Provisional Measures: Navigating the Complexities of International Arbitration

­Abstract

International arbitration encompasses disputes between state and non-state entities that enter a cross-border agreement. The contract may contain an indication of the intention of the parties to refer their disputes to arbitration, wherein the decision shall be binding. However, similar to litigation disputes, a situation may arise that puts the Parties’ interests at certain risk during the pendency of the suit. In such circumstances, temporary measures ought to be issued to preserve the assets at issue, as well as said interests. Litigation makes use of these measures as indispensable tools, whereas, in arbitration, parties are hesitant to utilize these measures, often due to the prevalent misconceived notions surrounding their enforceability and impact on the dispute. Provisional measures are sometimes referred to as ‘interim’ ‘conservatory’ or ‘precautionary’ measures and the Court or arbitral tribunal may allow the Parties interim reliefs through these measures which may take the form of an order to do or not to do something pending finality of the arbitral proceedings, or an award with appropriate security and statement of the grounds upon which the measures have been issued. Contrary to certain beliefs, an application for the order of temporary measures implies neither waiver nor infringement of the preexisting arbitration agreement and it has no effect on the tribunal’s vested authority. This paper aims to deconstruct the doubts revolving around the impact of provisional measures on arbitration proceedings by surveying the purpose, enforcement and requirements for obtaining these measures.

Keywords

Provisional measures, enforcement of provisional measures, international arbitration, arbitral tribunals, status quo, UNCITRAL Model law, arbitration rules, international court of justice, emergency orders.

Introduction

The term ‘Provisional’ denotes the temporary nature of an order simply serving as a hold to avoid compromising the parties’ rights prior to the passing of the final award. Per the definition in “Black’s Law Dictionary,” an interim measure is an order by an international tribunal to prevent a litigant from prejudicing the outcome of a lawsuit by acting arbitrarily before a judgment has been reached[1]. From this definition, we can gather, firstly, that the measures are passed by a tribunal in the form of an award, secondly, the measure is issued as an instrument of protection to preserve the contents in dispute, and finally, that the directive is made while the matter is still pending.

Conservatory measures available to the parties include but are not limited to:

  1. a preliminary injunction against a party
  2. assignation of a receiver
  3. custody, protection or review of the property (subject matter of the dispute)
  4. anti-suit injunctions ordering a party not to pursue court action as it may be violative of the arbitration agreement
  5. Security costs; An amount deposited by the applicant before the tribunal to which the respondent shall become entitled to recover should the applicant’s claim(s) become unfounded.

The primary considerations for the issuance of these conservatory measures are to safeguard the parties’ rights and to avert irremediable harm from acts prejudicial to the merits of the disputes which can be traced back to 1927 in the “Sino-Belgian Treaty case”[2] where Max Huber (then President of the Permanent Court of Justice (PCIJ)) directed interim measures using the aforementioned as guidelines.

Research Methodology

The nature of this paper is descriptive. It sets out to unveil the impact that provisional measures have on arbitration proceedings. The research herein was done with an integrated reference to primary sources such as case studies as well as secondary sources viz textbooks, dictionaries and journals

Review of Literature

In 2017 a resolution known as ‘the IDI Resolution 2017’[3] was passed highlighting the various guiding principles for reference when identifying the functions and purposes of temporary measures in international arbitration. Let us have a look into some of these principles:

  1. Guiding principle 1 provides for the decree of interim measures to preserve the competence of granting an effective terminal relief.
  2. Second tenet calls attention to the need to grant measures for the prevention of potential irreparable injury that may be brought upon the claims in dispute awaiting judgment.
  3. Lastly, a read of the fourth principle allows for provisional measures where it is deemed that the dispute is at risk of becoming aggravated.

While these principles suffice in some situations, the spectrum of circumstantial variety in international arbitration cases is simply too wide to be contained within these guiding principles. For a better arrangement of the impetuses of interim measures, we refer to Roberto Virzo’s proposal that provisional measures be categorized into typical and atypical measures[4].

