The availability of interim relief during the course of an arbitration, and beforehand in circumstances where parties have agreed to refer their disputes to arbitration, has always been a major concern in both domestic and international arbitration. This is particularly the case in the construction industry, given the potential for issues to arise at every stage of performance of the underlying contract calling for urgent attention that cannot be satisfied by arbitration proceedings on the merits, no matter how accelerated those proceedings may be.
It seems fair to say at the outset that even though a construction project may give rise to an extremely broad range of disputes with respect to which the need for interim relief may arise – from the requirement for an order for the expulsion of a contractor from site to the validity of a call on one of the range of bonds that may have been issued pursuant to the terms of the contract, for example – no need has been identified for an interim relief regime specific to construction arbitration.
This echoes the fact that there are no dedicated and widely used rules for construction arbitration in the international field. There is a clear preference for a set of rules that offers the parties a broad and flexible framework that can be adapted to whatever the specific needs of any given construction dispute may be. In our view this holds true for interim relief as for other aspects of construction arbitration.
As a result, this chapter will provide a relatively general overview of current rules and practice with respect to interim relief, before focusing on a recent development, namely emergency arbitration, that is highly relevant for construction disputes.
There is, however, one aspect of dispute resolution that is quite specific to the construction industry, namely recourse as a preliminary step to dispute boards on international projects, with a view to helping the parties to avoid disputes altogether and, if necessary, to render a decision on a dispute that can effectively be appealed to arbitration. This in turn, gives rise to questions concerning interim relief in a multi-tier dispute resolution context. The spotlight here will be on the FIDIC standard forms, most of which propose a highly elaborated dispute board regime followed, if appropriate, by International Chamber of Commerce (ICC) arbitration.
Interim relief – some general observations
The development of the law and practice concerning interim relief in arbitration, and particularly international arbitration, is a good example of how, over time, (1) many jurisdictions have come to accept that arbitral tribunals, as well as state courts, should be empowered to grant interim relief; and (2) state legislators and private interests have been able to achieve not simply a modus vivendi but a highly effective arrangement when it comes to combining the needs of arbitration users with the prerogatives of state courts.
The challenge, for both legislators and arbitration users (particularly institutions providing arbitration rules or administrative services with respect to the arbitral process), can be summarised as follows:
- to devise rules for the administration of interim relief in appropriate circumstances by an arbitral tribunal;
- to provide support from state courts with respect to interim relief ordered by an arbitral tribunal, particularly as regards enforcement; and
- to safeguard parties' access to interim relief from the courts even though they are bound by an arbitration agreement.
It is not our purpose here to carry out a detailed review of the extent to which this challenge is met by different national arbitration laws and various sets of institutional and other arbitration rules. Suffice it to say that when parties are deciding on the set of rules that will govern any arbitration between them, and also the seat of arbitration (and thereby the underlying national law that will apply to the arbitration), it is important that they be satisfied as to the availability of effective interim relief from both an arbitral tribunal and the state court.
Widely used sets of arbitration rules such as those of the ICC and the London Court of International Arbitration (LCIA), both of which are adopted frequently in construction arbitrations, are generally considered to respond adequately with respect to parties' needs when it comes to interim relief. However, comparison of the relevant provisions in the latest editions of those sets of rules (published in 2017 and 2014 respectively) reveals a notable difference in approach, and gives lie to the frequently encountered view that the rules of the leading arbitral institutions have become broadly uniform.
The provisions in the ICC Rules at Article 28 are relatively short and general in nature. They refer to 'conservatory and interim measures' without going into further detail. However, they provide what was evidently considered by the ICC task force preparing the 2017 edition to be a satisfactory statement of the relevant rules, since no changes were made from the wording appearing in the previous editions of 2012 and 1998. It should, however, be noted that the Secretariat's Guide to ICC Arbitration, published very shortly after the appearance of the 2012 edition, provides at paragraphs 3-1032 to 3-1050 a detailed and helpful commentary on Article 28 including a description of the types of measure available, advice for arbitrators and the Secretariat's practice in relation to applications for relief.
