Who has the power to order interim measures in aid of arbitration?

There are basically two answers to the question who should be given the power to order interim measures in the arbitration proceeding. In some jurisdictions, though in a minority, this power is exclusively given to the state court; as discussed below, this is the situation in China. Nevertheless, in a majority of jurisdictions, including the UNCITRAL Model Law jurisdictions, and as such Hong Kong and Singapore, both the state court and the arbitral tribunal have the power to order interim measures.³⁷⁵

Historically, state courts were the only forum to which the parties could effectively turn when seeking interim measures in arbitration. This historical view in part relied on limited trust toward arbitration and the understanding that an interim measure is a coercive measure; therefore, only state courts that are equipped with coercive powers should order it. Indeed, the arbitral tribunal lacks the power to directly require a party to do or refrain from doing something. As a result, if an interim measures ordered by the arbitral tribunal needs to be coercively enforced, the state court must be approached for that purpose: in this indirect way, the tribunal does have access to coercive powers. As noted by Born, the historical classification of interim measures is inaccurate. The view that only state courts should be able to decide the appropriateness of interim measures in aid of arbitration has been commonly abandoned and the arbitral tribunal has been permitted to decide the matter.³⁷⁶

Rationales for the arbitral tribunal’s power to order interim measures

There are numerous reasons to support the power of the tribunal to order interim measures. To start with, arbitrators are adjudicators in particular cases and, thus, are most familiar with the merits of the case. This allows the arbitral tribunal to not only be equipped with the relevant knowledge of a case, which is needed to make a decision in the situation of urgency, but also to assess which applications may be mere dilatory tactics. The tribunal is normally well oriented whether there genuinely exists a need for an interim measure. In addition, it has a number of tools that can be used to prevent frivolous requests. This includes ordering security as a condition for granting of the measure or awarding damages in case the measure should not have been granted.

375 See Born, 2440.

376 See ibid., 2432-2433.; Yesilirmak, Provisional Measures in International Commercial Arbitration, 64-66.

102

Some additional reasons supporting the power of the arbitral tribunal are: the respect for the parties’

choice of arbitration as a method to resolve disputes, privacy and confidentiality of the arbitration proceeding, as well as flexibility of arbitrators in designing the most appropriate measures.³⁷⁷ The power of the arbitral tribunal to order interim measures is essential for the overall fair and effective resolution of disputes. Therefore, according to Born, denying the right of the tribunal to safeguard the parties’ rights via interim measures is a potential frustration of a fair and efficient arbitration proceeding.³⁷⁸

Rationales for the court’s power to order interim measures

The arbitral tribunal’s authority to order interim measures typically is not exclusive. There can be instances where turning to the court when seeking an interim measure can be a sensible approach.

Even more, sometimes, in fact, this is the only way to proceed. There might be instances, where an interim measure relates to a non-party. In such a situation, it may be necessary to approach the court, since in line with a consensual nature of arbitration, the tribunal does not have the power over non-parties, and only the court’s decision can be binding upon them. By way of example, in a case where an interim measure orders a shipper to release perishable goods to a buyer in an arbitration between the buyer and the seller, it is more effective to turn to the court in order to get the shipper (a non-party) to perform the duty of releasing goods.³⁷⁹

It may also be that in some instances turning to the court can be faster, in particular where the arbitral tribunal consists of several arbitrators of different backgrounds, experience, and positions toward granting of interim measures.³⁸⁰ Furthermore, the court may be a preferred forum when the quick coercive enforcement is needed.³⁸¹ In addition, a question may arise as to whom to turn in case the arbitral tribunal has not been yet constituted, and there is a need for an interim measure. As discussed

377 See Born, 2432-2434.; Yesilirmak, Provisional Measures in International Commercial Arbitration, 49-54.

378 Born, 2426.

379 Lijun Cao and Schenchang Wang, "The Role of National Courts and Lex Fori in International Commercial Arbitration " in Pervasive Problems in International Arbitration, ed. Julian D. M. Lew and Loukas A. Mistelis (Kluwer Law International, 2006), 169.