  1. Typical Provisional Measures: R. Virzo describes this category as containing those interim measures that are provided for by statute. The second guiding principle (preservation of rights) is included here as provisions regarding the same are available in legal sources such as “The International Court of Justice Statute” bearing provision of the Court’s ‘power to indicate (…) any provisional measure which should be taken to preserve the subjective rights of the parties[5]
  2. Atypical Provisional Measures: This category includes all those measures which are not expressly provided for in statutory legislation. They are a consequence of the arbitrator’s choice which may go beyond their vested powers. Due to their flexible determinism, atypical measures should undergo careful analysis on a case-to-case basis. Measures that are issued to forestall the vexation of a dispute are not properly envisaged by ordinance, thus, the determination of what constitutes aggravation will vary from the facts of each case.

Competence of Arbitral Tribunals and Courts

In international disputes, measures impending judgment are largely governed by the respective national rules of each country wherein the courts are authorized to issue interim measures as they deem fit. The following are the various powers vested in judicial and arbitral forums when deciding on a petition involving provisional measures:

  1. Capacity to accord interim measures: A plain reading of Article 28 of the Arbitration Rules 2021 indicates that ‘unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the arbitral tribunal may, at the request of a party, order any interim or conservatory measures it deems appropriate’[6]. Furthermore, the parties are at liberty to request any juridical forum for temporary measures before transmitting to an arbitral tribunal[7]. However, contrary to litigation, arbitral tribunals may not issue such orders ex-parte. The notice ought to be given to the other Party whenever an edict for interim measures has been requested[8].

Besides the tribunals, the ‘International Court of Justice’ has also, vested within it, the power ‘to indicate, if it considers that circumstances so require, any provisional measures which ought to be taken to preserve the respective rights of either party’[9].

The ability to permit these measures is prima facie essential to assure efficacious and fair arbitration proceedings. In India,[10] the arbitral tribunals are granted the same power as the courts when passing an order of provisional measures relating to any proceedings before them. This power is, however, not unlimited. It is subject to the scope of the authority granted to the tribunal within the arbitration arrangement on account of party autonomy. This conveys that should the parties to the dispute expressly bar or curb the tribunal’s authority as regards issuing of interim measures, it shall not exercise such power. Furthermore, public policy consideration also limits the tribunal’s capacity to accord interim measures such as those measures that are violative of fundamental principles of law or that harm the interests of the public. Court intervention may also occur when the tribunal exceeds the scope of its authority, or where the measure is found to be unjust, or in violation of public policy.

  • Power to amend, revoke or uphold provisional measures: General and statutory consensus dictates that the arbitration forum before which a dispute is proffered may make changes to, revoke or uphold any measures passed by it[11]. The ‘Southern Bluefin Tuna’ cases as well as the ‘Mox Plant case’, wherein some measures passed by the arbitral tribunals were rescinded by them, are leading authorities in identifying the tribunal’s capacity to revoke, alter or affirm provisional measures.[12]

Interim measures are usually issued at the outset of the proceedings and persist until a decision on merits has been made. They are temporary and the tribunal is free to withdraw them if it determines that the grounds for issuing such an order have become non-existent due to:

  1. The failure of the requesting party to present a prima facie case
  2. The potentially irreparable harm for which the order was passed has dissipated
  3. The balance of convenience favours the revocation

If the tribunal deems it imperative to uphold the substance of the dispute, it may assert the measures passed by it by merging them with the obligations of the respondent when issuing the final award on merits[13].

Finally, where, upon assessment of the matter, the tribunal ascertains that the circumstances have changed, it may make such changes or alterations to the measures to reflect those changes.

The capacity to amend, revoke and uphold provisional measures is essential in that it ensures flexibility, allowing the arbitral panel to adapt the measures to the changing landscape of the case.

Functions and Purpose of Interim Measures

Provisional measures are primarily issued to act as a holding order pending the outcome of the suit[14] however, there is more to them than just their restrictive and directory nature viz:

  1. Maintenance of the Status Quo: Interim measures are issued to restore the state of affairs of the case (such as the parties’ interests) in the course of the dispute proceedings.[15] Wherein unilateral changes threaten to alter or prejudice the decision of the arbitral tribunal and the positions of the parties, they may pass a directive for measures to restore the balance of convenience between the parties.
  • Prevention of irreparable harm: There are times when the arbitrary acts of either party may prejudice or harm the arbitral process. If this happens to be the case, the arbitration forum may be moved to issue interim orders to counter the imminent irreversible damage that is likely to endanger the interests that are cardinal to the substance of the proceedings[16]. As to what constitutes irreparable harm or prejudice remains a matter of case-to-case determination. For instance, indigenous communities consider land not only as a tool for proprietorship and production but as a material and incorporeal or divine element. Therefore, infringing on such property would end up affecting the very survival of the community. The prejudice here is deemed irreparable and provisional measures should be prescribed[17]. In another case, irreparable prejudice was defined as ‘when individuals are subject to temporary or potentially ongoing separation from their families and suffer from psychological distress[18]. Interim measures must be permitted for the conservation and protection of the respective interests of either party.[19]
  • Conserving the substance in dispute: Conservatory measures can be indicated to prevent the dissipation of assets[20], the destruction of evidence[21], or those arbitrary acts that may compromise the tribunal’s ability to determine the standards of the proceedings.

In a recent case[22] wherein the respondent asserted that the funding agreement in dispute was unenforceable, the English court granted (the third party) asset preservation orders, pending arbitration of the substantive dispute, because a serious question regarding the enforceability of the funding agreement had arisen.

Similarly, in the notable ‘Enrica Lexie’ case[23], the ‘International Tribunal for the Law of the Sea’ (ITLOS) made a directive for temporary measures ordering the parties to desist from taking action that might aggravate the dispute or prejudice the interests of the other party: to preserve all the evidence that was even remotely related to this incident: to cooperate in the investigation and to keep from publishing any statements, which would prejudice the proceedings, before the public. This ensured that the subject matter was preserved, that no irreparable harm would be done to the interests of the parties, and ultimately that no unilateral or arbitrary action of either party would prejudice the proceedings before the arbitral tribunal.

  • Protection of Parties from frivolous claims: This can be done through the issue of a decree securing costs, a procedure in which a party to the proceedings intimates the arbitral forum to compel the other party to deposit security payment with the tribunal. This secures the party’s rights to recover costs in the event that the other party’s claim is unsuccessful and unfounded. The fees covered by the security cost may include but are not limited to, attorney fees, tribunal fees and administration costs.
  • To compel the Parties: Some provisional measures are issued to compel the parties to execute a decision rendered by the arbitration tribunal. In the ‘Arctic Sunrise case’[24], the International Tribunal for the Law of the Sea (ITLOS) had ordered Russia to release the Arctic Sunrise and its crew stating that the detention of the vessel was unlawful. However, Russia resisted the order until the tribunal issued a provisional order requiring Russia to heed the previous order passed by the tribunal after which the vessel and its crew were released. Russia, in this case, was compelled to act on a previous order of the tribunal through the issuance of a provisional measure. The factum of this purpose is provided for in the Permanent Court of Arbitration rules[25] and not in the United Nations Convention for the Law of the Sea under which the provisional measures in the Arctic Sunrise case were ordered, which qualifies it as an ‘Atypical interim measure[26].

Requirements of Interim Measures

The courts and arbitration tribunals have essential criteria that they consult when considering the grant of an interim measure. These criteria are governed by each Court’s or tribunal’s own rules (as the case may be). They are judge-made laws[27]:

  1. Admissible and well-grounded claim: Once the request for the issue of provisional services has been made, a prima facie assessment is made to determine the causal link between the temporary orders being sought and the respective interests of the parties. Additionally, requesting parties must take it upon themselves to establish, with sufficient evidence, that their claim has a legitimate basis on the stature of the case. Since interim measures are primarily founded on the rights of the parties on merits, the application must not include those measures that they would not be entitled to due to the objectionable nature of the main claim or the lack of jurisdiction thereof.

The measures being requested thereof must not amount to an interim judgment[28] and must not sway the decision as to the issue at hand.[29]

  • Urgency: The requirement of urgency stems from the very nature of provisional measures[30]. It symbolizes the intrinsic and central aspect of provisional measures in that they are issued to deal with imminent threats that cannot await the finality of the proceeding. Urgency encompasses those potential harms that, if left alone, will likely jeopardize the claims of the parties.

The Court of Justice[31] made it clear that only those measures that are established to be urgent will be considered.[32]

In one case, the Court of Justice denied issuing the requested provisional measures because the respondent had made statements on record, before it, regarding their willingness to not proceed with carrying out the challenged decision until the main action was decided, thus effectively removing urgency from the equation[33]. Urgency can be constituted from the comprehension of an imminent threat likely to irreparably harm either the interests of the parties or the substance of the dispute in the foreseeable future.