Perusal of the corresponding provisions of the LCIA Rules at Article 25 reveals a comparatively detailed presentation of the specific measures that may be ordered by the arbitral tribunal, and the rights of the parties including their right to apply to state courts for interim relief.
It is notable, for example, that the LCIA Rules expressly require the arbitral tribunal to give all parties a reasonable opportunity to respond to an application for relief (Article 25.1), whereas the issue of the availability of ex parte relief is not addressed in Article 28 of the ICC Rules but only in the Secretariat's Guide (at paragraph 3-1040), which states that '(t)here is no place for purely ex parte interim relief in ICC arbitration'. Arguably it is preferable for such a matter to be addressed in the Rules themselves rather than an accompanying guide.
Even though it is easy (and perhaps dangerous) to generalise, this preference in the LCIA Rules for a more detailed exposé of what might be called the 'rules of the game' seems to be characteristic of a Common Law yearning for clear guidance as to what the parties and arbitral tribunal may do, and how they are to proceed.
With respect to interim relief, a Common Law or Civil Law difference of approach that echoes the above-mentioned desire for clarity is particularly notable from the corresponding legislation. Thus, the English Arbitration Act 1996 contains, in Section 44 which deals generally with what its title calls 'court powers exercisable in support of arbitral proceedings', a set of provisions stipulating in some detail what can be done by an English court and how and when it is to be done. (Certain of these provisions are quoted below.)
The corresponding provisions in the French Civil Procedure Code (Article 1468, which applies to both domestic and, unless the parties provide otherwise, international arbitration) limit themselves to what may be done:
The arbitral tribunal may order against the parties any conservatory or provisional measures that it deems appropriate, set conditions for such measures and, if needs be, attach penalties to such order. However, only courts may order conservatory attachments and judicial security.
The arbitral tribunal has the power to modify or add to any provisional or conservatory measure that it has ordered.
It would be wrong, however, to conclude that the English and French approaches to the question of interim relief as demonstrated in their respective legislation in particular correspond to a fundamental difference with respect to remedies available to arbitrators or the supporting role allocated to the courts. On the contrary, both jurisdictions are seen as 'arbitration-friendly' in both respects and recommended as seats of arbitration by practitioners from each side of the Channel.
Neither would it be correct to conclude that differences between the ICC and LCIA Rules correspond to a substantially different perception of the arbitral process. Both sets of Rules seek to offer effective solutions for issues faced by the parties – and both have seen the need for an emergency arbitrator regime where interim relief is required before the arbitral tribunal is constituted.
However, before turning to emergency arbitration, the issue of the effectiveness of interim measures in arbitration requires to be considered, and in particular the question of the enforcement of measures order by an arbitral tribunal.
One of the fundamental differences between a state court and an arbitral tribunal is, of course, that the latter may not actually enforce the judgments or orders (such as interim measures) that it issues. Instead, the latter must rely upon the former. This is potentially a major concern, although it must be pointed out that enforcement issues do not arise in the majority of cases, as parties usually comply voluntarily. One of the main reasons for this is that parties are reluctant to refuse to comply with orders from the same individuals as those who will decide the substantive dispute. There is also the possibility of sanctions against a party for failing to comply – a costs award, for example.
It is well known that, when it comes to awards disposing of substantive disputes between the parties, instruments such as the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards greatly facilitate the position for a party seeking to enforce an award. The position is less clear when it comes to the enforcement of a decision as to interim relief by an arbitral tribunal. A number of national arbitration laws stipulate that the courts may require a party to comply with an order emanating from an arbitral tribunal – see, for example, Section 42 of the English Arbitration Act 1996.
