Guerrilla tactics are the methods used by the parties or their counsels to delay, obstruct or sabotage arbitral proceedings to the extent that they become ineffective. These delays or obstructions are sought by way of exploiting the procedural rules of arbitration. The party employs such tactics when it is mindful of the fact that it has failed to perform certain obligations under the contract or when the odds of winning are against him.[ii] So, he tries to create conditions which would make it impossible to enforce the negative arbitral award against him. These tactics can be broadly classified into two categories: first, ‘hard tactics’ including physical influence and threats to the parties, the counsels or even the arbitrators which could have an adverse impact on the arbitral proceedings; second, ‘soft tactics’ meaning misuse of the procedural rules to affect the conduct and outcome of arbitral proceedings.[iii]
Scholars have identified the following actions as ‘guerrilla’ tactics in arbitration: unethical practices in document production/disclosure by way of suppressing important information or mixing the relevant documents with irrelevant ones; causing unwarranted delay by faking medical health problems; creating a conflict of interest between arbitrators and counsels; frivolous challenges to the independence of arbitrators; bringing up new arguments or evidence on the day of hearing and ignoring the deadlines; lack of respect or courtesy towards members of the tribunal and opposing counsel. It also includes practices like seeking anti-arbitration injunctions, witness tampering and ex-parte communications with the arbitrators.[iv] With a growth in the use of guerrilla tactics in arbitration, the debate of combating it has accelerated. While hard tactics could be addressed by the criminal law of any country, what needs more attention is the question of how to address soft tactics which are not illegal per se and are merely exploited through a procedural loophole. In this article, the author discusses the viability of introducing emergency arbitration in India as a measure to limit the usage of guerrilla tactics by the parties.
What is emergency arbitration?
The parties agree to arbitrate their disputes through a contract but the process of formation of arbitral tribunal to resolve the disputes arising out of the contract may take some time. In the meantime, if the party at fault seeks to indulge in activities which might cause irreparable harm to the other party then, such latter party would seek interim relief from the arbitrator to restrict the former. The concept of emergency arbitration has been developed to provide such interim relief before the arbitral tribunals are formed.[v] Instead of going to the municipal courts for instant relief, the parties would appoint emergency arbitrators who would grant enforceable interim awards. These interim reliefs would generally relate to seeking an injunction against the party resorting to guerrilla tactics.
Position in India
The incorporation of provisions facilitating emergency arbitration in India has received much deliberation over the last few years. However, the definition of ‘arbitral award’ under Section 2(c) of the Arbitration and Conciliation Act, 1996 [hereinafter “the 1996 Act”] does not recognise an emergency award.
Section 17 of the 1996 Act allows the arbitral tribunals to provide the aggrieved party with interim relief. However, such an interim award can be passed only once an arbitral tribunal is established. Therefore, a party who is in urgent need of interim relief would still have to go to a court under Section 9 of the 1996 Act. Section 9 allows the court to provide the parties to an arbitration agreement with an interim relief at any time before the enforcement of the final arbitral award. Pertinently, these two provisions fall under Part I of the 1996 Act and thus would not apply to foreign arbitral proceedings. This non-application of Section 9 to foreign emergency arbitral awards was discussed by the Indian Court in the cases of Raffles Design International India Pvt. Ltd. v. Educomp Professional Education Ltd. and HSBC PI Holdings (Mauritius) Ltd. v. Avitel Post Studioz Ltd. These cases categorically held that Section 9 merely gives the parties the right to approach the local courts for interim measures and does not allow enforcement of foreign emergency arbitral awards.
Part II of the 1996 Act does not have any specific clause recognising the enforcement of interim awards. Thus, the only way in which a foreign interim arbitral award can be enforced in India is through the employment of the New York Convention, 1958. But the lack of any express mention of interim awards and emergency arbitrators in the Convention has created a lacuna in Indian Arbitration law. In order to bring the Indian law in line with the universally accepted rules of arbitration, the 246th Law Commission Report recommended an amendment to Section 2 (d) of the 1996 Act, which defines an ‘arbitral tribunal’, to include the concept of an emergency arbitrator. The International Chamber of Commerce (ICC) Arbitration Rules under Article 29 recognise the use of emergency arbitration when the parties need urgent interim or conservatory measures that cannot await the constitution of an arbitration tribunal. Similarly, Article 30 of the Singapore International Arbitration Centre (SIAC) Arbitration Rules also allows for emergency arbitration. This recommendation was reiterated by the report of the High-Level Committee under the aegis of B.R. Krishna J. It was later discussed and promoted by various scholars as well. However, the 2015 Amendment Act failed to incorporate the changes and thus left the uncertainty around the enforceability of emergency awards of foreign arbitral awards as it is.
Therefore, the parties holding an award delivered by emergency arbitrators in foreign jurisdictions have often fallen back on Section 9 of the 1996 Act. This increases judicial interference with the arbitral proceedings of the parties because the courts do not recognise the emergency award and takes the matter of granting interim relief into its own hands. This runs counter to the principle of party autonomy as one of the parties is forced to pursue litigation in courts despite the existence of a valid arbitration agreement.
How can emergency arbitration limit the usage of guerrilla tactics in the early phase of arbitration?