380 Yesilirmak, Provisional Measures in International Commercial Arbitration, 74.

381 For other reasons when turning to the court, rather than to the tribunal might be a better idea when seeking to obtain an interim measure in aid of arbitration, see Joseph and Foxton, 257.; Susan Field,

"Narrowing the Powers of the National Courts to Grant Interim Measures – a Measure Too Far?," Kluwer Arbitration Blog (27 August 2015), http://arbitrationblog.kluwerarbitration.com/2015/08/27/narrowing-the-powers-of-the-national-courts-to-grant-interim-measures-a-measure-too-far/. (last accessed: 20 November 2018).

103

in greater detail below in this Chapter, numerous arbitration rules provide now for the access to an emergency arbitrator in such instances. Nevertheless, it can also be a practicable idea to turn to the court. In general, if state courts work efficiently and are able to effectively help with interim measures, approaching them with the requests for interim measures can be a sensible option in any number of instances.

In the context of states giving the power to order interim measures in aid of arbitration only to the state court, this has numerous shortcomings. They include the lack of neutrality, privacy, and confidentiality of relevant proceedings, which can be especially relevant if these were the reasons why the parties agreed to arbitrate in the first place. Some other problematic issues include delays by courts in some jurisdictions and the complexity of proceedings in large cross-border disputes involving multiple jurisdictions.

a. UNCITRAL Model Law

One of the most significant modifications introduced by the 2006 version of the UNCITRAL Model Law, when comparing it with the preceding version from 1985, is that it addresses extensively the issue of interim measures. Articles 9 and 17 both refer to the power to order interim measures of both the arbitral tribunal and the court. Article 9 provides that “[i]t is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure.” Furthermore, Art. 17(1) stipulates that

“[u]nless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim measures.”

The content of Art. 9 was included in the 2006 version of the UNCITRAL Model Law in an unchanged shape. In general, the need for Art. 9 was driven by the study on the New York Convention and the divergent positions of state courts as to whether they can grant interim measures (and in particular attachments) in matters governed by arbitration agreements. While some courts refused to do that, because in their view, such court-granted measures would hinder the expeditious arbitration proceeding, some other courts agreed to grant them, because they found that such measures did not impede arbitration, but rather guaranteed the subsequent successful enforcement of arbitral awards.

The drafters of the UNCITRAL Model Law decided that the interim measures granted by state courts were compatible with arbitration.³⁸²

382 Holtzmann and Neuhaus, 332.

104

As to Art. 17, it was significantly revised by the 2006 version of the UNCITRAL Model Law. The original version of Art. 17, as adopted in 1985, provides that unless the parties agreed otherwise, the arbitral tribunal can, upon the request of a party, order any party to take a measures of protection it considers necessary in respect to the subject-matter of a dispute. Further, in ordering the measure, it can require the party to provide an appropriate security.³⁸³ It should be stressed that the wording “any party”

defines the limits of this provision and excludes non-parties, which is in line with the contractual character of arbitration.³⁸⁴

According to the drafters of the 2006 version of the UNCITRAL Model Law, the revision of Art. 17 was considered to be “necessary in light of the fact that such measures are increasingly relied upon in the practice of international commercial arbitration”.³⁸⁵ The Working Group of the UNCITRAL Model Law agreed that due to the uncertainties existing under the 1985 Model Law provisions and some national laws on the scope of interim measures available, conditions for ordering them, as well as the enforcement regime, the effectiveness of international arbitration might be at stake. Regarding the aspect of the enforcement specifically, the Working Group stressed that, in practice, an enforceable interim measure may be equally as important as a final award on the merits.³⁸⁶ The issue of the enforcement of interim measures is dealt with in greater detail below in a separate section of this Chapter.

Chapter IV A was also added to the 2006 version of the 2006 UNCITRAL Model Law. It is titled “Interim Measures and Preliminary Orders” and keeps the substance of the original Art. 17, but adds a number of new provisions (Art. 17 to Art. 17J). As to the amendment of Art. 17, a revised provision extends the authority of the tribunal by deleting the phrase that interim measure can be granted “in respect of the subject-matter of the dispute”. It was so decided, because the original wording from 1985 could suggest limiting the tribunal’s authority to issue some interim measures such as freezing the assets that are not the subject matter of a particular dispute. Further, the revised version of Art. 17 provides

383 See more on the legislative history of Art. 17 in ibid., 530-533.

384 See ibid., 532.; Brekoulakis, Ribeiro, and Shore, in Concise International Arbitration (2nd Ed.), 870-871.

385 United Nations Commission on International Trade Law, "Explanatory Note by the UNCITRAL Secretariat on the 1985 Model Law on International Commercial Arbitration as Amended in 2006," para 4. See also Sundaresh Menon and Elaine Chao, "Reforming the Model Law Provisions on Interim Measures of Protection," Asian International Arbitration Journal 2, no. 1 (2006), 1 et seq. for the assessment of the changes introduced in 2006.