However, in jurisdictions where there are no such express provisions, difficulties have often been expressed as to the enforceability of interim measures on the basis that they do not constitute final arbitral awards disposing of substantive disputes between the parties. In recent years, however, particularly in the United States, a body of decisions and doctrine has developed in support of the view that, even though the matter may be interim in nature, measures should be enforced as arbitral awards since they 'are “final” in the sense that they dispose of a request for relief pending the conclusion of an arbitration'.2
There has been a call for the development for the equivalent of the New York Convention with specific reference to the enforcement of interim measures. However, UNCITRAL has preferred instead to address the matter in the latest version (2006) of its Model Law on International Commercial Arbitration. Thus, Article 17H now stipulates as a general principle that '(a)n interim measure issued by an arbitral tribunal shall be recognised as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which it was issued…'.
The 'new kid on the block' – emergency arbitration
A major problem with the regime for interim relief during arbitration proceedings is, of course, that an application cannot be made unless and until the arbitral tribunal is constituted. However, it is well known that it may take several months following the commencement of arbitration proceedings to constitute the tribunal, particularly if one of the parties is uncooperative.
One solution has been to include provision in arbitration rules for the expedited formation of the arbitral tribunal – see for example Article 9A of the LCIA Rules. A further solution, developed over the last decade or so to address a perceived need for interim relief during the pre-arbitral stage, has been the introduction of an emergency arbitrator regime.
Emergency arbitration is not, however, entirely a creature of the 21st century. A relatively similar solution was offered by the ICC in 1990 in the form of a 'Pre-Arbitral Referee' procedure – indeed this procedure remains available to parties, even though it has been used only occasionally. The Pre-Arbitral Referee was proposed as a means of addressing precisely the issues that are now being referred to emergency arbitrators, namely urgent requirements for provisional or conservatory measures pending a decision on the merits in an arbitration that has yet to be commenced. The role of the Pre-Arbitral Referee would be to issue a binding order as to the request for interim measures within 30 days of his or her appointment.
It was described in 2000 as 'an excellent idea which thus far has not worked'.3 The problem seems to have been that the procedure was offered separately from the ICC Rules as a purely voluntary scheme, and as a result there was relatively little uptake.
There is a much greater uptake now that emergency arbitrator provisions are fully integrated into the arbitration rules used by various institutions. The International Centre for Dispute Resolution (ICDR), the international division of the American Arbitration Association, was the first to do so, in 2006, at Article 37 of the ICDR Rules, having also found that a separate set of Optional Rules for Emergency Protection published in 1999, and providing for an emergency arbitrator, had not had much success.
A number of other institutions have now followed this example, including the Stockholm Chamber of Commerce, the Singapore International Arbitration Centre, the Kuala Lumpur Regional Centre for Arbitration, the Hong Kong International Arbitration Centre, the DIFC-LCIA Arbitration Centre in Dubai and, as of 1 July 2017, the Chinese Arbitration Association. What is more, legislation has been amended to take into account the advent of emergency arbitration – for example, Singapore has modified its arbitration legislation to make it clear that 'arbitrator' includes 'emergency arbitrator', and the Hong Kong arbitration legislation now provides assistance with the enforcement of relief granted by emergency arbitrators.
The ICC rules adopted emergency arbitration provisions in the 2012 edition of its Rules and the LCIA followed two years later (in 2014). Nowadays, emergency arbitration provisions apply with respect to arbitration agreements entered into before 1 January 2012 for the ICC and before 1 October 2014 for the LCIA. Further, they both stipulate that the parties may opt out of the emergency arbitration regime.
The ICC and LCIA regimes reflect the common purpose of enabling a party to seek emergency relief before an arbitral tribunal is in place. We will focus here on the ICC offering, which is broadly comparable with those of other institutions, except that the emergency arbitrator may only issue an order and not an award – see further below. In 2016, the ICC Court received 25 applications under the ICC Emergency Arbitrator Rules. Over half of these applications came from the construction, engineering and energy sectors. The number of applications dropped slightly to 21 in 2017. However no details of the matters arising out of construction contracts are available at present.
