THE POWERS AND JURISDICTION OF ARBITRAL TRIBUNALS TO ORDER INTERIM

MEASURES OF PROTECTION IN INTERNATIONAL COMMERCIAL ARBITRATION

By: Mofesomo Tayo-Oyetibo

Supervisor: Jonathan Hill

Word count: 11, 877

A dissertation submitted to the University of Bristol in accordance with the requirements of the

degree of Master of Law by advanced study in LLM in Commercial Law in the Faculty of Social Sciences

and Law.

1

ABSTRACT

The reliance on international commercial arbitration as the preferred dispute resolution vehicle in international disputes means that the examination of certain elements within the international arbitration process is now important. This dissertation is concerned with the powers and jurisdiction of arbitral tribunals to order interim measures of protection in international commercial arbitration. Bucking the historical trend of allowing arbitral tribunals little or no powers to order interim measures of protection, the jurisdiction of tribunals is now commonplace in many international arbitration systems. The principal source of the authority of arbitral tribunals to order interim measures of protection which is the agreement of the parties is critically examined in light of arguments to the effect that the lex arbitri is the answer to the question of where the authority of arbitral tribunals to order interim measures of protection originates. The limitations which exist and may potentially operate to limit the authority of arbitral tribunals to order interim measures of protection are also discussed. Some limitations are absolute like where the agreement of the parties or the lex arbitri expressly forbids the arbitral tribunal from ordering interim measures while some others put the arbitral tribunal in a position where proceeding to order interim measures will be a fruitless exercise, like where there is potentially no scope for enforcement.

2

I declare that the work in this dissertation was carried out in accordance with the requirements of the University’s Regulations and Code of Practice for Taught Postgraduate Programmes and that it has not been submitted for any other academic award. Except where indicated by specific reference in the text, this work is my own work. Work done in collaboration with, or with the assistance of others, is indicated as such. I have identified all material in this dissertation which is not my own work through appropriate referencing and acknowledgement. Where I have quoted from the work of others, I have included the source in the references/bibliography. Any views expressed in the dissertation are those of the author.

SIGNED: MOFESOMO TAYO-OYETIBO

DATE: 13/09/2013

3

INTRODUCTION

Several reasons may exist for why parties agree to refer their disputes to international commercial

arbitration. These reasons may range from the parties wanting a hand-picked and experienced tribunal

to adjudicate their differences, to avoiding the publicity accompanying court proceedings which could

damage one or both of the parties’ commercial interests1. Whatever the reason may be, it has been

documented that the usual expectation of the parties will be for their disputes to be settled within the

singular forum of international commercial arbitration2. Before this expectation of the parties can be

actualized in the form of a final award by the arbitral tribunal, there will in many cases be a need for

either elements material to the resolution of the dispute or the rights of the parties to be safeguarded.

Cue the need for interim measures of protection. Such measures are engineered to protect the rights

and interests of the party in whose favour the measures are made 3 and to also preserve the integrity of

the arbitral process4.

Interim measures of protection in international commercial arbitration have been described as ‘the tools

to preserve and ensure the usefulness of arbitration’5. These measures of protection have also been

judicially recognised as those ‘intended to preserve a factual or legal situation so as to safeguard rights

the recognition of which is sought from the tribunal having jurisdiction as to the substance of the

case’6. The essential effect of interim measures of protection is to reallocate the risk in the dispute

between the parties by transferring it either entirely or otherwise from the party applying for the

interim measures of protection to the other party to the dispute7.

1 Redfern (1995) 722 Redfern (1995) 723 Runeland and Blanke (2007) 1894 Born (2012) 2035 Adhipathi (2003) 46 Case C-391/95 Van Uden Maritime BV v. Kommanditgesellschaft in Firma Deco-Line, [1998] ECR I-7091, para 71337 Lew (2003) 586

4

Generally, the processes and procedures of litigation in traditional legal systems are founded on the

fundamental doctrine of fair hearing and several rules and safeguards usually exist to guarantee that the

parties involved are given the opportunity to be heard8. Consequently, inordinate delays inevitably

creep into the system; thereby prolonging the time it takes for the courts to determine disputes

between parties. Furthermore, it is not uncommon for such delays to prejudice and cause irreparable

damage to the rights of one party.9 For example, a party to an action may after the commencement of

the action, realise or believe that any decision which will be rendered at the determination of the

proceedings will be unfavourable to his interests and therefore proceed cynically to dissipate his assets.

In the same vein, crucial evidence could be tampered with or even destroyed beyond restoration, with

the effect of adversely affecting or even terminating the chances of the other party to the proceedings.

The reasons why the above circumstances will be of genuine concern to the other party to the

proceedings are apparent. These reasons have led to interim measures of protection being described as

possibly being ‘more important’10 than the final award. It is respectfully submitted that while they may

not always be more important than the final award, they will usually always be ‘as important’ as the

final award. This is because where an interim measure of protection is secured by a party, the measure

may on its own have the consequence of conclusively determining an issue between the parties

irretrievably. For example, where an interim measure of protection is ordered to freeze the bank

account or arrest the vessel of a party with limited financial strength, such a party will come under

pressure as a direct consequence of the order. The pressure exerted on the party subject to the order

may compel it to agree to a settlement on terms which it may ordinarily not have accepted in the

absence of the order11.

8 Born (2001) 9209 Born (2001) 92010 Hartley (1999) 67411 Lew (2003) 622

5

Chapter One of this paper discusses the actual source of the powers of arbitral tribunals to order interim

measures of protection in international commercial arbitration. Some commentators differ on what the

actual root source of this authority of arbitral tribunals to order interim measures of protection is, but

the general consensus is that for a determination of the source of such authority the agreement of the

parties, the lex arbitri and any applicable arbitration rules are to be primarily examined12.

Chapter Two considers the potential limitations to the powers of arbitral tribunals to order interim

measures of protection in international commercial arbitration. While some of such limitations are

inherent in the nature and practice of international arbitration, the fact that in many cases, tribunal

ordered interim measures or relief will face potentially insurmountable enforcement difficulties is

examined.

Chapter Three discusses the need for the protection of party rights in international commercial

arbitration and also the types of interim measures of protection typically available from arbitral tribunal.

It identifies the need for the consensual jurisdiction bestowed upon the arbitral tribunal not to be

eroded by either of the parties or external factors prior to the final determination of the disputes by the

tribunal.

12 Born (2011) 814

6

CHAPTER 1

1.0 Introduction

In international commercial arbitration, with regard specifically to interim measures of protection, the

granting of such measures will generally be available through either the arbitral tribunal or the courts or

both forums where there is concurrent jurisdiction. A significant thread that runs through several

sources of international commercial arbitration conventions, laws and rules is that there is a general

recognition of the existence of a concurrent jurisdiction; where both the arbitral tribunal and the courts

are empowered to order interim measures of protection13.

The fundamental principle of party autonomy in international commercial arbitration allows for a

situation in which parties to the arbitration will in many cases, be in a position to choose between

approaching the arbitral tribunal or the courts. However, this chapter specifically and critically examines

the issues concerning the powers and jurisdiction of arbitral tribunals to order interim measures of

protection in international commercial arbitration. The powers and jurisdiction of arbitral tribunals to

order interim measures of protection is considered against the backdrop of the agreement of the

parties, the lex arbitri and international arbitration rules. This chapter aims to unequivocally establish

the fundamental role that the agreement of the parties has to play as a source from which the powers

and jurisdiction of arbitral tribunals to order interim measures of protection are derived. In the current

sphere of international commercial arbitration, the powers and jurisdiction of arbitral tribunals to order

interim measures of protection is seemingly assured as a result of an identification of the need for

arbitral tribunals to be able guarantee the integrity of the arbitral process or protect the rights of the

parties concerned.

