Interim Measures in International Arbitration

Written by Team Farallon

  • Farallon Law Corporation
  • January 22, 2024

In the context of arbitration, parties involved in a legal dispute often face the decision of whether to seek interim measures. Interim measures of protection are temporary actions or orders that aim to safeguard the rights or property of one of the parties during the arbitration process. They serve as a kind of stopgap solution, providing immediate relief until a final decision on the merits of the dispute is reached by the arbitral tribunal.

These measures play a crucial role in ensuring that the purposes of the arbitration are not frustrated; they maintain the status quo and establish rules to regulate the conduct of the parties throughout the arbitration proceedings. In essence, interim measures of protection are a vital tool in the arbitration process, allowing parties to address urgent issues and protect their interests while the dispute resolution process unfolds. The choice of whether to seek these measures from the arbitral tribunal or a local court can have significant implications for the arbitration’s progression.

Interim Measures Available to Arbitral Tribunals

Under both the International Arbitration Act (IAA) and the Arbitration Act (AA), tribunals have the power to grant a wide range of interim measures during arbitration proceedings. Importantly, they are not restricted to a specific set or type of interim measures, providing them with flexibility in deciding what actions are necessary to address disputes effectively.

However, there are some limitations on the power of arbitral tribunals when it comes to granting interim relief. Arbitral tribunals cannot grant interim relief on an ex parte basis, meaning they cannot make decisions or issue orders without involving and notifying all parties involved in the arbitration. For example, Rule 19.6 of the Singapore International Arbitration Centre (SIAC) Rules state that any statements, documents, or information provided to the tribunal and the Registrar by one party must be simultaneously communicated to the other party.

In the past, before the establishment of an arbitration tribunal, parties seeking urgent interim relief typically had to apply to a national court. Interim relief is a legal remedy used to address urgent issues that arise during the arbitration process, such as preserving assets or restraining a party from taking certain actions.

Most arbitration rules have now introduced a mechanism to obtain interim relief even before the full arbitration tribunal is constituted. This mechanism involves the appointment of an “emergency arbitrator” whose role is to swiftly address urgent matters that cannot wait for the formal arbitration process to begin.

Notably, parties usually have little to no say in the selection of the emergency arbitrator. This lack of input is a deliberate choice made in the interest of expediting the process for the sake of efficiency and speed.

The SIAC grants the emergency arbitrator extensive powers. These powers include making jurisdictional decisions and issuing interim relief orders or awards. What’s unique is that the emergency arbitrator can issue preliminary orders even before a formal hearing takes place. Moreover, under the SIAC Rules, the emergency arbitrator is under a tight deadline to issue their interim order or award, usually within 14 days from their appointment. However, in exceptional circumstances, the Registrar, an administrative officer, may extend this timeframe.

The tribunal is granted the authority to re-evaluate, modify, or even annul any interim award or emergency relief order issued by the emergency arbitrator. Importantly, the tribunal is not constrained by the rationale provided by the emergency arbitrator. Additionally, the tribunal assumes the final decision-making authority regarding the costs associated with applications adjudicated by the emergency arbitrator.

Any interim order or award from the emergency arbitrator ceases to be binding under specific conditions. These conditions include when the tribunal is not constituted within 90 days of the order or award, when the tribunal issues a final award, or if the claim is withdrawn.

This streamlined process is likely to be faster than going through the court system, contributing to the perception that parties can conveniently address their arbitration needs within the framework of the Singapore arbitral institution, establishing it as a one-stop solution for such matters.

Court Ordered Interim Measures

Singapore’s legal framework for arbitration grants the Singapore courts the authority to grant interim relief in support of arbitration. This authority is provided by both the IAA and the AA. Article 9 of the Model Law also underscores that it is entirely acceptable for a party involved in arbitration to request interim protection from a court. This request can be made either before or during the arbitration process, and the court is permitted to grant such protection. A similar provision can be found in Rule 10.3 of the SIAC Rules.

However, the court may refuse to issue an order for interim relief if it believes that the fact that the arbitration is taking place outside of Singapore makes it inappropriate to grant such an order. In other words, the appropriateness of seeking interim relief from the Singapore courts depends on the location of the arbitration. Typically, if Singapore is designated as the seat of arbitration, it is considered appropriate for parties to request injunctive relief from the Singapore courts.