The ICC approach enables a party to apply for 'urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal' at any time prior to the transmission of the file to the arbitral tribunal (Article 29.1). However, the Request for Arbitration with respect to the substantive merits of the dispute underlying the application for interim relief must be filed no later than 10 days after receipt by the ICC Court Secretariat of the application (unless the emergency arbitrator grants a longer period), failing which the President of the ICC International Court of Arbitration (the President) will terminate the emergency arbitrator proceedings (Article 29.6).
The important role allocated to the President under the ICC Rules demonstrates the ICC's concern to ensure the success of an application under Article 29. Thus, it is the President who, within two days of receipt of the application, will himself appoint the emergency arbitrator. The choice is entirely at the President's discretion since the ICC (unlike the ICDR) has no emergency arbitrator list – just as there are no published arbitrator lists for appointments in standard ICC arbitration.
It is also the President who will decide whether the application justifies the implementation of the emergency arbitrator provisions (Appendix V Article 1.5). However, as under the standard ICC Arbitration Rules, it is the emergency arbitrator and not the President who will decide whether he or she has jurisdiction to grant relief (Appendix V Article 6.2).
Appendix V to the ICC Arbitration Rules, which sets out the procedure to be followed in detail, might be said to comprise in essence a concentrated version of the Rules applying to disputes on the merits, except that the maximum period from transmission of the file to issue of the emergency arbitrator's order must not exceed 15 days, unless the President agrees to an extension (Appendix V Article 6.4).
As might be expected, it is up to the emergency arbitrator to conduct the proceedings as he or she sees fit (Appendix V Article 5.2). It is, however, notable that he or she must 'ensure that each party has a reasonable opportunity to present its case' (Appendix V Article 5.2). This is not required under all sets of emergency arbitrator provisions – thus, the LCIA Rules require all parties to be consulted 'if possible' (Article 9.7). However it can be expected that emergency arbitrators will make every effort not only to 'consult' all parties but to obtain written submissions from them.
Detailed provisions also regulate the order to be issued by the emergency arbitrator. The ICC provisions, unlike many of the other sets of arbitration rules that now include provision for emergency arbitration, are notable for not giving the emergency arbitrator power to issue an arbitral award, whereas both awards and orders may be issued by an arbitral tribunal under the standard interim relief provisions at Article 28.1. Therefore, in emergency arbitration under the ICC Rules, there will be no delay owing to the requirement under Article 34 that an award be scrutinised by the ICC Court.
An important point to note is that an emergency arbitrator can play no part in any proceedings on the merits. The ICC Rules specify that '(a)n emergency arbitrator shall not act as an arbitrator in any arbitration relating to the dispute that gave rise to the Application' (Appendix V Article 2.6). This may well be considered to be a disadvantage, when compared to the alternative solution of the expedited formation of the tribunal as mentioned above, given the understanding of the underlying contract and circumstances relating to the dispute that the emergency arbitrator will have acquired.
A key concern with respect to emergency arbitration, as with the granting of interim relief in 'standard' arbitration proceedings, is of course the enforceability of the decision of the emergency arbitrator, whether it be in the form of an order or an award. A general concern under all sets of rules is the status of the emergency arbitrator – in other words, there is some uncertainty as to whether he or she will be considered by courts to have acted as an arbitrator, particularly as the award or order handed down can be modified by the arbitral tribunal deciding the substantive disputes with respect to which the emergency proceedings were commenced (see for example Article 29.3 of the ICC Rules). As stated above, some jurisdictions have modified their arbitration legislation to avoid any issues in this regard, but this is far from being a frequent occurrence to date.
A second concern, as with interim relief generally, arises precisely as a result of the interim nature of the decision made by the emergency arbitrator. Insofar as the decision is expressed to be an award, then enforcement may be easier, for the reasons indicated above. The status of ICC decisions under the ICC Rules, which may only take the form of 'orders', would appear in principle, therefore, to be more problematic. However, there is case law from both the United States and France (Braspetro Oil Services company v. The Management and Implementation Authority of the Great Man-Made river Project, Paris Court of Appeal, 1999, (1999) Mealey's Intl Arb Rep, 8; and Publicis Communication and Publicis SA v. True North Communications Inc, US Court of Appeals, 206 F.3.d 725 (7th Cir. 2000)) to support the view that the actual denomination of the decision in question is irrelevant and that it is the content of the decision that determines whether it is final in nature with respect to the issue in question.