13Gaillard and Savage (1999) 711

7

1.1 The Source of the Powers And Jurisdiction Of Arbitral Tribunals To Order Interim Measures Of

Protection

The question of whether an arbitral tribunal has the power and jurisdiction to order interim measures of

protection will always be of significance to parties to the arbitration. Therefore, where a party to an

international commercial arbitration seeks to determine the status of the arbitral tribunal’s powers and

jurisdiction with regard to ordering interim measures of protection in support of the arbitration, three

main sources will be of relevance. According to Born, these sources are; applicable international

arbitration conventions, chiefly the New York Convention, the applicable national law and the parties'

arbitration agreement which in many cases leads to any relevant institutional arbitration rules that may

have been incorporated14.

1.1.1 Arbitration Agreement

The logical genesis for any examination of the powers and jurisdiction of international commercial

arbitral tribunals to order interim measures of protection should be the agreement of the parties to

refer their disputes to international commercial arbitration. This is because the entire process of

international commercial arbitration including all the applicable laws, rules and procedures stems out of

the exercise of the party autonomy principle which is the principal pillar of the international commercial

arbitration process15.

Generally and also advisably, arbitration clauses which refer future disputes to international commercial

arbitration are often concise and do not aim to provide specifically for all facets of the arbitration or all

conceivable circumstances. To place the agreement of parties to refer their international commercial

disputes in international commercial arbitration in proper context with regard to interim measures of

14 Born (2011) 81415 Boog (2010) 416

8

protection, arbitration clauses that are typically obtainable in practice will be considered. This is because

a review of the default or template arbitration clauses contained in major ad hoc and institutional

arbitration rules buttresses the aforementioned point on the general purport of arbitration clauses. For

example, the International Chamber of Commerce (“ICC”) has a basic model arbitration clause which

states in its entirety that:

All disputes arising out of or in connection with the present contract shall be

finally settled under the Rules of Arbitration of the International Chamber of

Commerce by one or more arbitrators appointed in accordance with the said

Rules

Similarly, the London Court of International Arbitration (“LCIA”) recommends the following as a model

arbitration clause:

Any dispute arising out of or in connection with this contract, including any

question regarding its existence, validity or termination, shall be referred to and

finally resolved by arbitration under the LCIA Rules, which Rules are deemed to

be incorporated by reference into this clause

Likewise, The UNCITRAL Arbitration Rules provides in its Annex that:

Any dispute, controversy or claim arising out of or relating to this contract, or

the breach, termination or invalidity thereof, shall be settled by arbitration in

accordance with the UNCITRAL Arbitration Rules

The above provisions indicate that typical international arbitration clauses in their practical simplicity

will not usually expressly provide for the powers or jurisdiction of arbitral tribunals to order interim

9

measures of protection16 or in fact provide specifically for any other procedural powers.

Notwithstanding this, it is submitted that the agreement of the parties to submit their disputes to

international commercial arbitration is the foundational basis and source of the powers and jurisdiction

that arbitral tribunals possess to order interim measures of protection. The reason for this submission is

that what is majorly obtainable in the practice of international commercial arbitration is for arbitration

agreements to incorporate either ad hoc or institutional international commercial arbitration rules17

which are to guide the practice and procedures of the arbitration process. The significance of this

contractual incorporation to the agreement of the parties as a source of the powers and jurisdiction of

arbitral tribunals to order interim measures of protection is the fact that pursuant to a pro-arbitration

rationale, the major ad hoc and institutional international arbitration rules expressly provide for the

powers and jurisdiction of arbitral tribunals to order interim measures of protection.

In the context of arbitral tribunals deriving their powers and jurisdiction from the agreement of the

parties, the lex arbitri may also be of significance. This is because the question of whether or not an

arbitral tribunal has the powers and jurisdiction to order interim measures of protection is determined

according to the provisions of lex arbitri18. Notwithstanding this, it is submitted that this fact does not in

any way controvert the position of the agreement of the parties pursuant to the party autonomy

principle, as the fundamental basis for the powers and jurisdiction of arbitral tribunals to order interim

measures of protection in international commercial arbitration. This is because before the dispute

resolution process even begins and before the examination of the provisions of the lex arbitri to

determine whether or not, or to what extent it permits arbitral tribunals to order interim measures of

protection, the agreement of the parties will presumably be in existence. It is this agreement of the

parties that dictates what the lex arbitri will be, by reflecting the intention of the parties to submit their

16 Yesilirmak (2005) 5517 Boog (2010) 41618 Segesser and Boog (2013) 108

10

international commercial arbitration to the law of the jurisdiction to which the lex arbitri applies,

therefore making its provisions on the powers of arbitral tribunals to order interim measures applicable

to the arbitration.

There is legal commentary of sceptical persuasion with regards to the preceding interpretation of the

party autonomy principle in the sense that it is the bedrock of the powers and jurisdiction of arbitral

tribunals to order interim measures of protection. For example, Karrer contends that the above

interpretation of the party autonomy principle is one that contains only ‘a grain of truth’ 19 as it is an

extensive and overly liberal interpretation of the party autonomy principle. He further contends that

regardless of how liberally party autonomy is exercised, either expressly or indirectly through

international arbitration rules, where the lex arbitri is restrictive in terms of its provisions as to the

powers and jurisdiction of arbitral tribunals to order interim measures of protection, such liberal

application of the party autonomy principle will ‘do no good’20.

Such a restrictive interpretation of the role of the agreement of the parties in determining the authority

of arbitral tribunals to order interim measures of protection in international commercial arbitration can

arguably be seen as one which overlooks the most significant aspect of the root of the authority of

arbitral tribunals in this regard. When seeking the source of the powers of arbitral tribunals to order

interim measures of protection in international commercial arbitration, an interpretation of the root of

such powers which seeks to absolutely prioritise the lex arbitri over the agreement of the parties is one

that gives little credence to the fact that it is the agreement of the parties through party autonomy that

makes the lex arbitri even relevant at all. In international commercial arbitration parties will always

through party autonomy, be at liberty to agree on the lex arbitri presumably with the provisions of such

19 Karrer (2001) 9920 Karrer (2001) 99

11

law in mind, including those that stipulate the powers and jurisdiction of arbitral tribunals to order

interim measures of protection.

Where parties to an international commercial arbitration feel the provisions of any lex arbitri are

unsuitable for their intentions and purpose regarding the powers of arbitral tribunals to order interim

measures of protection, it is certainly conceivable that they will resort to agreeing on another more

suitable lex arbitri as applying to their international arbitration. Boog supports the foregoing

submissions as he is of the opinion that the author’s liberal interpretation of the party autonomy

principle as above is the ‘prevailing view among commentators’.21 Redfern and Hunter have also

commented that the best approach to determining the powers and jurisdiction of an arbitral tribunal to

order interim measures of protection is to look first at the arbitration agreement 22. The provisions of the

lex arbitri on the powers and jurisdiction of arbitral tribunals in international commercial arbitration are

certainly of great importance but the role of the agreement of the parties must crucially, not be

relegated in this regard. The fact that the mandatory provisions of the lex arbitri take pre-eminence

when the arbitration commences must not be seen as operating to erode role of the agreement of the

parties as the origin of the powers and jurisdiction of arbitral tribunals to order interim measures of

protection.