The primary objective of the courts is to strengthen and support the arbitration process and ensure the effectiveness of any arbitration awards issued. Essentially, this means that courts should intervene and order interim measures only when these measures contribute to and promote the arbitration proceedings.

When a case requires urgent attention, a party can make an application to the court without notifying the opposing party, which is referred to as an ex parte application. The court has the discretion to determine the conditions and terms of this ex parte application. However, it’s important to note that even in these situations, there is a fundamental requirement for the party making the application to provide full and transparent disclosure of all relevant information. Failure to do so could result in the cancellation of the injunction or other measures granted by the court.

There may be potential conflict between the need for urgency and the principle of notifying the other party. In such cases, a party can balance both factors by notifying the opposing party and simultaneously requesting an expedited court hearing. During this early hearing, the court can consider and decide on appropriate measures, especially if the other party requests a delay, such as an adjournment, to prepare and submit reply affidavits. This approach seeks to strike a balance between the need for swift action and the requirement for procedural fairness in legal proceedings.

Applicants ought to be cautious when defining the scope and terms of the relief they are seeking in a legal case. If an application for relief is too broad, it can harm the chances of success. For example, in the case of Maldives Airports Co Ltd and Anor v GMR Male International Airport Pte Ltd, [2013] SGCA 16, the Court of Appeal found that the requested injunction was so extensive that it was impractical, and as a result, the Court cancelled the injunction that had been previously granted by the High Court.

When courts grant injunctions, they often impose strict conditions on the applicant. One common condition is that the applicant must provide an undertaking to pay damages if the court later determines that the order was not justified. In other words, if the court later finds that the injunction should not have been granted, the applicant may be required to compensate the other party for any harm or losses they suffered as a result of the injunction.

Interim Prohibitory Injunctions

To assess whether such an injunction should be granted, Singapore courts employ the “balance of convenience test,” which entails demonstrating the presence of a serious legal issue, the inadequacy of monetary compensation, and the overall appropriateness of granting the injunction.

The case in question, Maldives Airports Co Ltd and Anor, revolved around a dispute arising from GMR’s concession to develop Male International Airport, granted by the Maldives government. The government’s notice to GMR to vacate the airport prompted arbitration proceedings in Singapore. During this process, GMR applied to the Singapore High Court for an interim injunction, seeking to prevent the Maldives government from interfering with their obligations under the concession agreement and from taking control of the airport and its facilities.

The High Court granted part of the injunction, specifically the one preventing interference with GMR’s obligations. However, it declined the second part, which aimed to prevent the government from taking control of the airport. GMR appealed this decision, leading to a review by the Court of Appeal.

The Court of Appeal examined section 12A(4) of the IAA, which authorized the High Court to issue interim injunctions for preserving evidence or assets. It clarified that “assets” in this context were not limited to physical items but also included contractual rights.

Importantly, the Court of Appeal emphasized that not all contractual rights could be preserved via injunctions. Only those rights that couldn’t be adequately compensated through monetary damages qualified as assets. GMR argued that certain contractual rights, such as the right to proper termination notice, the right to arbitration before contractual entitlements were destroyed, and their interest in the land on which the airport stood, should be considered assets. However, the Court of Appeal determined that only the interest in land met the criteria as an asset because the other rights could be sufficiently addressed through monetary compensation.

Additionally, the Court pointed out that it could only order an interim injunction in an urgent case if it was satisfied that the injunction was necessary to preserve evidence or assets. If there were other reasonably available alternatives for securing the evidence or asset, then the Court could not deem the injunction as necessary.

Freezing Injunctions

The powers under section 12(A) also include the power to grant a freezing injunction. This is a court-issued order that restrains a party from using or disposing of their assets while a legal dispute or arbitration is pending. To obtain such an injunction, the party requesting it must meet specific criteria:

First, the applicant must demonstrate a “good arguable case.” This means they must present a convincing legal argument or case for their claim. Second, it is necessary for the defendant, against whom the injunction is sought, to have assets within or outside the jurisdiction where the legal proceedings are taking place. Third, the applicant must establish a real risk that the defendant may dissipate or dishonestly deal with their assets. This risk must be genuine and serious, to the extent that it might render any future arbitration award unenforceable.

