Arbitration Tips Interim Measures
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Arbitration Tips Interim Measures When a dispute arises which must, under the terms of an arbitration agreement, be referred to arbitration, the need might arise for urgent interim measures to protect a party’s position pending the outcome of the arbitration. Interim measures, for example, to preserve evidence or assets may be crucial to the outcome of the arbitral proceedings and/or the enforcement of any award. Interim measures often require early investigation, swift decisions and prompt action if they are to be obtained and effective. This note provides some practical tips on the measures available, who can grant them and where, when and how to apply.
John Abbott
Russell Beard
Partner john.abbott@laytons.com +44 (0)20 7842 8000
Partner russell.beard@laytons.com +44 (0)20 7842 8000
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Arbitration Tips | Interim Measures
What are interim measures?
Who can grant interim measures?
Interim measures comprise a range of possible orders, usually
Who can grant interim measures will depend on the terms of
sought urgently and at an early stage of proceedings, on a
the arbitration agreement, any applicable institutional rules
protective basis.
and applicable national laws. The list of potential bodies to which an application for interim measures can be made
The types of orders which a party may seek include: • To preserve assets, restraining an opponent from
includes: • The arbitral tribunal
removing or dealing with assets so as to try to protect
• An emergency arbitrator
itself from later enforcement action (a “freezing order”)
• A national court.
• To preserve evidence, preventing an opponent from destroying, damaging or losing evidence which might be important to the case • To preserve property which is the subject of the dispute,
Where to apply?
preventing an opponent from destroying, damaging or
Where an arbitral tribunal is not yet appointed
losing it (e.g. requiring the property to be delivered up
The need for interim measures often arises at an early stage,
and held safely)
before arbitral proceedings have begun. Where a tribunal is
• To permit access to property or goods which are
not yet appointed, there are two potential options:
the subject of the dispute (e.g. for the purpose of inspecting, sampling, testing, experimenting) • To restrain actions which risk irreparable harm which
• An emergency arbitrator • A national court
cannot easily be compensated in damages (e.g. the misuse of confidential business information, unlawful
The option of an emergency arbitrator is only available if
competition in breach of restrictions, infringement of
the arbitration agreement or applicable institutional rules
intellectual property rights)
permit one. An emergency arbitrator will typically have broad
• To permit the sale of perishable goods and to preserve the sale proceeds • To require an interim payment or the provision of security for costs.
powers to order interim measures, but generally will not be able to bind the tribunal, once appointed, so there will be a risk that an emergency arbitrator’s award may be set aside or varied. The strategic considerations immediately below will be equally applicable.
Other potential orders may also be available.
Where an arbitral tribunal is appointed The first step is to look at the arbitration agreement and any institutional rules which apply, to see what powers the tribunal has to grant interim measures. Where no institutional rules apply under the arbitration agreement, the agreement itself may confer such powers on the tribunal or the law of the seat of the arbitration may do so.
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Arbitration Tips | Interim Measures
It is then necessary to give strategic consideration to matters including:
• Will you need to make the application without notice, so as not to tip off the opponent and risk undermining the purpose of the application (e.g. an application to freeze
• Whether an order of the tribunal will be enforceable.
assets to prevent dissipation)? Some institutional rules
Arbitral tribunals are not able to enforce their own
preclude applications without notice to the other party.
awards, but the advantage of seeking an award through
Some tribunals may be reluctant to grant relief without
emergency arbitration is the ability to enforce the
first hearing the other party. Even where an order or
award under the New York Convention in any signatory
award is made without notice, there may be difficulties
state. However, not all interim arbitral awards may be
in enforcing it (the New York Convention provides that
enforceable under the New York Convention and you
a ground for resisting enforcement is where one party
will need to consider whether the nature of the award
was not given proper notice of the proceedings or was
you seek would be enforceable in the intended country
otherwise unable to present its case).
of enforcement. If there is any doubt, it may be better to issue an application for pre-arbitral relief in a national court.
• Will you need to provide security, in the event that it is later determined that the interim measures should not have been granted and to compensate any loss caused
• Give careful consideration also to whether you will
to the opposing party?
be able to enforce the order or award of the tribunal under the laws of the jurisdiction where enforcement
Consideration of such matters may render an application to
will take place (e.g. the country where assets which
a national court a more attractive option, where possible and
are to be preserved are located). Some national laws
subject, of course, to local advice on the pros and cons of the
may not recognise the arbitral tribunal as having the
law and procedure of the relevant jurisdiction.
power to grant interim measures giving rise to potential enforcement difficulties.
