Emergency Awards in India’s Arbitration Regime in the Wake of the Amazon-Future Retail Dispute
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Emergency Awards in India’s Arbitration Regime in the Wake of the Amazon-Future Retail Dispute

The Apex Court’s verdict on August 6 in Amazon Holdings LLC v. Future Retail Ltd., upholding the enforceability of the Singapore International Arbitration Centre’s (SIAC) emergency award and putting rest to a year-long dispute between two multinational commerce giants, sealed a victory not just for Amazon but also for India’s future integrating international arbitration within its regime.

The former retail king of India, Future Group, had been in a feud with Amazon ever since the announcement of their merger deal with Reliance Retail which Amazon claimed to be in breach of the agreement between Amazon and Future Group. The dispute particularly knocked the doors of the emergency arbitral tribunal of SIAC when Future Retail, in disregard of the pending dispute before the constitute Arbitral Tribunal, was moving forward with the disputed “Reliance Deal.”

The matter came before the Indian courts when Amazon, after securing the emergency award in its favor, came to the Delhi High Court for enforcing it so as to restrain Future Group from moving ahead with the transaction. The Learned Single Judge, appreciating the stature of party autonomy, passed an order of Status Quo (to maintain existing status) between the parties. Aggrieved by this, Future Group moved a Division Bench of the High Court, which in turn stayed the Single Judge’s order, which was then appealed by Amazon before the Supreme Court of India.

Recognition of Emergency Awards Under Indian Statutes

The foremost impetus which the Apex Court had to deliberate upon was on the question whether the award so passed by the SIAC emergency arbitrator is enforceable in India or not.

The status of foreign arbitral awards in India has been quite uncertain and more so in the instance of foreign emergency awards. The Arbitration and Conciliation Act, 1996, treats both domestic as well as international awards pari-materia, i.e., on the same footing and subject to the same scope. Due to this, it had become a common practice to redress against foreign awards in domestic courts despite the fact that judicial intervention in such awards is a procedural abuse as noted by the Law Commission in its 246th Report.

On a plain reading of Section 2(1)(d) of the Act, it would seem that foreign interim awards do not have any place in the Indian statute books as the definition of what is to be included in the arbitral tribunal does not include “emergency arbitrator.” As such, an emergency arbitrator is generally a person who only decides an immediate interim dispute and whose decision does not culminate into a final award and by its nature is outside the purview of the Act, which recognizes only final awards, and thus, there is no way of enforcing such interim orders.  

Even the courts have reflected contradictory views on whether such awards are enforceable or not. The Delhi High Court in Raffles Design International India Pvt Ltd. v. Educomp Professional Education held that emergency awards are not enforceable in India, whereas the Bombay High Court in the case of HSBC PI Holdings Ltd. v. Avitel Post Studioz Limited & Ors. took a detour and enforced the emergency award through a patchwork bypassing the same award as an interim order under Section 9 of the Act.

However, the Apex Court finally settled this position in the Amazon-Future Group case by rendering emergency awards as enforceable in India. By reading into Sections 2(6) & 2(8) that enable parties to freely decide what issues they wish to arbitrate and by which Tribunal, the Court held that the Act not only contemplates but also permits emergency awards. The Act gives parties full autonomy to refer any and all issues to any tribunal of their choice, and this includes interim disputes referred to an emergency arbitrator.

The Court also provided much-needed clarity on how the parties should seek interim relief. It opined that while Section 9, the provision for seeking interim relief, applies even in international arbitration, the parties can either with explicit agreement or through implicit provisions (such as the rules of the international arbitration seat) exclude its applicability. The applicability of Section 9 would depend upon the agreement and curial law. What this would imply is that, if the parties so decide, they may be able to seek interim relief either exclusively from domestic courts or only from international tribunals or even concurrently from both of them as was seen in the Raffles case as long as either the agreement or the rules of the arbitration tribunal provides for it.

While this arms the parties with much-needed autonomy, it also provides the parties an opportunity to misuse it. It would not only lead to multiplicity of proceedings if the same interim relief is sought concurrently at two different institutions, but it would also lead to confusion as to which one would be enforceable if both arrive at contradictory conclusions. The Court missed the opportunity to address that multiple or concurrent reliefs should not be permissible if the matter is already sub-judice.

Enforcement of Emergency Awards

After affirming that emergency awards are awards under the Act, the Court’s next impetus was how such awards are to be enforced. If the HSBC case is to be regarded as the yardstick, then it would seem that the approach for enforcing emergency awards is through an order of the domestic court under Section 9, which is similar to what has been awarded by the emergency arbitrator. But this would regard the emergency award as only a persuasive order, giving the domestic court the ultimate jurisdiction to accept, reject or even modify the emergency award, thus invalidating the sanctity of international awards and rendering such awards only as pseudo-enforceable.

The Apex Court too acknowledged this procedural impropriety, and so it held that emergency awards would be as much of an interim measure as one that has been ordered by an arbitral tribunal, and thus enforceable under Section 17 of the Act, which provides for interim awards rendered by arbitral tribunals. It premised its decision on the use of the words “during the arbitral proceedings” in Section 17, which is wide enough to also include emergency awards.   

Before parting with the verdict, the Court also felt the need to deliberate upon the maintainability of the appeal filed before the Division Bench of Delhi High Court. Future Group had filed the appeal under Order 43 Rule 1(r) of the Civil Procedure Code, 1908, which deals with appeals from orders of injunction passed under Order 39 Rule 2-A of CPC, citing that the enforcement of the emergency award was done by the Single Judge not under the Act but rather under the order for injunction.

The Court, frowning upon Future Group’s contention, said that such an appeal is not maintainable as the power exercised for enforcement of emergency award is not done under CPC but rather under Section 17 of the Act itself. It said that despite the fact that the Act mentions that any order passed for enforcement under it would be deemed as if an order was passed by the court, this legal fiction of “deemed order” is created only to provide the nature of the enforceability; the actual power is exercised under Section 17, from which no appeal lies except on certain grounds.

While this has created a much better atmosphere for enforcement of emergency awards, there still lie a few issues which the court should have again deliberated upon. The Indian arbitration regime still continues to suffer from the issue of excessive judicial intervention. The Act provides that the courts may intervene in the enforcement of an award if it is either fundamentally against the Indian law, if it is against public policy, or if it is not in India’s interest, and in such instances may even set aside an award. While the first two grounds may be argued to be reasonable, the third ground should not be invoked, at least when it comes to international awards. In fact, the Law Commission itself recommended the non-application of the third ground in international awards in its 246th Report.

While this decision was not on merits, and the dispute between Amazon and Future Group is far from being over, this is still a watershed moment for India’s arbitration regime. From the HSBC case to the Amazon-Future Retail case, the enforcement of emergency awards has come a full circle. The judgment has not only laid rest to the lacunas with respect to emergency awards to further consecrate party autonomy but has also rectified the procedural issues that plagued enforcement of international awards. While there are still many more issues left, the judgment is one out of the many steps that India would need to further move towards becoming the hub of international arbitration and ease of doing business.

 

Romit Sahai is a 3rd year law student at the Vivekananda Institute of Professional Studies in New Delhi

 

Suggested citation: Romit Sahai, Emergency Awards in India’s Arbitration Regime in the Wake of the Amazon-Future Retail Dispute, JURIST – Student Commentary, October 18, 2021, https://www.jurist.org/commentary/2021/10/romit-sahai-amazon-future-arbitration-emergency-awards/.


This article was prepared for publication by Katherine Gemmingen, Commentary Co-Managing Editor. Please direct any questions or comments to her at commentary@jurist.org


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