Finally, the ICC Rules, like others providing for emergency arbitration, stipulate that the parties' agreement to such provisions is 'not intended to prevent any party from seeking urgent interim or conservatory measures from a competent judicial authority…' (Article 29.7). However, a recent English court decision, addressing a broadly similar provision under the LCIA Rules, indicates that wording such as that found in the ICC Rules may well actually limit a party's ability to seek relief from a state court by virtue of the inclusion of emergency arbitration provisions in its arbitration agreement.
Thus, in Gerald Metals v. Timis  EWHC 2327 (Ch) it was held that, applying the test under Section 44(3) of the Arbitration Act 1996 ('if the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets') resort to a state court for relief should not be allowed. The court considered that, by virtue of the emergency arbitration provisions in the LCIA Rules, the applicant had had an adequate opportunity to obtain appropriate relief under its arbitration agreement. In other words, the condition set out in Section 44(5) of the 1996 Act, namely 'in any case the court shall act only if or to the extent that the arbitral tribunal, or any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively', had not been satisfied.
This is evidently an outcome that flows from the implementation of the specific provisions of the English legislation. A recent French court decision demonstrates that the position can be completely different in other jurisdictions. Thus, the Toulouse Court of Appeal recently held that '[e]ven though Article 29 of the ICC Rules enables a party to seek urgent interim or conservatory measures from the emergency arbitrator, it was only one of the options available to ASG and did not prevent it from applying to the competent judicial authority'. (Toulouse Court of Appeal (3rd Chamber), 30 April 2018, No. 17/3754).
These cases underline the importance of taking into consideration the arbitration law at the place of arbitration when deciding whether to include emergency arbitration provisions within the scope of an arbitration agreement, given the possibility that the right to apply to the courts for interim relief may be seriously jeopardised if the wrong decision is taken.
Emergency arbitration in a multi-tier context
We have seen above that the emergency arbitrator provisions under the ICC Rules are not obligatory. It should also be noted that the ICC Rules provide, at Article 29(6), that those provisions shall not apply if '…(c) the parties have agreed to another pre-arbitral procedure that provides for the granting of conservatory, interim or similar measures'.
The Secretariat's Guide to ICC Arbitration (2012) comments on this provision as follows:
Agreeing to another pre-arbitral procedure that provides for the granting of conservatory, interim or similar measures amounts to an implied opt-out and therefore also excludes the application of the Emergency Arbitrator Provisions… For example, this will occur where the parties have agreed to the ICC pre-arbitral referee procedure or to use a dispute board that may issue interim measures. (Paragraph 3-1102.)
On that basis, therefore, the emergency arbitrator provisions will not apply if the parties have adopted the latest edition (2015) of the ICC Dispute Board Rules which, at Article 15(1), empower the dispute board to 'decide upon any provisional relief such as interim or conservatory measures'. The same power, in identical terms, was given under the Dispute Adjudication Board (DAB) Procedural Rules introduced in many FIDIC standard form contracts since 1999 and therefore incorporated by default into FIDIC-based contracts.
It would seem, however, that the position is not entirely straightforward. One question in particular comes to mind – what if the parties have agreed to a pre-arbitral procedure but have not constituted the entity that would be empowered to decide upon provisional relief at the time when a party wishes to make an application.
The ICC emergency arbitrator provisions would appear to have been drafted on the basis that the dispute board will be operational from an early point in the contract period. This is the expectation under the ICC Dispute Board Rules, for example. Applying Article 7, the dispute board should be appointed within about 90 days after signature of the underlying contract, with the time required depending upon how many individuals are to be appointed and the extent to which the parties cooperate in the process.