Urgency can also be constituted by the comprehension of the potential aggravation of the dispute wherein the court may award such interim measures as it considers necessary to prevent regrettable events and unfortunate incidents[34]

  • Balance of convenience: The arbitral tribunal must take into account the imminent harm bearing on the requesting party against the potential prejudice to the responding party when deciding on interim measures.

This requirement was first recognized in the ‘Electric Tramway Company of Sofia’ case[35] and subsequently affirmed by the ‘Court of Justice of the European Union’ in 1963[36]. Courts ought to ‘balance the competing claims of injury’ while paying attention to the effect that granting the requested measures or refusing them, would have on the parties as well as the public[37].

  • Security: The English High Court has long affirmed the practice of including an undertaking, by the applicant, for payment of any financial losses that the respondent may sustain, within the order for an injunction. This acts as security for the responding party if the claim of the requesting party becomes unfounded.

Enforcement of Interim Measures Including Emergency Awards

The most characteristic attribute of interim measures is their binding nature. They create an obligation in the parties and demand compliance by the parties directed[38].

If there is non-compliance on the part of the responding party to the issued temporary measures, the requesting party may seek enforcement of the same through the proper application process before a court.[39]

In the Philippines, no distinction is drawn between the enforceability of those interim measures issued by a foreign institution or measures issued in the Philippines.[40]

Similarly, in India, the Delhi High Court recognised the enforceability of foreign interim awards and emergency awards under ‘Section 9 of the Arbitration and Conciliation Act 1996’ as regards foreign-seated arbitration[41]. However, this is subject to the precondition that a remedy under Section 17 of the Act would be ineffectual.

Leading arbitral institutions such as the ‘London Court of International Arbitration’ (LIAC)[42], the ‘Singapore International Arbitration Centre’ (SIAC)[43], the ‘International Chamber of Commerce’ (ICC)[44], the ‘Hong Kong International Arbitration Centre’ (HKIAC)[45], and the ‘Stockholm Chamber of Commerce’ (SCC)[46] all recognize the binding nature and enforceability of emergency awards.

Despite the great variations, the Model law[47] provides that an interim measure may be passed as an award to quell the enforceability talks with much emphasis put on the need for there to be no difference when enforcing interim measures issued by both foreign and national seats.

Suggestions and Conclusions

Interim measures play an indispensable role in international arbitration as they address imminent threats and preserve the interests of the Parties awaiting judgment on merits.

They serve various functions and purposes such as conserving the material substance in dispute, maintaining and restoring the status quo, averting imminent irreparable harm, and enhancing the efficacy of the arbitration process.

These temporary measures have proven to be cardinal and impactful in cases that involve substantial assets, potential harm to reputation etc. This ensures fairness in the arbitration proceedings.

In conclusion, interim measures are an indispensable tool in international arbitration that more parties need to take cognizance of to protect their rights, preserve the subject matter and promote the overall success of the arbitral process.

NAME: FANUEL RUDI

INSTITUTION: NIILM UNIVERSITY


[1] ‘Interim measure’ Blacks Law Dictionary 8th Edition (2004)

[2] “Denunciation of the Treaty of 2 November 1865 between China and Belgium (Belgium v. China) (1927) PCIJ Ser A No.8”

[3] ‘Institute de Droit International’, Session of Hyderabad, Third Commission, Provisional Measures, Final Report, Rapporteur Lord Collin of Mapesbury, p.268, para 12.

[4] “Provisional Measures Issued by International Courts and Tribunals”, p2, Roberto Virzo et al Ed., Springer Science and Business Media LLC 2021

[5] Statute of the International Court of Justice, Article 41.