The case of Bouvier, Yves Charles Edgar and another v Accent Delight International Ltd and another and another appeal [2015] SGCA involved the granting of a worldwide Mareva injunction, which is a broader type of freezing injunction that extends beyond a single jurisdiction.

In this specific case, the Court of Appeal in Singapore made a significant legal decision regarding the requirements for obtaining a Mareva injunction. The key point of the case was that the Court clarified that the mere allegation of dishonesty by a party is not sufficient on its own to obtain a Mareva injunction. Instead, the party seeking the injunction must also demonstrate a “real risk of dissipation of assets.” In other words, it’s not enough to claim that the other party is acting dishonestly; there must be credible evidence to show that their actions create a genuine risk that they will try to dispose of their assets to avoid satisfying a potential judgment.

Search Orders

Essentially, a search order allows designated individuals to access a person’s premises, search for specific pieces of evidence or assets, and seize them for safekeeping. However, the application for a search order is an uncommon occurrence. This rarity is attributed to the nature of disputes within this domain, which typically do not necessitate such measures.

A notable characteristic of a search order is that it is granted without notifying the party against whom it is issued. This is known as an ex parte order. The primary rationale behind this secrecy is the concern that if the respondent were alerted to the applicant’s intentions, they might take steps to destroy the very items being sought, thereby obstructing the course of justice.

To secure a search order, the applicant is obliged to satisfy several stringent conditions. First, they must present an exceedingly strong prima facie case, essentially implying that their initial argument or case is exceptionally persuasive. Second, the potential harm or damage that could be averted through the grant of the order must be of significant gravity. Third, there needs to be clear and compelling evidence that the respondent is in possession of the specific documents or items sought in the application. Last, there must exist a genuine possibility that the respondent might intentionally destroy these documents or items if they were to learn about the applicant’s pursuit of them.

Interlocutory Anti-Suit Injunctions

These injunctions are legal remedies that the Singaporean courts can grant to compel a defendant to refrain from initiating or continuing legal proceedings in a foreign country, particularly when such actions would violate an arbitration agreement.

To determine whether such an injunction should be granted, the courts consider two key factors. First, they assess whether the party requesting the injunction has clearly demonstrated that there has been a breach of the arbitration agreement. Second, they evaluate whether the party against whom the injunction is sought can provide compelling reasons to justify not enforcing the arbitration agreement.

A clear breach of the arbitration agreement itself indicates unreasonable or unfair conduct and justifies the court’s intervention. This intervention is not considered an affront to the principles of comity among nations, as the injunction is directed towards the party violating the agreement rather than interfering directly with a foreign court.

It is also worth noting that the mere existence of multiple legal proceedings in different jurisdictions is not automatically regarded as vexatious. Instead, each case requires a clear demonstration of a breach of the arbitration agreement. For example, in the case Regalindo Resources Pte Ltd v Seatrek Trans Pte Ltd [2008] SGHC 74, an anti-suit injunction was not granted because the New York proceedings were consistent with the arbitration agreement, and there were good reasons for pursuing them due to the availability of interim relief not offered in Singapore.

Should You Apply to the Arbitral Tribunal or to the Courts for Relief?

Parties often lean towards seeking relief from the courts rather than the arbitral tribunal. This preference is due to courts being quicker in issuing orders, having stronger coercive powers, and being more effective when it comes to enforcing those orders against third parties.

There are several reasons why a party might choose to go to court for interim relief instead of the arbitral tribunal. It can be challenging for an arbitrator to issue an ex parte order because it might be seen as improper or biased. Also, the sanctions that an arbitral tribunal can impose on a party that violates its orders are limited. In contrast, a court-issued injunction comes with the full enforcement power of the court.

However, the policy of Singaporean courts is to intervene in arbitration matters only under specific circumstances. These include cases involving third parties, urgent matters, or situations where the court’s enforcement powers are necessary. The court’s interim orders are meant to support the ongoing arbitral proceedings, not replace the role of the arbitral tribunal.

While an arbitral tribunal may not have the same level of coercive power as a court, it still holds authority as the ultimate decision-maker in the dispute. Parties are encouraged to strike an appropriate balance between the court’s role in supervising and supporting international arbitration in Singapore while respecting the primary agreement of the parties to arbitrate their dispute.

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