Arbitration, as a form of alternate dispute resolution, has found increased popularity with the proliferation of transnational commerce. The International Court of Arbitration (ICC) alone announces more than 19,000 disputes heard since 1923, and almost 7,000 requests were filed within the last decade alone. This article shall briefly analyse the implications of an arbitration clause on the competence of a national court in the field of interim measures.
My aim is to observe the areas in which national courts can still exert jurisdiction over provisional relief once the parties have agreed on arbitration as their dispute resolution mechanism of choice.
1. A historical perspective
It must first be mentioned that arbitration is a ‘creature of contract’. The basis of the arbitral tribunal’s competence therefore lies within an agreement concluded between the parties. Moreover, the agreement – usually taking the form of an arbitration clause – will, in most aspects, be governed by contract law rules.
In contrast, the competence of a national court stems from the law itself. The national court can hear a dispute because it enjoys public authority. Arbitral tribunals, however, derive their authority from the will of the parties and therefore lack the authority to coercively enforce their orders.
The relationship between national courts and arbitral tribunals was always present. Ancient Roman law acknowledged the concept of arbitration, and developed a mechanism by means of which the parties could ensure that an ‘arbitral award’ would be respected. The parties would present themselves in front of a judge and vow to pay a penalty if they did not respect the decision of the arbitrators. While the Roman judge did not enforce the award in itself, it did enforce the promise to pay the penalties (Redfern and Hunter, 2009).
During the early twenty century, particularly in common law jurisdictions, the powers granted to national courts over arbitral tribunals allowed the former to exert an extensive review of the arbitral award (Corell and Szczepanik, 2013, p. 566). This view has changed in recent times, largely as a result of uniform arbitration laws such as the United Nations Commission on International Trade Law (UNCITRAL) Model Law, which provides in Article 5 that ‘no court shall intervene except where so provided by this law’. The nature of arbitration remains unchanged, however. As a result of its contractual nature, arbitral awards only enjoy the authority conferred upon them by national laws (Fouchard, Gaillard, and Goldman, 1999, p. 884).
2. Interim measures
Interim measures are aimed at a provisional protection of rights, generally with the purpose of preventing imminent losses that could be incurred by one of the parties. In what concerns arbitration proceedings, the concept of interim measures was introduced at the beginning of the twenty century, ‘mainly to satisfy the needs of business participants’ (Yesilirmak, 2005, p. 19). While the 21st century has brought numerous changes to the mechanism of interim protection of rights – for example, the new International Chamber of Commerce (ICC) Rules applicable since 2012 were also successful as a result of the Emergency Arbitrator – courts still play a significant role in the process.
Regarding these changes, three trends have emerged with regard to competence in matters of interim measures: (2.1) an exclusive competence of the arbitral tribunal, (2.2) an exclusive competence of national courts, and (2.3) an alternative competence between the two institutions.
2.1. The exclusive competence of the arbitral tribunal
Turning back towards the ‘creature of contract’ adage, party autonomy was considered to only be fully respected where the jurisdiction of the courts is eliminated in all but the final stages of the dispute resolution – enforcement or set-aside of the award.
From a philosophical point of view, it has been stated that an exclusive jurisdiction of the arbitral tribunal is the ultimate means to ensure the sanctity of contract (Sanders, 1999, p. 270). Party autonomy allowed the parties to conclude a contract by means of which they replaced the jurisdiction of the otherwise competent national courts. It is the same party autonomy that should subsequently restrict a party from seeking provisional relief outside of the contractual setting that it agreed to.
From a practical point of view, ‘the arbitral tribunal may well have better understanding of the case and, in some cases, be better equipped than the courts with technical expertise in the arbitrated area, such as financial services’ (Lee, 2013, p. 232).
2.2. The exclusive competence of national courts
Certain authors have noted that, because parties would not be entitled to establish a provisional measure simply by means of a private settlement between them, the granting of provisional relief should fall outside of the ambit of arbitration, because arbitration is in itself a contract (Kutschera and Nitsch,1994, p. 49).
Most arguments in favour of exclusive court jurisdiction, however, stem from the fact that the assistance of courts is required because their public authority sometimes allows national courts to offer a quicker solution to an urgent matter (Karrer, 2000, p. 99).
Parties choose arbitration (and the seat of arbitration) according to their desire for fairness, speed or ‘neutral grounds’ (or, for that matter, grounds familiar to the party in the strongest negotiating position). To the contrary, interim measures are sometimes best suited, territorially, for the country where the respondent has its assets.
2.3. The alternative competence of national courts and arbitral tribunals
Most national laws and arbitration rules have currently adopted this third opinion.
A distinction must be made, however, between systems that allow for court intervention only if the possibility was expressly stipulated within the arbitration clause, and systems that allow for court intervention even in the absence of such a possibility being provided for by the parties.
In France, for example, courts are fully allowed to grant interim relief until the moment when the arbitral tribunal is established. After that point, parties may only turn towards the courts in exceptional, urgent circumstances (Yesilirmak, 2005, p. 89). The English Arbitration Act provides that courts can only intervene if the arbitrator ‘has no power or is unable for the time being to act effectively’ (Section 44(5) EAA).
Arbitration rules also appear to have adopted the view of alternative competence. The ICC Rules 2012 provide that the provisions concerning the Emergency Arbitrator ‘are not intended to prevent any party from seeking urgent interim or conservatory measures from a competent judicial authority’ (Article 29 ICC Rules).
The International Centre for Settlement of Investment Disputes (ICSID), the most notable example of arbitration rules that prohibit the granting of provisional relief by a court, were amended in 1984 so as to allow the parties to appeal to a court, ‘provided that they have so stipulated in the agreement recording their consent’.
To conclude, my opinion is that the contractual nature of arbitration should be fully respected. Parties often choose arbitration in order to make sure that a neutral setting will govern their dispute. One of the aspects that parties want to ensure is that they will avoid fluctuating legislation or a judgement by a court that is unfamiliar or that they do not deem trustworthy.
As such, nothing should restrict parties for opting for a national court to grant them interim relief, provided that this choice was made possible by the parties through their arbitration clause, or that during the dispute both parties consent to a hearing in front of a national court. Advantageous as national proceedings may be, the same party autonomy that granted the parties the possibility to exclude the jurisdiction of national courts should bind them to their choice fully, in all aspects concerning their dispute, unless the parties themselves have stipulated otherwise.