386 Howard Holtzmann et al., A Guide to the 2006 Amendments to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Kluwer Law International, 2015), 165.

105

for the above mentioned definition and categories of interim measures.³⁸⁷

Concerning the distribution of power to order interim measures, Art. 17J, titled “Court-ordered interim measures”, was added. It provides that “[a] court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of whether their place is in the territory of this State, as it has in relation to proceedings in courts. The court shall exercise such power in accordance with its own procedures in consideration of the specific features of international arbitration.” Hence, Art. 17J confirms that the court has the power to order interim measures in aid of arbitration, and this power is extended to measures in support of an arbitration proceeding taking place outside of this court’s jurisdiction. This extension of the power to support foreign arbitration was dictated by the character of international arbitration and the need to secure assets, evidence, or particular actions in jurisdictions other that the place of arbitration. Further, in ordering interim measures in aid of arbitration, the court refers to its own procedural laws, while taking into account the special characteristics of international arbitration.

The remaining articles of Chapter IVA deal with a number of issues, including types and conditions for ordering interim measures. In ordering interim measures, the arbitral tribunal may require an appropriate security, as well as the disclosure of any change of circumstances based on which the measure was requested or granted. The tribunal can also modify, terminate, and suspend the interim measure it granted. It can also decide on the cost and damages, if it subsequently determines that the measure should not have been granted.³⁸⁸ Finally, Section 2 of Chapter IV A of the 2006 UNCITRAL Model Law deals with the so called “preliminary orders”, which allows ex parte measure applications that can be granted if the tribunal finds that a prior disclosure of the request for an interim measure to the party against which the measure is directed would risk frustrating the purpose of this measure.³⁸⁹

Based on the UNCITRAL Model Law text, both the arbitral tribunal and the state court have the power to order interim measures in aid of arbitration. However, there is a question of the relationship between Art. 9, Art. 17, and Art. 17J. Namely, whether the tribunal and the court have coexisting jurisdiction to grant interim measures and, thus, a party has a truly free choice to turn to either of the

387 See p. 99-100 of this Chapter.

388 Art. 17A, 17D, 17E, 17F, 17G of the 2006 UNCITRAL Model Law. See the legislative history of these articles in Holtzmann et al., 166-172 & 176-183.

389 Art. 17B and Art. 17C of the 2006 UNCITRAL Model Law. See also ibid., 172-175.

106

two, or whether one of them is given the priority. In practice, there have been different answers to this question in Model Law jurisdictions. The language of the UNCITRAL Model Law seems to suggest the simultaneous power of the tribunal and the court, without any particular priority. Article 9 provides that a party can request an interim measure from the court “before or during arbitral proceedings”, and Art. 17 stipulates without any further clarification that “a tribunal may, at the request of a party, grant interim measures”.³⁹⁰ It is suggested by the explanatory note to the 2006 version of the UNCITRAL Model Law that Art. 17J was added in order to eliminate the doubts that despite the existence of an arbitration agreement, both the tribunal and the state court can be approached for obtaining an interim measure, and the choice is in the hands of a party requesting a relief.³⁹¹

The other position is that that once the arbitral tribunal is in place, the state court should only have the subsidiary jurisdiction to order interim measures in aid of arbitration. That means that the court has the power to order the measure, but only in instances where the tribunal is not able to do so itself.

This position is supported by the laws and practice of Hong Kong and Singapore, as discussed below.

b. Hong Kong and Singapore

Hong Kong considerably follows the solutions of the 2006 version in the area of interim measures in aid of arbitration.³⁹² It adopted Art. 9 of the UNCITRAL Model Law by virtue of Section 31 of the HK Arbitration Ordinance, and Art. 17 is applied by Section 35.³⁹³ However, Art. 17J of the UNCITRAL Model Law, dealing with court-ordered interim measures, does not have effect in Hong Kong. Instead, Section 45 of the HK Arbitration Ordinance makes a more detailed explanation as to court-ordered interim measures. According to Section 45, on the application of any party, the court can grant an interim measure in aid of arbitration irrespective of whether or not the arbitral tribunal is also vested

390 See also Brekoulakis, Ribeiro, and Shore, in Concise International Arbitration (2nd Ed.), 860.

391 United Nations Commission on International Trade Law, "Explanatory Note by the UNCITRAL Secretariat on the 1985 Model Law on International Commercial Arbitration as Amended in 2006," para 30.; see also United Nations Commission on International Trade Law, UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, 94. See, generally, on the UNCITRAL Model Law regime for interim measures in Binder, 232-275.