1.1.2 Applicable National Law

In international commercial arbitration, where the parties have exercised their liberty under the

principle of party autonomy to agree on the lex arbitri that will be applicable to the arbitration, the

question of whether the arbitral tribunal can order interim measures of protection will have its answers

mainly in the applicable law.23 The impact of the provisions of the applicable law on the powers and

21 Boog (2010) 41222 Redfern and hunter (2009) 31723 Born (2012) 203

12

jurisdiction of the arbitral tribunal to order interim measures of protection is crucial and can be

determinant. This is because where by the agreement of the parties to the arbitration, the lex arbitri

becomes applicable, it could be said that the fundamental role of the arbitration agreement as a source

of the powers and jurisdiction of the arbitral tribunal to order interim measures of protection becomes

subordinated and subject to the provisions of the lex arbitri. This is because regardless of the agreement

and intention of the parties, where the relevant applicable law restrains or prohibits arbitral tribunals

from ordering interim measures of protection, they will usually be loath to doing so24. The reason for this

is the fact that a national court will generally not enforce an interim measure ordered by an arbitral

tribunal where that tribunal has been precluded by the provisions of the applicable law from having the

powers and jurisdiction to make such an order and the tribunal proceeds ultra vires to make the order25.

Therefore international arbitral tribunals to the extent possible generally tend comply with the

provisions of the applicable law with regard to their authority to order interim measures of protection26.

Historically the powers and jurisdiction to order interim measures of protection in international

commercial arbitration were widely exclusive to the courts or the powers of arbitral tribunals to order

interim measures of protection severely restricted27. Several reasons have been put forward as the

cause of this historical court centric stance on the issuance of interim measures of protection in

international commercial arbitration. One of such reasons is that national courts were assertive of their

powers and jurisdiction over the dispute resolution process and the parties to the process before

reaching a decision on the merits; this was considered an exclusive sovereign power28. The practical

issues inherent in ex parte applications and proceedings were also regarded as a concern and

24 Born (2012) 20525 Born (2012) 20326 Yesilirmak (2005) 6027 Karrer (2001) 9728 Lew (2003) 588

13

justification for favouring the exclusive of dominant powers and jurisdiction of national courts to order

interim measures of protection.

A third reason and one that Born describes as a rationale that was ‘manifestly unsatisfactory’29 is that

interim measures of protection are coercive measures and arbitral tribunals unlike national courts are

not empowered to issue coercive measures. He agreeably argues that the issuance of interim measures

of protection by an arbitral tribunal through an order or interim award which is directed at a party is no

exercise of greater coercive authority than the rendering of a final award granting an injunctive relief. In

practical terms, the purport of either an interim order of injunction or a final award granting an

injunctive relief is to direct the party subject to the order to carry out or refrain from carrying out certain

actions. In neither situation does the arbitral tribunal posses the authority to compel the party subject

to either type of order to carry out the order without the assistance of the courts. Born concludes that

this third reason for the prejudice against the powers and jurisdiction of arbitral tribunals to order

interim measures of protection is one that was founded on a ‘faulty characterisation’30 of the actual

nature of such orders. This conclusion is certainly agreeable, as in the context of compelling a party

subject to a decision of an arbitral tribunal to carry out the directions of the decision; it is difficult to

contemplate a situation where an order for an interim measure of protection bears more coercive

characteristics than a final award. Final awards in many cases will be decided one way or the other

between the parties and will contain orders which will be required to be carried out. The distinction

between coerciveness of orders for interim relief and final awards as a justification for the historical

preclusion of arbitral tribunals from ordering interim measures of protection in international commercial

arbitration is therefore one that is certainly suspect and consequently unjustifiable on this premise.

29 Born (2009) 195030 Born (2009) 1950

14

Maintaining the historical disdain for the devolution of the powers and jurisdiction to order interim

measures of protection to arbitral tribunals in international commercial arbitration, certain jurisdictions

still reserve the powers and jurisdiction to grant interim measures of protection exclusively to the courts

thereby prohibiting arbitral tribunals from exercising such jurisdiction or powers. For example domestic

arbitration laws in Argentina, Greece and Finland have been identified as having express provisions to

this effect31. Also an arbitration law that is of similar effect and has been described as the ‘only major

arbitration system today that prohibits such jurisdiction’32 is the Italian arbitration system as per the

Italian Code of Civil Procedure. Until recently, an arbitration system in another jurisdiction that can be

considered as ‘major’ also expressly prohibited arbitral tribunals from ordering or granting interim

measures of protection, with only the courts being empowered to do so. This was the Inter-cantonal

Concordat in Switzerland until it was repealed in 2011 by the Swiss Code of Civil Procedure which now

allows for interim measures of protection to be ordered by arbitral tribunals.

This change in mentality and legislation in Switzerland is a prime example of the prevalent trend in

international commercial arbitration with specific regard to interim measures of protection. In line with

this trend, there is commentary suggesting that in situations where parties agree to have their disputes

resolved and finally settled through international commercial arbitration, the widely accepted position

in international dispute resolution is that the arbitral tribunal is the natural forum for interim measures

of protection to be sought and granted33. This is as over the last few decades the arbitration systems in

several and the most developed jurisdictions have jettisoned the historic rejection of the powers and

jurisdiction of arbitral tribunals to order interim measures of protection in international commercial

arbitration34 in favour of more liberal structures.

31 Karrer (2001) 9732 Landolt and Neal (2011) 67033 Yesilirmak (2005) 4934 Born (2009) 1951

15

For example the initial 1985 provision of Article 17 of the Model Law provided that:

Unless otherwise agreed by the parties, the arbitral tribunal may, at the request

of a party, order any party to take such interim measure of protection as the

arbitral tribunal may consider necessary in respect of the subject-matter of the

dispute

This provision is still significantly relevant in international commercial arbitration today. This is because

as earlier stated, according to UNCITRAL as many as 66 countries have relied on its provisions in the

legislation of their lex arbitri35. While the 2006 revisions to the law are also significant in today’s practice

and jurisprudence of international commercial arbitration it is pertinent to note that the fact that the

2006 version of the law as at 2011 had not been incorporated by any jurisdiction36 makes the original

version highly relevant in practice.

This original provision while expressly recognising the powers and jurisdiction of arbitral tribunals to

order interim measures of protection has been described as being restrictive of those same powers 37 as

a result of the interpretations it has been given in practice. This is because of the caveat that any such

measure must be ‘necessary’ and ‘in respect of the subject matter of the dispute’. This restrictiveness is

seen as arguably operating to exclude arbitral tribunals from ordering interim measures seeking to

preserve evidence necessary for or relevant to the adjudication of the dispute on its merits38.

Born argues that this original text of Article 17 ought not to be restrictively construed and permits an

arbitral tribunal to order any interim measures it believes to be ‘necessary’ as long as such measures can

reasonably be related to the subject matter of the dispute39. It is submitted that while Born’s

35 UNCITRAL Website: http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html36 Born (2011) 83837 Born (2012) 20438 Landholt and Neal (2011) 67139 Born (2009) 1953

16

interpretation may be according to the spirit of the provisions of Article 17, the cautionary

interpretation given to the provision by arbitral tribunals may be hinged on the fact that a broad

interpretation of what constitutes the “subject matter” could lead to a scenario in which arbitral

tribunals define the term in an all-encompassing manner to include things which fall outside the scope

of the dispute40. When it is remembered that the brief of the arbitral tribunal is limited to the disputes

referred to it by the parties, a liberal interpretation of Article 17 which goes beyond the scope of the

subject matter of the dispute will invariably lead to the arbitral tribunal making an order for an interim

measure ultra vires its powers and jurisdiction- an outcome which runs contrary to the consensual

nature of arbitration.

