Emergency Arbitrator Interim Measures: The Seat Decides the Power

What the Singapore court decided

A Chinese shareholder froze a S$19.8 million liquidation dividend through an emergency arbitrator, and lost it at the enforcement stage a year later. A Chinese manufacturer and a Singapore optics company had incorporated a joint venture in Singapore to work on a customer project. Their cooperation framework agreement and joint venture agreement both sent disputes to CIETAC in Shanghai under Chinese law.

The project was terminated, the joint venture was wound up, and the Singapore company was admitted as a creditor in the liquidation for S$19,423,680.54 under a settlement with the liquidators that the Court approved. Days before the dividend was expected, the Chinese company applied to CIETAC for an emergency arbitrator, who ordered the Singapore company not to receive the payout pending the arbitration.

The Chinese company obtained permission to enforce that interim award in Singapore. The Singapore company applied to set the enforcement order aside on four grounds under section 31 of the International Arbitration Act 1994 (Singapore) (the IAA). Three failed. The fourth succeeded, and the enforcement order went.

Is an emergency arbitrator's order an award you can enforce?

Yes, and the argument that it is not was rejected as untenable. An emergency arbitrator's interim decision is an arbitral award within section 27(1) of the IAA. The definition captures an order or direction made in the course of an arbitration in respect of the matters listed in section 12(1)(c) to (j), and the IAA's definition of arbitral tribunal includes emergency arbitrators: [29] to [31].

The order in this case was characterised as a measure preserving property forming part of the subject matter of the dispute, or ensuring that an eventual award is not rendered ineffectual by the dissipation of assets, or simply as another interim measure: [30].

An order that can be enforced is an order that can be resisted, on every ground the enforcement regime provides.

That characterisation runs both ways, and your company should notice which way. It is what made the interim relief enforceable in Singapore at all. It is also what exposed the relief to the full list of grounds for refusing enforcement in section 31.

Which law gives the arbitrator the power?

The law of the arbitral seat, and not the law of the place where you intend to enforce. The Chinese company argued that the applicable law included Singapore law as the law of the place of enforcement, so that an arbitrator seated in China could draw the power to order interim measures from the law of the country where the order would land.

The Court found support in the Chartered Institute of Arbitrators' Practice Guideline on Applications for Interim Measures 2016, which directs an arbitrator to the arbitration agreement, the applicable rules and the law of the place of arbitration, and in the leading commentary, which treats the procedural law of the arbitration as the law governing the power to grant provisional measures: [52] to [56].

Read practically, your seat clause is a grant of powers and not merely a choice of supervising courts. It is chosen once, early, usually with very little discussion, and it settles what any tribunal constituted under the clause will be able to do years later.

Does silence in the law of the seat grant the power?

No. The question is whether the law of the seat confers the power, not whether it forbids its exercise. Both sides' Chinese law experts agreed that Chinese law does not expressly prohibit tribunals or emergency arbitrators from granting interim measures. The Chinese company argued that the silence left the field open to the institutional rules.

On the expert evidence accepted, property, evidence and conduct preservation measures are the exclusive preserve of the people's courts in China, with arbitral tribunals excluded from the relevant provisions: [63]. The Court also accepted evidence of a deliberate legislative policy, noting that a 2021 draft of the revised arbitration law had included tribunal-ordered interim measures and that those provisions were not adopted: [69] to [70].

One qualification matters, and it is what makes this a drafting problem rather than a dead end. The Court held that an express agreement by the parties can cure silence in the law of the seat, although it cannot override a prohibition contained in it: [89].

Does agreeing to CIETAC arbitration confer the power?

Not by itself, on these rules. Article 23(2) of the CIETAC Rules allows a party to apply for emergency relief in accordance with the applicable law or the agreement of the parties. The Chinese company argued that agreeing to CIETAC arbitration meant agreeing to the rules, and that this was itself the agreement the rules call for.