From the discussion above, it is clear that the fundamental objective of emergency arbitration is to protect the interests of the innocent party. If the interim measures are not granted and the position remains status quo after the dispute arises, the party would try to continue and elongate the proceedings. In doing so, the party would fall back on guerrilla tactics to manoeuver the procedural rules in his favour or even hamper the proceedings in one way or the other. The author argues that the introduction of emergency arbitration would limit the defaulting party, to an extent, from using such tactics and would ensure the speedy resolution of disputes for the following reasons:
Firstly, if the arbitration rules allow, the tribunals can pass interim cost awards holding the defaulting party liable for the costs of arbitration. This would deter the parties from unnecessarily stretching the arbitral proceedings as the longer the proceedings go on, the higher the costs will be.
Secondly, one of the most common remedies sought through an interim injunction is to freeze the assets of the other party so that such party does not dispose of the property. If the enforcement and realisation of the arbitral award depend on such property, such injunctions become necessary. For example, in maritime arbitration, attachment of ships and related assets is often required. If such assets are not frozen and are in fact disposed of by the concerned party, the enforcement of the award passed against the owner party would be dubious. This kind of interim measures also find a place under Article 26 of the UNCITRAL Arbitration Rules, 2013 which reads as “provide a means of preserving assets out of which a subsequent award may be satisfied”. Though this remedy can be provided by the courts as well, an emergency arbitration would speed up the matter. As an arbitral tribunal is empowered to grant interim measure, an emergency arbitrator can grant an interim injunction in favour of the claimant restricting a respondent from disposing the assets. Though limited in scope, this would have a substantial impact on cases where the enforcement of the arbitral awards depends on the assets of the parties. It would restrict the parties from disposing off the assets as a guerrilla tactic to affect the outcome of an arbitration proceeding.
Thirdly, unlike courts which have to follow all the procedural laws, the parties can agree on the procedure for conducting the arbitration proceedings. If no such procedure is agreed to by the parties, the tribunal is authorised to conduct the proceedings in such manner as it considers appropriate. Thus, the tribunal can play a key role in limiting the guerrilla tacticians. The arbitrators would be able to play a commanding role in emergency arbitration and restrain a party from misusing the procedural rules if it is clear that the party is doing so to maliciously delay or obstruct the proceedings.
The use of guerrilla tactics has gone unchecked thus far due to the lack of any enforceable laws and rules on the conduct of the counsels in international arbitration. The concept of emergency arbitration has developed over time with international institutions like the United Nations Commission on International Trade Law (UNCITRAL), Hong Kong International Arbitration Centre (HKIAC) and Singapore International Arbitration Centre (SIAC) recognising it in their respective arbitration rules and several countries adopting the concept in their domestic legislation as well. For instance, Section 2(1) of the Singapore International Arbitration Act expressly recognises emergency arbitration as a mode of dispute settlement.
However, the domestic arbitration law of India i.e. the Arbitration and Conciliation Act, 1996 still fails to recognise this concept. Indian arbitration institutes like Delhi International Arbitration Center (DIAC) under Articles 2(1) and 14 of the Arbitration Rules, and Mumbai Center for International Arbitration (MCIA) under Articles 1 and 14 of the Arbitration Rules have recognised the arbitral awards delivered by emergency arbitrators as enforceable. Based on this, the author argues that it is high time for India to make legislative amendments to the 1996 Act to include ‘emergency arbitral awards’ in Section 2(c) and provide for the appointment of an ‘emergency arbitrator’ under Section 2(d). Further, there is a pressing need for the introduction of a provision similar in character to Section 17 of Part I, in Part II of the 1996 Act to allow for the enforcement of foreign emergency arbitral awards and to consequently promote India as the commercial hub for international arbitration. Once the practice of emergency arbitration is incorporated in India, the parties would no longer have to rely on Courts under Section 9 of the 1996 Act for interim measures. This would restrict judicial interference and improve the overall arbitral experience.
[i] Chitransh Vijayvergia is a graduate of the batch of 2020 from the National University of Advanced Legal Studies, Kochi. He has a keen interest in international dispute resolution laws and insolvency laws. For any discussion related to the article, he can be contacted via mail firstname.lastname@example.org. [ii] Peter A. Halprin, Resisting Guerrilla Tactics in International Arbitration, in 85(1) Arbitration: The International Journal of Arbitration, Mediation and Dispute Management 87 (Stavros Brekoulakis ed, 2019). [iii] Vladimir Khvalei, Guerrilla Tactic in International Arbitration, Russian View, in Austrian YB Int’l Arb. 335 (Nikolaus Pitkowitz et al. eds, 2011). [iv] Edna Sussman & Solomon Ebere, All’s Fair in Love and War – Or is it? Reflections on Ethical Standards for Counsel in International Arbitration, 22(4) Am. Rev. Int’l Arb. 611, 613-5 (2011). [v] Rania Alnaber, Emergency Arbitration: Mere Innovation or Vast Improvement, 35(4) Arb. Int’l 441 (2019).
Preferred Citation: Chitransh Vijayvergia, Can the usage of guerrilla tactics be limited through emergency arbitration?, Arbitration & Corporate Law Review, Published on 29th July 2020.
This article was reviewed by Aditya Prakash and Ritika Acharya.