Notwithstanding the foregoing, it is respectfully submitted that even with the old Article 17 possessing

wordings that could operate to restrict the practical exercise of the powers of arbitral tribunals to order

interim measures of protection, the fact that it provided for express the express authority of arbitral

tribunals to order such measures must be construed as a liberal step forward in light of the general

historical disposition.

The 2006 revisions to Article 17 of the Model Law means that Article 17(1) now provides that ‘Unless

otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim

measures’. This provision has been described as having the effect of broadening the jurisdiction of

arbitral tribunals in international commercial arbitration with regard to interim measures of protection 41

and according to Born is proof that the original provision should be given a more liberal interpretation 42

rather than one which seeks to limit its scope. The provision still possesses the ‘opt out’43 character of

the former Article 17 and operates to automatically confer the powers and jurisdiction to order interim

40 Huntley (2005) 7841 Landholt and Neal (2011) 67142 Born (2009) 195343 Graham (2009) 547

17

measures of protection on the arbitral tribunal unless the parties expressly agree otherwise. Article

17(2) dictates the categories of interim measures available to arbitral tribunals in international

commercial arbitration by providing for a closed list of four categories of interim measures available to

an arbitral tribunal in international commercial arbitration;

(2) An interim measure is any temporary measure, whether in the form of an

award or in another form, by which, at any time prior to the issuance of the

award by which the dispute is finally decided, the arbitral tribunal orders a party

to:

(a) Maintain or restore the status quo pending determination of the dispute;

(b) Take action that would prevent, or refrain from taking action that is likely to

cause, current or imminent harm or prejudice to the arbitral process itself;

(c) Provide a means of preserving assets out of which a subsequent award may

be satisfied; or

(d) Preserve evidence that may be relevant and material to the resolution of the

dispute.

These categories aim to legislate for every conceivable circumstance in which such measures will be

required in international commercial arbitration44. While the wording of Article 17(2) is seemingly

boundless, this is not necessarily the case as for any interim measure of protection ordered by an

arbitral tribunal to be valid under the provision it must be one that is classifiable under one of the

categories provided45. It is also noteworthy and welcome that this provision in subsection (d) provides

for the preservation of evidence that may be relevant and material to the dispute to remedy the fact

44 Graham (2009) 55045 Landholt and Neal (2011) 672

18

that under the former Article 17, arguments in practice frequently hinged on whether certain evidence

was necessary in respect of the subject matter of the dispute46.

Legislating for the powers and jurisdiction of arbitral tribunals to order interim measures of protection

the UK Arbitration Act 1996 in Section 39(1) provides that ‘The parties are free to agree that the tribunal

shall have power to order on a provisional basis any relief which it would have power to grant in a final

award’. Further to this, Subsection (4) of the same section provides that ‘Unless the parties agree to

confer such power on the tribunal, the tribunal has no such power’. The purport of these sections is to

clothe the arbitral tribunal with the powers and jurisdiction to order interim measures of protection

where the parties so agree. Under this law, while the power to order such measures is vested in the

tribunal by these provisions, the implication of subsection (4) is that the agreement of the parties is

required to trigger subsection (1). For the provisions of the Act empowering the arbitral tribunal to

order interim measures of protection to be activated and become applicable, the parties are required to

exercise by agreement, their liberty under the party autonomy principle. This is unlike the position

under the Article 17 of the Model Law which requires the exercise of the freedom afforded by party

autonomy in the reverse, for the purpose of stripping the arbitral tribunal of its automatic powers and

jurisdiction and foreclosing it from ordering any interim measures of protection.

The fact that Section 39 requires the trigger of the agreement of the parties to come into effect has led

to the provisions being described as less desirable than that of the Model Law47. It is respectfully

submitted that this particular criticism of the Arbitration Act is largely inconsequential from a practical

point of view. This is because in the practice of international commercial arbitration, clauses and

agreements typically incorporate institutional or ad hoc arbitration rules, provisions of which are

deemed to form part of the agreement of the parties48 and most of which now invariably provide for the

46 Landholt and Neal (2011) 67247 Born (2009) 195748 Boog (2010) 416

19

powers of arbitral tribunals to order interim measures of protection. For instance, the LCIA, ICC and

UNCITRAL arbitration rules expressly provide in Articles 25, 28 and 26 respectively for arbitral tribunals

to have the authority to order interim measures of protection and they will be sufficient to trigger the

application of Section 39 of the Arbitration Act thereby empowering an arbitral tribunal to order interim

measures of protection.

A somewhat different arbitration system may be found in the United States where the Federal

Arbitration Act (“FAA”) has been identified as not containing any specific provisions which expressly

empower arbitral tribunals to order interim measures of protection in support of international

commercial arbitration49. An interpretation of the FAA may suggest that prima facie, arbitral tribunals do

not have the powers and jurisdiction to order interim measures of protection in international

commercial arbitration where the FAA is the applicable law. However, in practice, this suggestion has

not proven to necessarily be the case. According to Born, US courts have recognised the power of

arbitral tribunals to order interim measures of protection where the FAA is the applicable law 50 with the

position therefore being that even as the Act does not legislate on the powers and jurisdiction of arbitral

tribunals to order interim measures of protection, unless the parties agree to the contrary, the tribunal

will be in a position to order interim measures.

An illustration of this can be found in the United States Court of Appeals, Sixth Circuit decision in Island

Creek Coal Sales Company v City of Gainesville, Florida51 where it was held that the determination of

whether an arbitral tribunal has the authority to order interim injunctive relief depends on an

examination of the agreement of the parties to determine the remedial powers the agreement confers

on the arbitral tribunal in respect of the arbitration. It was further held that unless the agreement of the

parties expressly prevents the arbitral tribunal from ordering interim measures, an arbitral tribunal

49 Waincymer (2012) 64650 Born (2011) 81751 729 F.2d 1046

20

which proceeds to order such measures will not have exceeded its authority52. It has been documented

that this interpretation of the powers of arbitral tribunals to order interim measures of protection is

certainly consistent with the fundamental principle of the FAA which is that arbitration agreements are

enforceable53.

1.1.3 International Arbitration Rules

As previously identified, the foundational source of the powers and jurisdiction of arbitral tribunals to

order interim measures of protection which is the express agreement of the parties through an

arbitration agreement, will rarely explicitly dictate the powers of tribunals to order interim measures. It

is pursuant to this fact that ad hoc and institutional international arbitration rules become important in

the context of providing a source of powers and jurisdiction of arbitral tribunals to order interim

measures of protection.