Two limits on how far that reaches. Whether adopting rules is itself sufficient depends on the wording of the particular rules, and the Court expressly left open whether the position differs in a CIETAC arbitration seated outside China: [91]. The leading commentary takes a different view, treating an agreement to arbitrate as impliedly conferring the power, and the Court set that out before departing from it: [90].

The institution's own screening does not save the position either. The Chinese company pointed out that the CIETAC Arbitration Court reviews an application before appointing an emergency arbitrator, which it said operated as a guardrail. The Court held that the institution's view that the procedure was appropriate does not make the appointment accord with the applicable law or with the parties' agreement: [94] to [95].

Why the other three objections failed

The party resisting enforcement won on one ground and lost on three, and was ordered to bear part of its own costs for the ones it lost. Costs were awarded to it on a standard basis but reduced to 60 per cent, because of the number of misconceived points taken to resist enforcement: [140].

The compressed timetable in a foreign language

The Singapore company said it learned of the proceedings by courier, that the papers and the procedure were in Chinese, that its request for time was refused almost immediately, and that it could not take part in a hearing held eight days later. The Court held that the language was a feature of CIETAC arbitration to which it must be taken to have agreed under Article 84(2) of the rules, that the fifteen day emergency timetable was clear on the face of the rules, and that it had been warned more than once that it would bear the consequences of staying away: [111] to [113].

The remedy the Court had in mind sits inside the arbitration. Under Appendix III to the CIETAC Rules the tribunal, once constituted, may modify, suspend or terminate the emergency arbitrator's decision, and the decision then ceases to bind. If an emergency order goes against your company, that application is the first move rather than the enforcement court.

The connection to the liquidation

The Court held that the presumption of arbitrability was not rebutted: [127]. On its account of Larsen Oil and Gas Pte Ltd v Petroprod Ltd, the line falls between disputes stemming from an insolvent company's pre-insolvency rights and obligations, which remain arbitrable, and disputes arising only on the onset of insolvency through the operation of the insolvency regime, which do not: [123]. The arbitration here was about alleged breaches of the joint venture documents, which pre-dated the winding up, and the joint venture company was not a party to it. Quoting the Court of Appeal in AnAn Group (Singapore) Pte Ltd v VTB Bank, the Court recorded that Larsen Oil does not make every dispute with a connection to insolvency law, however tangential, non-arbitrable: [126].

Public policy

This is the most counter-intuitive part of the decision. The same defect that defeated enforcement under section 31(2)(d) did not engage the public policy ground, and that objection failed: [138]. The threshold is deliberately narrow, requiring conduct that shocks the conscience, is clearly injurious to the public good, or violates the forum's most basic notions of morality and justice. The Court recorded that the mere fact that an award may be contrary to Singapore law or to a foreign law does not in itself make upholding it contrary to Singapore's public policy: [134].

Take the drafting point from that rather than the comfort. Public policy is not a safety net for a defective award, and a party that identifies the wrong ground can lose an application it was entitled to win.

What this changes in your arbitration clause

This is a drafting problem before it is a litigation problem, and the fix costs nothing at the drafting stage. The seat is usually chosen for neutrality, convenience or because it appeared in the last contract, and rarely for what it allows a tribunal to do. This decision is a reminder that the second question is the operative one.

Four neighbouring questions are answered elsewhere on this site. Whether a clause that is defective on its face can still be enforced turns on different principles, and Singapore courts will usually save a clause that shows a clear intention to arbitrate. Where the other side is drifting towards the courts instead, the question is how to hold them to the arbitration agreement. And once an award has been made, the limits on reopening it are a question of finality rather than of power. Where the other side reaches for the insolvency court instead of the tribunal, a creditor generally cannot wind a company up over a debt covered by an arbitration clause.

Where the answer to the first question is no, the money spent on an emergency procedure buys an order that the enforcement court can be asked to disregard, and the year that passes while that is argued is a year in which the underlying dispute has still not been decided. The place to fix it is the clause.

This article is provided for general information purposes only and does not constitute legal advice. Specialised legal counsel should be sought for specific fact patterns.