Similarly, under the widely used 1999 edition of the FIDIC Conditions of Contract for Construction (known as the 'Red Book'), which proposes that the parties adopt a 'standing' DAB, it is foreseen (in the form of Appendix to Tender attached as part of the Red Book package) that the DAB should be constituted within 28 days of the contractual Commencement Date. (A standing DAB is also foreseen under the FIDIC Conditions of Contract for Design, Build and Operate Projects, the first edition of which appeared in 2008.)
In practice, however, this is often not the case. Despite the strict terms of their contract, parties may nevertheless prefer to defer the constitution of the dispute board until a dispute arises in relation to which they require a formal recommendation or decision from the dispute board. This is often done with a view to avoiding the cost of a dispute board operating on a retainer basis before a formal dispute procedure needs to be adopted.
Then there is the arrangement applicable under the 1999 editions of the FIDIC Conditions of Contract for Plant and Design-Build (known as the 'Yellow Book') and the FIDIC Conditions of Contract for EPC Turnkey Projects (known as the 'Silver Book'), where the parties' agreement is that a DAB is to be appointed only after one of them requires a dispute to be adjudicated:
[T]he Parties shall jointly appoint a DAB by the date 28 days after a Party gives notice to the other Party of its intention to refer a dispute to a DAB in accordance with Sub-Clause 20.4. (Sub-Clause 20.2 of both the Yellow and Silver Books.)
Indeed, the appointment may take much longer given the need for the parties to negotiate and sign dispute board agreements with the DAB members, particularly if one of the parties is not as cooperative as it might be.
Indeed, use of the 1999 FIDIC forms has shown that, even though the parties may have contracted to set up dispute boards that would be empowered to grant provisional relief, it may well not prove possible to have an operational dispute board in place until long after the provisional relief was not only required but may have served a purpose.
New editions of the Red, Yellow and Silver Books were published by FIDIC in December 2017. An important development is that some of them provide for the constitution of a dispute board – now called a 'Dispute Avoidance/Adjudication Board' or 'DAAB' – at the outset of the job, or more specifically within 28 days after the issue of the contractual Letter of Acceptance, or by such other date agreed by the parties.
A real effort has been made by FIDIC to ensure that the DAAB is indeed up and running at an early date, particularly as it now has a significant dispute avoidance role to fulfil.
It should be noted that the DAAB Procedural Rules maintain the same wording as the 1999 editions on interim relief. In other words, the clash with the ICC emergency arbitrator provisions described above has not been addressed.
If delays in the appointment of a DAB/DAAB persist, it seems to be unfortunate to have to exclude the possibility of applying the ICC emergency arbitrator provisions, if that is indeed how Article 29(6)(c) is to be interpreted. It might be said in response that this will not necessarily be a cause of hardship, since a party may always apply to a competent judicial authority for relief. This may well be correct, but disregards the fact that the parties' intention in agreeing to the ICC or FIDIC dispute board regime as well as ICC arbitration is to rely primarily upon recognised independent and private dispute resolution methods rather than the state court alternative.
Perhaps the simplest solution to 'plug the gap' would be to stipulate in the contract that the ICC emergency arbitrator provisions will be applicable until the dispute board is constituted. This begs the question of why the ICC emergency arbitrator provisions should no longer be applicable once that point is reached.
However, it is difficult to see what the benefit of such an arrangement might be. There seems to be no advantage of effectively having a choice between referring a matter to an emergency arbitrator or dispute board for provisional relief. The outcome in each case would appear to be an order or decision that would merely be provisionally binding on the parties – as discussed above, the ICC regime does not provide for the issue of an enforceable arbitral award.
1 Peter Hirst and David Brown are partners at Clyde & Co.
2 Gary B. Born, International Commercial Arbitration, Second edition (2014), Section 17.03.
3 Craig, Park and Paulsson, International Chamber of Commerce Arbitration, Third edition, p. 706.