As a source of powers and jurisdiction of arbitral tribunals to order interim measures of protection,

arbitration rules almost invariably and in generally liberal terms provide for arbitral tribunals to have the

authority to make interim orders54. As already identified; the LCIA, ICC and UNCITRAL Arbitration Rules

are international commercial arbitration rules which fall into the category of rules which do so. For

example Article 28(1) of the ICC Arbitration Rules provides 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 measure it deems appropriate. The arbitral tribunal may

make the granting of any such measure subject to appropriate security being

furnished by the requesting party. Any such measure shall take the form of an

52 At Para. 1153 Born (2011) 81754 Born (2009) 1958

21

order, giving reasons, or of an award, as the arbitral tribunal considers

appropriate

The China International Economic and Trade Arbitration Commission (“CIETAC”) Arbitration Rules is

similarly noteworthy as it now falls into the category of arbitration rules that expressly provides for the

powers of arbitral tribunals to order interim measures of protection. The CIETAC rules previously

provided in Article 23 that arbitral tribunals could not order interim measures of protection but the

position is now different as after the 2012 revision of the rules, Article 21 allows arbitral tribunals to

order interim measures of protection by providing in subparagraph (2) that:

At the request of a party, the arbitral tribunal may order any interim measure it

deems necessary or proper in accordance with the applicable law

The foregoing provisions show that the leading arbitration rules typically specifically provide for the

powers and jurisdiction of arbitral tribunals to order interim measures of protection with deference

usually given to the express agreement of the parties and the mandatory provisions of any applicable

law. Where the applicable law is permissive of the powers and jurisdiction of arbitral tribunals to order

interim measures of protection the case will usually be that under the major ad hoc or institutional

international arbitration rules, bar any negative stipulations contained in the agreement of the parties,

the arbitral tribunal will be empowered to order interim measures of protection55.

The effect of this is therefore that international arbitration rules through the agreement of the parties

will usually readily be a source of rather liberal powers and jurisdiction for arbitral tribunals to order

interim measures of protection. In the practice of international commercial arbitration this conclusion

has been acceptable to national courts. An illustration of this may be found in the decision of a US

55 Born (2009) 1961

22

District Court in Maine in the case of Baychar Inc v Frisby Technologies Inc56. In this case the applicant’s

application for a preliminary injunction concerning the infringement of patented technology in footwear

apparel was rejected. This was because the court held that the arbitral tribunal which was operating

pursuant to the American Arbitration Association Arbitration Rules had the authority to order the

preliminary relief sought. The court in this case was readily disposed to recognising the powers and

jurisdiction of the arbitral tribunal to order interim measures of protection in the form of a preliminary

injunctive relief pursuant to the provisions of the relevant arbitration rules by refraining from granting

the application which would in those circumstances essentially have taken away the authority of the

arbitral tribunal to do so effectively or usefully under the arbitration rules.

1.1.4 Implied Powers

In addition to the foregoing, there is commentary which suggests that an arbitral tribunal may posses

implied powers and jurisdiction to order interim measures of protection in circumstances where neither

the applicable law nor the relevant arbitration rules provide for such powers and jurisdiction. Lew is of

the opinion that where the laws or rules do not expressly provide for or exclude the powers of arbitral

tribunals to order interim measures of protection, through the arbitration agreement the parties have

vested the powers necessary to settle their dispute in the tribunal. He goes further to state that this

includes the power to order any interim measures of protection necessary for the safeguarding of the

rights of the parties and the effectiveness of the tribunal's decision making 57. Yesilirmak is also of this

point of view as he has opined that the powers and jurisdiction of arbitral tribunals to grant interim

measures derive from implied powers entrusted to arbitrators as the organ entrusted with the

resolution of a dispute58. The fact that this implied source of authority is inferred and is not a product of

express statutory or contractual stipulations, means that if it is considered as a source of the powers of

56 01-CV-28-B-S (2001)57 Lew (2003) 59458 Yesilirmak (2005) 56

23

arbitral tribunals to order interim measures of protection, it should be considered as subordinate to the

other sources of authority. Also, enforcement issues may arise where an arbitral tribunal orders interim

measures of protection based on this implied jurisdiction.

Born points out that in the US, with only little case law on this point, the lower courts have generally

been disposed to recognising and enforcing interim measures ordered by the arbitral tribunal where

called upon to do so59. In light of the fact that the FAA is silent on the jurisdiction of arbitral tribunals to

order interim measures of protection, the attitude of the lower US courts in the few cases may possibly

be instructive on how to proceed where arbitral tribunals order interim measures of protection pursuant

to implied powers and jurisdiction. However, whether this disposition to recognise and enforce arbitral

tribunal ordered interim measures of protection in cases where the jurisdiction to do so is impliedly

derived will reverberate beyond US jurisprudence is left to be seen. This is as a result of the dearth of

authorities on this particular point and the fact that in many cases, either through the lex arbitri or

arbitration agreements which generally incorporate international arbitration rules, the powers and

jurisdiction of arbitral tribunals to order interim measures of protection will usually be expressly

provided for.

CHAPTER 2

2.0 Introduction 59 Born (2011) 844

24

Sequel to identifying the fact that due to laws and rules which confer a wide discretion and powers, in

the current international commercial arbitration climate arbitral tribunals can and will usually be

empowered to order interim measures of protection, this chapter importantly examines the limits of

those powers and jurisdiction of arbitral tribunals. With regard to interim measures of protection in

international commercial arbitration, the powers of arbitral tribunals are subject to several limitations.

Some of such limitations are inherent in the nature of the arbitral process and as a result should be

regarded as an inalienable part of the process. One of such limitations is that which may become

operative upon the agreement of the parties. On the other hand, there is also a limitation which is

external to the arbitration process itself but is derived from a lack of recognition of interim measures of

protection by the New York Conversion.

2.1 Limits To The Exercise Of Powers Of Powers And Jurisdiction By Arbitral Tribunal To Order Interim

Measures Of Protection

Some of the limits to the powers of arbitral tribunals to order interim measures of protection have been

described as being in many ways down to the principle of party autonomy being the bedrock of the

arbitral process. Lew points out that one of the basic limits to the powers and jurisdiction of arbitral

tribunals to order interim measures of protection is the manner in which the powers are originally

derived; the agreement of the parties. He argues that the consensual nature of the authority of the

arbitral tribunal has the consequent effect of precluding the tribunal from ordering acts to be performed

or cease to be performed by third parties who are not parties to the arbitration 60 and therefore not

subject to the jurisdiction of the tribunal. It has been noted that the globalisation of trade and

commerce as well as multi-site and multi-party manufacturing processes, increased foreign investment

and complex corporate group structures means that in many cases there are now a significant number

60 Lew (2003) 594

25

of commercial activities that inevitably involve the activities of more than two parties 61. This multi

faceted characteristic of modern international trade brings forth a key limitation as it is presumable that

an arbitral tribunal will not proceed to make an interim order of protection purporting to bind a third

party entity not subject to its jurisdiction even where such an entity is seemingly very influential in the

subject matter of the dispute . For example, ordering the attachment of or dealing with property held or

owned by a third party62.

However, a way around the fact that arbitral tribunals can not compel compliance by third parties may

be for the tribunal to make interim protective orders which affect and are contractually binding on a

party to the proceedings with regard to his acts or omissions in connection with any relevant third party.

The fact that the arbitral tribunal is unable to persuasively oblige a third party to carry out certain acts or

desist from performing certain acts should not operate to blind the tribunal from the fact that it

nevertheless possesses a measure of control over the actual parties to the arbitration.

Also stemming from the argument that the powers and jurisdiction of the arbitral tribunal may be

limited by the consensual nature of the parties’ agreement is the fact that the parties may agree to

preclude the tribunal from ordering interim measures of protection. This is reinforced by the fact that

the applicable law may also contain provisions (as Article 17 of the Model Law does) which allow the

parties to do so. It has already been emphasised that the genesis of the powers of arbitral tribunals to

order interim measures of protection is the agreement of the parties pursuant to the principle of party

autonomy. Therefore it is clear that where such agreement serves to foreclose the powers and

jurisdiction of an arbitral tribunal to order interim measures of protection there will usually be no way

around the agreement. The position may however be different in a situation where the applicable law

mandatorily provides for the powers and jurisdiction of the arbitral tribunal to order interim measures

61 Waincymer (2012) 50262 Born (2012) 206

26

of protection regardless of the agreement of the parties. In the course of the research for this paper no

such law has been found. This is unsurprising as a lex arbitri which expressly provides for the powers of

arbitral tribunals to order interim measures of protection regardless of the contrary agreement of the

parties should be respectfully viewed as an anti-arbitration system. This conclusion is however not to

state that such arbitration systems do not exist.