392 See Sections 35–45, 56, 60 and 61 of the HK Arbitration Ordinance. See also, generally, Ma and Brock, 549-563.; Cheng and Moser, 133-139. for the issue of interim measures in aid of arbitration in Hong Kong.

393 In addition, Art. 17A-17G of the UNCITRAL Model Law is applicable through Sections 36-42 with no changes.

As to Art. 17H dealing with the enforcement of tribunal-ordered interim measures, Section 61 has effect in substitution of it. Article 17I dealing with the grounds for refusing the enforcement, and Art. 17J on court-ordered interim measures do not have effect in Hong Kong (Art. 17J is substituted by Section 45 of the HK Arbitration Ordinance). For interim measures in Hong Kong, also Sections 61 (on the enforcement of the tribunal’s orders and directions), 56 (on general powers of the tribunal), and 60 (on the court’s powers in arbitration) are relevant.

107

with similar powers in relation to the same dispute. However, the court can refuse to grant the measure, if it is currently the subject of the arbitration proceeding and it considers that it is more appropriate for the tribunal to deal with this issue.

Such preference of having the arbitral tribunal deciding on an interim measure in the situation where it can be granted by both the tribunal and the court was articulated in Leviathan Shipping Co Ltd v. Sky Sailing Overseas Co Ltd.³⁹⁴ In this case, a Hong Kong court supported the position that the power of the state court “should be exercised sparingly, and only where there are special reasons to utilise it.”³⁹⁵ The court in this case further elaborated that such special reasons could include a situation where the arbitral tribunal does not have the power to grant all of the relief sought in a single application. In such a situation, rather than applying to the tribunal for some of the relief, and to the court for the other part, it would make more sense to file a single application to the court. Correspondingly, among the examples cited as requiring the use of the court’s power are situations wherein (1) the arbitration proceeding was commenced, but the tribunal has not been yet appointed, as well as (2) where an order would refer to non-parties.

As to the situation in Singapore, it is important to stress that Singapore adopted the 1985 version of the UNCITRAL Model Law, and Chapter IV A. of the 2006 version was not adopted there.³⁹⁶ Article 9 and Art. 17 of the UNCITRAL Model Law are applicable together with Sections 12 and 12A of the SIAA, but there some modifications.³⁹⁷ Namely, under the SIAA (Section 12A), although both the state court and the arbitral tribunal can order interim measures, a party seeking to obtain the measure should first approach the tribunal with its request. Only if the requested measure cannot be given by the tribunal, because it has no power to order it, or it is unable for the time being to act effectively, the party can turn to the court. The position that the court’s power in the area of interim measures is of a supportive nature, and is not substitutive for the tribunal’s power was confirmed by a court in NCC International AB v. Alliance Concrete Singapore Pte Ltd., in which it was stated that under the

394 Leviathan Shipping Co Ltd v Sky Sailing Overseas Co Ltd, Hong Kong Court of First Instance, 18 August 1998, [1998] 4 HKC 347.

395 Ibid. See also Ma and Brock, 561-562.; Cheng and Moser, 135-137.

396 Singapore decided not to adopt all of the amendments of the UNCITRAL Model Law from 2006 due to the lack of the industry support for it. Only new Art.17J was reflected in the revised version of the SIAA. See Joseph and Foxton, 225 note 2. See also the same source p. 225-260 for the general overview of interim measures in aid of arbitration in Singapore.

397 See Art. 9 and Art. 17 of the UNCITRAL Model Law read together with Art. 3(1) and Art. 12 & 12A of the SIAA. Section 12 of the SIAA deals in greater detail with the powers of the arbitral tribunal. Section 12A reflects the idea of Art. 17J of the UNCITRAL Model Law, however, there are some modifications.