[6] The ICC Arbitration Rules 2021, Article 28(1)

[7] The ICC Arbitration Rules 2021, Article 28(2)

[8] The UNCITRAL Model Law (1985) (as amended in 2006), Article 17B and 17C

[9] Statute of the International Court of Justice, Article 41

[10] The UNCITRAL Model Law, 1985 (as amended in 2006), Article 17C(1)

[11] UNCLOS 1982 Article 290(5)

[12] Southern Bluefin Tuna Cases (New Zealand v. Japan: Australia v Japan) ITLOS Case Nos.3 and 4, Provisional Measures, Order of 27 August 1999; The Mox Plant Case (Ireland v. United Kingdom) ITLOS Case No.10, Provisional Measures, Order of 3 December 2001. ‘Arbitral tribunals revoked the provisional measures issued by them’

[13] “Provisional Measures Issued by International Courts and Tribunals”, p.10, H. Thirlway et al Ed., Springer Science and Business Media LLC 2021)

[14] ‘Redfern & Hunter on International Arbitration,’ 5th Edition, Student Version, p.445, Oxford University Press, 2009.

[15] UNCITRAL Model Law, 1985 (as amended in 2006), Article 17(2)(a)

[16] ICJ under Article 49 of its Statute in Jadhav (India v. Pakistan), Provisional Measures, Order of 18 May 2017, p.243, para 49.

[17] IACHR, Mayagna (Sumo) Awas Tingni Community Case, Judgment of 31 August 2001, para 149.

[18] ICJ, Application of the International Convention on the Elimination of all Forms of Racial Discrimination (Qatar v. United Arab Emirates), Provisional Measures, Order of 23 July 2018, para 69

[19] ICJ Statute, Op Cit

[20] UNCITRAL Model Law, 1985 (as amended in 2006), Article 17(2)(c)

[21] UNCITRAL Model Law, 1985 (as amended in 2006), Article 17(2)(d)

[22] Therium Litigation Funding AIC v. Bugsby Property LLC (2023) EWHC 2027 (Comm)

[23] The ‘Enrica Lexie’ Incident (Italy v. India) ITLOS Case No.24, Provisional Measures, Order of 24 August 2015

[24] The ‘Arctic Sunrise’ Case (The Netherlands v. Russia), ITLOS Case No.22, Provisional Measures Order of 22 November 2013, para 98

[25] The PCA Arbitration Rules, 2012, Article 26(2)(b)

[26] Refer to page 3 ‘Atypical Provisional Measures

[27] ICJ Practice Direction XI; ‘The Criteria for the Indication of Provisional Measures as Stipulated in the Statute, Rules and Jurisprudence of the Court’

[28] PCIJ, Factory at Chorzow (Indemnities) (Germany v. Poland), Provisional Measures, Order of 21 November 1927)

[29] The Statute of the Court of Justice of the European Union, 1952, Article 39

[30] ‘Judge Treves’ in Southern Bluefin Tuna Cases Supra note 82, para 3

[31] CJEU Case C-44/ 17R, European Commission v. Republic of Poland, Order of the Court (Grand Chamber) of 20 November 2017, para 29

[32] The Rules of Procedure of the Court of Justice, Article 160, para 3.

[33] CJEU, Case C-31/ 79 R, Société des Aciéries de Monterea v. Commission, Order of 27 March 1979, para 2.

[34] PCIJ, Legal Status of the South-Eastern Territory of Greenland, Order of 3 August 1932, p.184 also; Land and Maritime Boundary between Cameroon and Nigeria, supra note 39, para 41

[35] Electric Tramway Company of Sofia v. Bulgaria and Municipality of Sofia, TAM, Vol II, para 926-927

[36] CJEU, Case C-15/ 63 R, Lasalle v. Parliament, Order of 13 March 1963, p.57

[37] Winter v. National Resources Defense Council, 129 S.Ct. 365 (2008) 555 US.7 citing; Weinberger v. Romeo-Barcelo, 456 US 305, 312, 102 S.Ct 1798, 72 L. Ed. 2d 91

[38] La Grand (Germany v. United States of America) Order of 3 March 1999

[39] PIArb: Commercial Arbitration Handbook, 2016, p.111, para 9.3.1

[40] PIArb: Commercial Arbitration Handbook, 2016, p.111, para 9.3.3

[41] Shanghai Electric Group Company Ltd v. Reliance Infrastructure Ltd, 2022 SCC OnLine Del 2112

[42] The LIAC Rules, Rule 9.9

[43] The SIAC Rules, para 12, Schedule 1

[44] The ICC Rules, Rule 29.2

[45] The HKIAC Rules, para 16, Schedule V

[46] The SCC Rules, Article 9

[47] The UNCITRAL Model Law, 1985 (as amended in 2006), Article 17