There is also the fact that the arbitral tribunal only exists and can only exercise powers and jurisdiction

over the parties or the subject matter of the dispute after it is formed 63. This limitation is self evident as

the tribunal will be unable to act until it is given life upon constitution. In ad hoc international

commercial arbitrations this particular limitation may be construed as an absolute one as an arbitral

tribunal which has not yet been constituted will invariably be completely powerless to render any form

of assistance to the parties. In institutional arbitration, to remedy this, some arbitration institutions like

the International Commercial Arbitration Court at the ICC provides an avenue for the interim protection

of rights and the arbitration process before the constitution of the arbitral tribunal with the use of

emergency procedures like the Pre-Arbitral Referee Procedure64. However, even this remedy may itself

be limited in its use and effectiveness as a result of several factors including the peculiar circumstances

of each case, as some circumstances may not readily accommodate institutional emergency

mechanisms. The provisions of the applicable law65 will also be relevant as where the lex arbitri is

unfavourable to such emergency mechanisms the efficacy of any interim measures of protection

ordered pursuant to the emergency mechanisms will be questionable and possibly unenforceable. This

particular limitation has crucial practical implications for parties to international commercial arbitration.

This is because the process of constituting the arbitral tribunal can take weeks or in some cases

months66 and in ad hoc international arbitration maybe an indeterminate amount of time for whatever

63 Lew (2003) 59464 Dunmore (2012) 22365 Yesilirmak (2005) 15266 Born (2011) 818

27

reason. The party seeking protection in the arbitration proceedings will be constrained in the foregoing

prevailing circumstances from seeking any form of interim measures of protection from the arbitral

tribunal.

The consequence of the operation of the aforementioned limitations to the powers and jurisdiction of

arbitral tribunals to order interim measures of protection is that the only recourse available to the

parties in many if not all cases will invariably be to the courts67. This is as a result of the fact that

generally speaking, the powers and jurisdiction of arbitral tribunals to order interim measures of

protection is not usually exclusive68. This is because modern arbitration regimes around the world

provide for a situation where arbitral tribunals enjoy powers and jurisdiction to grant interim measures

running in parallel to those of the courts of the seat of the arbitration and indeed several cases, those of

other courts69.

It is submitted that within that parallel jurisdiction is a further limitation to the powers and jurisdiction

of the arbitral tribunal to order interim measures of protection in international commercial arbitration.

In many cases, even where the tribunal is constituted, a party may still approach the courts seeking

interim measures of protection as the courts will have jurisdiction to grant them regardless of the stance

of the tribunal. This may thereby create a situation where the court grants the application for interim

measures and consequently fetters the powers and jurisdiction of the tribunal over the parties and the

dispute. Also, the grant of an order for interim measures of protection by the court can operate to

pressure the party subject to the order to settle. In this situation, as the interim measure will be granted

before the arbitration proceedings are concluded, where the party subject to the order accepts or

proposes a settlement as a result of the court order, the integrity of the agreement of the parties to

have their dispute settled by arbitration will have been compromised. The court order for interim

67 Yesilirmak (2005) 9668 Poudret and Besson (2007) 52569 Landolt and Neal (2011) 675

28

measures of protection will have as a result of the settlement between the parties, effectively

terminated the dispute resolution process, without giving the arbitral tribunal the opportunity to fully

exercise its powers and jurisdiction over the parties by comprehensively adjudicating the dispute and

rendering an award on the merits70.

In the United Kingdom, there are provisions within the Arbitration Act which may be seen as operating

to preserve and protect the integrity of the powers and jurisdiction of the arbitral tribunal to order

interim measures of protection. Section 44 of the Act provides that ‘Unless otherwise agreed by the

parties, the court has for the purposes of and in relation to arbitral proceedings the same power of

making orders...as it has for the purposes of and in relation to legal proceedings’. This section preserves

the jurisdiction of the court to order interim measures of protection, but as a non mandatory provision

this section leaves open the option for the parties to oust the jurisdiction of the court in that regard71.

Therefore in the UK, unless the parties exercise their power to by agreement expressly exclude the

courts from ordering interim measures of protection, the courts will alongside the tribunal, have the

jurisdiction to order such measures72. As a result, an avenue for parties to circumvent this indirect

limitation on the powers and jurisdiction of the arbitral tribunal is for them to exercise their powers

available under Section 44 of the Arbitration Act and to by agreement confer exclusive jurisdiction on

the arbitral tribunal with respect to interim measures of protection. For example in Mantovani v

Caparelli SpA73 the English Court of Appeal held that an arbitration agreement which stated that none of

the parties were to ‘bring any action or other legal proceedings against the other of them in respect of

any such dispute until such dispute shall first have been heard and determined by the arbitrators’ was

sufficient to amount to an agreement to oust the jurisdiction of the courts under Section 44 pursuant to

70 Lew (2003) 62271 Donovan (2005) 21372

Donovan (2005) 21373 [1980] 1 Lloyd's Rep 375

29

preserving the powers and jurisdiction of the arbitral tribunal to order the required interim measures of

protection.

As a practical point, the question of whether the parties will want to by agreement entirely exclude the

courts in light of the coercive judicial powers the courts have is one that will have to be balanced against

the desire of the parties to have their disputes resolved exclusively in the forum of international

commercial arbitration and one that can have serious consequences. An illustration of how this may

unfold and be of critical importance in practice has been espoused by the UK House of Lords in the case

of Channel Tunnel Group v. Balfour Beatty74 per Lord Mustill:

There is always a tension when the court is asked to order, by way of interim

relief in support of an arbitration, a remedy of the same kind as will ultimately

be sought from the arbitrators: between, on the one hand, the need for the court

to make a tentative assessment of the merits in order to decide whether the

plaintiff's claim is strong enough to merit protection, and on the other the duty

of the court to respect the choice of tribunal which both parties have made, and

not to take out of the hands of the arbitrators (or other decision-makers) a

power of decision which the parties have entrusted to them alone. In the present

instance I consider that the latter consideration must prevail... If the court now

itself orders an interlocutory mandatory injunction, there will be very little left

for the arbitrators to decide.75

This balancing act which the parties may be required to carry out is one with potentially strong

implications. The reluctance of the House of Lords in the Channel Tunnel case to acquiesce to the

application for interim relief on the basis of preserving the right of the arbitral tribunal to exercise its full

74 [1993] AC 334 (HL)75 Lord Mustill at page 367

30

powers and jurisdiction over the parties will undoubtedly put a party seeking interim relief but without a

constituted tribunal to seek it from in a tight corner76 especially in ad hoc international arbitration.

In Brazil there is judicial authority which upholds and preserves the agreement of the parties to have

their dispute settled by the arbitral tribunal and also removes the potential for the powers and

jurisdiction of the arbitral tribunal to order interim measures to be eroded through a party who

approaches the court after the constitution of the arbitral tribunal. The Brazilian Superior Court of

Justice in held in Itarumã Participações S.A. v Participações em Complexos Bioenergéticos77 that from the

point the arbitral tribunal is constituted, it has the exclusive jurisdiction to determine any issue referred

to arbitration, including any appurtenant issue on the granting of any interim measures of protection 78.

