involved with the
enforceability of foreign-seated EA awards within the Indian courts.
There may be at present no provision just like part 17 of the Act
relevant to foreign-seated EA proceedings with the consequence that,
as issues stand, foreign-seated EA awards are unlikely to be
immediately enforceable within the Indian courts. Following the latest
line of pro-arbitration choices issued by the Courtroom, which has
included the numerous judgment in PASL Wind Options
Personal Restricted v. GE Energy Conversion India Personal Restricted

(which we lined right here), it’s to be hoped that the Courtroom will
present additional readability on this vital problem sooner slightly than
later.

The content material of this text is meant to offer a common
information to the subject material. Specialist recommendation needs to be sought
about your particular circumstances.

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