Making an application to a national court You need to give consideration to which court is most suitable
• Whether it will be necessary to compel compliance. The tribunal has no power to compel compliance by
to grant the relief sought. Options include the court of the country in which:
third parties (e.g. a bank which might hold funds which are to be frozen). The tribunal might be able to impose sanctions on a party to the arbitration where there is
• the assets or evidence which you wish to preserve are located
non-compliance. For example, the courts of England
• the opposing party is located
and Wales have the power (section 44 of the Arbitration
• the arbitration has its seat.
Act 1996) to take steps to support the integrity of an arbitration seated within its jurisdiction, including issuing
It is generally advisable to seek local legal advice on the
protective orders before the arbitration has started.
practicalities of seeking relief, enforcing any order and whether the relevant national courts will entertain an application. You
• Where it is possible to enforce an order or award
will also need to consider whether such an application is
of the tribunal through a national court, what is the
consistent with the arbitration agreement and whether such
process and how long will it take? Delay in dealing with
action risks consequences before the tribunal or the courts of
procedural requirements before enforcement may well
the country where the arbitration has its seat.
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Arbitration Tips | Interim Measures
Making an application to the English court The English court’s powers to intervene to grant interim
When to apply
measures are intended to support, rather than displace, the
It is usually important to apply as early as possible. Delay may
arbitral process. It has the power to grant relief including
prejudice both your ability to obtain interim measures (a court
orders in relation the taking or preservation of evidence,
or tribunal may take account of delay in determining whether
the preservation of property or assets and injunctive relief,
or not to grant relief ) and your ability to enforce an award
provided the tribunal has no power or is unable for the time
(e.g. if assets or evidence are already lost).
being to act effectively. It may order that any relief it grants will cease to have effect on the order of the tribunal or when the arbitral tribunal has power to act.
How to apply
In practice, recourse to those powers of the English court
The procedural steps you will need to take will depend
may be helpful where the tribunal is not yet appointed or
in large measure on the arbitration agreement and any
where the tribunal lacks the powers necessary to grant the
institutional rules which apply or, if you are applying to a
relief sought. Where the arbitral tribunal is appointed and
national court, its procedural rules.
has the power to act effectively, the option of applying to the English court for interim measures is, in effect, ruled
An application will, in general, need to be made in writing,
out. Care also needs to be taken where the applicable rules
backed up with all available evidence to demonstrate the
permit an application to an emergency arbitrator, before the
strength of the case for interim measures and state very
tribunal is appointed, as that may render it difficult to make
precisely the order sought (an application which is formulated
an application to the English court, provided an emergency
too widely will be at greater risk of being dismissed).
arbitrator can act effectively. Be aware that where an application is made without notice, there may be a requirement (as is the case before the English court) for full and frank disclosure of all matters relevant to the application, whether supportive or harmful to your case; a failure to disclose a matter which might have a bearing on the decision or award might risk it later being set aside.
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Arbitration Tips | Interim Measures
Arbitration Our team is experienced in resolving disputes through arbitration and committed to providing outcomes-focused, innovative and commercially minded advice to guide our clients through all stages of the arbitration process. We represent clients from across the globe in arbitrations involving a range of sectors including construction, international trade and commodities, investment treaties and shipping. Our experience spans arbitrations convened through the main international institutions such as the ICC, LCIA, LMAA, DIFC and SIAC as well as on an ad-hoc basis.
Our Team John Abbott
Russell Beard
Robert Clark
Simon Foster
Partner john.abbott@laytons.com +44 (0)20 7842 8000
Partner russell.beard@laytons.com +44 (0)20 7842 8000
Partner robert.clark@laytons.com +44 (0)20 7842 8000
Partner simon.foster@laytons.com +44 (0)1483 407 000
Richard Harrison
Paddy Kelly
Rebekah Parker
Will Slater
Partner richard.harrison@laytons.com +44 (0)20 7842 8000
Partner paddy.kelly@laytons.com +44 (0)20 7842 8000
Partner rebekah.parker@laytons.com +44 (0)20 7842 8000
Consultant will.slater@laytons.com +44 (0)20 7842 8000
Geraint Thomas
Ben Thorogood
Partner geraint.thomas@laytons.com +44 (0)20 7842 8000
Daniel Walter
Solicitor daniel.walter@laytons.com +44 (0)20 7842 8000
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Solicitor ben.thorogood@laytons.com +44 (0)20 7842 8000
This information is offered on the basis that it is a general guide only and not a substitute for legal advice. We cannot accept any responsibility for any liabilities of any kind incurred in reliance on this information.
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