Furthermore, the court held that the only situation in which the national courts in Brazil will have the

jurisdiction to order interim measures of protection is in exceptional circumstances in which the arbitral

tribunal is unable to do so79. This approach may be regarded as one that is welcome, in terms of

maintaining the trend of strengthening and broadening the control that arbitral tribunals have over

parties and the disputes submitted to arbitration at least to the extent of limiting external judicial

interference.

The final limitation on the powers and jurisdiction of arbitral tribunals to order interim measures of

protection to be considered here is one that lies in the enforceability of those measures when granted

by the tribunal. This issue of the enforcement of arbitral tribunal ordered interim measures of

protection is arguably one that is more complex than the aforementioned limitations. The fact that

arbitral tribunals can order interim measures of protection is seemingly inalienable, however when it

comes to the enforcement of those measures there is generally no predominant authority80.

76 Redfern (1995) 8577 S.A. – PCBIOS, Resp no. 1,297,974-RJ78 Stuber (2012) 173 79 Stuber (2012) 17480 Dunmore (2012) 225

31

In the practice of arbitration, enforcement has been described a perennial issue81. In the context and

practice of international commercial arbitration the issue of enforcement therefore becomes

increasingly complex82. Several conclusions have been advanced by commentators as the reasons for the

enforcement of interim measures of protection issued by arbitral tribunals in international commercial

arbitration being a knotty issue.

Firstly, an arbitral tribunal ordinarily lacks the authority to directly enforce the interim measures of

protection that it orders83. This is because in international commercial arbitration, interim measures of

protection ordered by arbitral tribunals are not ‘self executing’84 in contrast with those which may be

ordered by national courts that carry direct coercive authority, for example the imposition of fines,

penalties or criminal sanctions85. This lack of coercive powers by international commercial arbitration

tribunals carries with it the consequential effect that domestic court intervention and assistance 86 is

required and the manner in which this may lead to a further limitation of the authority of the arbitral

tribunal over the parties and the dispute has already been considered.

Also, it has been stated that there is generally a vacuum in connection with the regime for the

enforcement of interim measures.87 The reason is because in many cases arbitration statutes and

systems generally do not expressly provide for the judicial enforceability of interim measures of

protection ordered by arbitral tribunals88. More particularly, many national laws on arbitration fail to

legislate for the recognition or enforcement of interim measures of protection ordered in the course of

international arbitration proceedings outside their jurisdiction89. In the cases where arbitration systems

81 Bergqvist et al. (2009) 93982 Bismuth (2009) 77483 Born (2009) 196684 Bismuth (2009) 78885 Born (2009) 196786 Bismuth (2009) 77487 Graham (2009) 54388 Born (2012) 21189 Lew (2003) 614

32

do manage to legislate for the enforcement of interim measures of protection ordered by arbitral

tribunals, such provisions are usually then limited to the enforcement of only those measures ordered

by arbitral tribunals which have their seat within the jurisdiction in which enforcement is sought90. In

those cases, this has been achieved by giving orders for interim measures the same legal effect as an

arbitral award under the New York Convention or their own more liberal national laws 91. A more liberal

and what may be considered a notable exception to the narrow scope of recognition and enforcement

of arbitral tribunal ordered interim measures of protection may however be found in the German

arbitration system. This system has been described as the only one to expressly provide for the

recognition and enforcement of interim measures of protection ordered by international arbitral

tribunals seated in a foreign jurisdiction92.

In addition to and in the context of the foregoing, there is also the position of interim measures of

protection when considered in light of the New York Convention. The New York Convention as already

identified, is by far the most significant international convention in terms of recognition and

enforcement of arbitral awards. Considering the fact that this convention makes the recognition and

enforcement of international arbitral awards fast and predictable93, the fact that the same can not

readily be said for interim measures ordered by arbitral tribunals must be seen as a limitation on the

powers of arbitral tribunals with regard to such measures. The reason is because the New York

Convention provides exclusively for the recognition and enforcement of arbitral awards which are

considered to be ‘final’94. This therefore seemingly leaves no room for the recognition or enforcement of

interim measures of protection granted during the course of the arbitration as was decided in the

Australian Supreme Court of Queensland in the case of Resort Condominiums International Inc. v. Ray

90 Lew (2003) 61291 Branson (2003) 17292 Kojovic (2001) 52093 Bergqvist et al. (2009) 93994 Dunmore (2012) 225

33

Bolwell and Resort Condominiums (Australasia) Pty. Ltd95 where it was held that the New York

Convention is inapplicable to interim measures or relief.

Consequently, the question of whether an order for an interim measure of protection granted by an

arbitral tribunal in international commercial arbitration can be recognised and enforced internationally

will turn on the possibility of such an order being interpreted as a final award96. As a result of the fact

that interim measures of protection are modifiable and revocable during the pendency of the

arbitration, the enforcement of such measures prior to or after the constitution of the arbitral tribunal

will be unobtainable under the New York Convention97. As one commentator puts it ‘On a strictly formal

plan, orders, procedural orders, or decisions adopted by arbitral tribunals are not “awards” and cannot

intuitively benefit from the New York Convention’98.

The inapplicability of the New York Convention to interim measures of protection is clearly a problem in

terms of the ability of arbitral tribunals exercising the full reach of their authority over the parties and

the subject matter of the dispute. In the context of international commercial arbitration, it is not unlikely

that any order or award rendered by the arbitral tribunal will be required for use and enforcement

outside the jurisdiction of the seat of the arbitration. In situations where the law of the jurisdiction in

which enforcement is sought fails to recognise interim measures ordered abroad, the measure ordered

by the tribunal will be of little value to anyone concerned. In practical terms, what this means is that the

party seeking the interim measures may be put in a position where he is forced to go before the courts

of the jurisdiction in which enforcement of the interim measures is sought and re-present his case or

embark upon arguments over whether the order of the arbitral tribunal granting the interim measures

95 (1993) 118 ALR 65596 Dunmore (2012) 22597 Bergqvist et al. (2009) 94098 Bismuth (2009) 790

34

possesses the characteristics of a final award to make it enforceable under the New York Convention or

not99.

Asides the legal issues, there is also the fact that duplicated proceedings on the interlocutory issues of

interim measures will inevitably add to the cost of the resolution of the disputes and also result in a

convoluted process which the parties to the arbitration may have sought to avoid in the first place by

submitting to international arbitration. The cross border nature of international trade and the speed

with which the subject matter of the dispute sought to be protected may be affected, means that where

the party seeking the interim measures fails to derive the full utility of the measure at the first

opportunity (when ordered by the tribunal), the chance to do so subsequently may have irretrievably

been lost. As a result, there have been calls for the formulation of an international instrument for the

purpose of obliging national courts to give effect to interim measures of protection ordered by

competent and duly constituted arbitral tribunals in the same way final awards are treated, subject only

to international public policy100.

The harmonization of the international commercial arbitration process which will be brought about by

an international instrument will significantly if not entirely remove one of the current limitations on the

powers and jurisdiction of arbitral tribunals to order interim measures of protection brought about by

the lack of potential for recognition and enforcement of such measures. It is also conceivable that the

usefulness of any such instrument will be felt even outside the scope of tribunal ordered interim

measures of protection. The current regime for the grant of interim measures of protection leaves some

scope for abuse by recalcitrant parties who may proceed to approach the courts where there is

concurrent jurisdiction or outrightly fail to carry out the orders of the arbitral tribunal. In a situation

where interim measures ordered by arbitral tribunals are expressly internationally enforceable as a

99 Bismuth (2009) 790100 Lew (2003) 615

35

result of being backed up by an international convention, the prospects of a wayward party taking

advantage of the lack of inherent coercive powers of the arbitral tribunal will conceivably reduce. Such a

development will rightly put the powers and jurisdiction of international commercial arbitral tribunals in

the same position with respect to interim measures of protection as it currently is with final awards as

obtainable under the New York Convention. Born is also of this opinion, as he has commented that

‘there is no sound policy reason for withholding judicial enforcement mechanisms for tribunal-ordered

provisional measures’101

Practically speaking however, it has been noted that in international commercial arbitration, interim

measures of protection ordered by arbitral tribunals usually come to be voluntarily complied with by the

parties subject to such orders102. The reason for such voluntary compliance has been suggested as being

to some extent motivated by the fear of the party subject to the order that non-compliance with the

order will have an adverse effect on the party’s position in the eyes of the arbitral tribunal with regard

to the substantive issue in dispute103. It is submitted that this voluntary compliance is crucial to the

integrity of the international commercial arbitration process. This is because the aforementioned

suggestion by some commentators for a unifying international instrument is one that requires a colossal

amount of effort to actualise. The success of the New York Convention is hinged on the fact that its

minimalistic approach allows for a situation in which it can readily be assimilated internationally into

several systems with little scope for debate104. Furthermore, it was promulgated pursuant to the

widespread consensus and identification of the need for the international recognition and enforcement

of arbitral awards105 and as already stated, the issue of the enforcement of orders for interim measures

of protection by arbitral tribunals is one that can not yet be described as straightforward.

101 Born (2009) 2023102 Bergqvist et al. (2009) 943103 Craig et al. (2000) 460104 Hara (2010) 20105 Gaillard (2009) 692

36

CHAPTER 3

3.0 Introduction

Finally, the principal categories of interim measures of protection obtainable from arbitral tribunals

in international commercial arbitration practice are discussed along with illustrations as to how they

can prove beneficial and in some cases crucial to the arbitration process.

3.1 Categories Of Interim Measures Of Protection In International Commercial Arbitration

37

There are a variety of interim measures of protection typically available to arbitral tribunals in the

practice of international commercial arbitration. Generally these interim measures are categorized

into those which seek to preserve or protect evidence relevant to the arbitration proceedings, those

aimed at maintaining the status quo to prevent irreparable harm (usually through injunctions or

other similar orders) and those aimed at the facilitation of the enforcement of the award 106. These

three categories of interim measures have been described as being the most prevalent in the

practice of international commercial arbitration as a result of arbitral tribunals receiving a high

number of requests for such orders107. It is submitted that the reason why these categories of

interim measures are highly sought is that they are the ones most germane to international

commercial arbitration108 in terms of the protection of the integrity of the adjudication process and

of the rights of the parties concerned.

3.1.1 Interim measures for the Preservation Of Evidence

Considering the fact that disputes arise usually out of one party’s reluctance to abide by the rules or

be bound by agreements and contracts previously entered into, it is conceivable that such a party

will even in the dispute resolution process exhibit recalcitrant tendencies. Such tendencies as with

the need for interim measures of protection in other regards, may lead to the need for the

preservation of evidence relevant to the arbitration process. Certain interim measures of protection

are obtainable in international commercial arbitration for the purpose of protecting relevant

evidence and the prevention of the dissipation of such evidence109.

Such measures of interim protection and preservation of relevant evidence include those that order

the inspection of a construction site prior to the carrying out of work on the site which would bring

106 Gaillard and Savage (1999) 721107 Gaillard and Savage (1999) 733108 Gaillard and Savage (1999) 733109 Ryden (2011) 16

38

irreversible changes110 both to the site and any relevant evidence within the site. Also, an order may

be made to allow experts enter a site relevant to the dispute and assess the conditions of the soil or

other circumstances to enable the experts provide a thorough and efficient analysis, considering the

fact that some technical assessments become expensive or even impossible to carry out once

progress in the work on the site is made111.

3.1.2 Injunctive Reliefs Or Measures

An injunction or an injunctive order is an order compelling a person or an entity to perform or desist

from continuing to perform a certain action or actions112. Various forms of injunctive reliefs or

measures may be available in support of the international arbitration process. Several of them

include but are not limited to anti-suit injunctions, mareva injunctions, freezing orders, orders for

the transfer of goods, orders for the sale of goods or stay of the sale, orders for the supply of goods,

orders for the establishment of an escrow account for holding the proceeds of a letter of credit and

orders for the preservation of alteration of the status quo113.

It is noteworthy that injunctions granted by the arbitral tribunal, which have their origin in the will of

the parties, like their agreement, posses a private law character. Therefore the consequence is that

such injunctions can only bring forth private and contract law rights or obligations 114. This is in

contrast to an injunction ordered by the court, which will be reinforced by the coercive powers of

the state. The key difference is the fact that injunctions granted by the courts as interim measures of 110 Segesser and Boog (2013) 112111 Van Den Berg (2009) 576112 Yesilirmak (2005) 208113 Yesilirmak (2005) 208114 Stalev(1994) 110

39

protection in support of the arbitration are devoid of the enforcement difficulties and issues

inherent in orders granted by the tribunal as a result of the coercive judicial powers of the courts as

provided by statutes.

3.1.3 Security For Payment

A security for payment or claim is one that has been defined as being ‘a kind of advance payment

designed to guarantee the payment and/or enforcement of the final award where the applicant

proves to be right on the merits of the case in dispute’.115 Interim measures such as this are aimed at

the facilitation of the enforcement of the award when it is finally rendered. The ordering of this

category of interim measure of protection is hinged on the party seeking the relief showing that if at

the end of the arbitral process a favourable award is rendered, there is a real possibility that he will

be unable to enforce it against the respondent116. An illustration of how interim measures of

protection ordering security for payment may be crucial in practice is the case of one arbitration

between a State Government and an Electricity Company.

In that arbitration the State Government made a claim against the Federal Government owned

Electricity Company for wrongful deductions from the account of the State Government as a result

of a breach of a Barge Power Purchase Agreement by the electricity company and had to apply for

an order for security for payment. This was because during the pendency of the arbitration it

became apparent that the electricity company had been stalling the arbitration process and in all

likelihood was going to be dissolved into several successor companies before the award would be

rendered and none of the successor companies would have honoured any final award rendered by

the tribunal on the premise that they were never parties to the arbitration agreement or part of the

arbitration proceedings. The application of the State Government was granted, as the Electricity

115 Yesilirmak (2005)213116 Yesilirmak (2005) 205

40

Company was ordered to provide a security for payment of the claim should the state government

succeed when the award is rendered. The electricity company accordingly provided security for

payment in the form of a federal government bank guarantee and also proceeded to participate

more willingly in the arbitration proceedings. This example also illustrates how interim measures of

protection may be a useful tool for the purpose of securing the bona fide participation of a party

who may otherwise seek to disrupt the arbitration process.

CONCLUSION

In conclusion, the importance of the need to protect party rights in international commercial arbitration

has been identified. Interim measures of protection serve not only to protect such rights but also to

preserve the integrity of the arbitral dispute resolution process. The authority of national courts to

guarantee this protection is not usually in doubt. However this has not always been the case in terms of

the powers and jurisdiction of arbitral tribunals to guarantee protection. The standard now seems to be

for arbitral tribunals to be clothed with the powers and jurisdiction to order interim measures of

protection in international commercial arbitration.

While arbitral tribunals derive their powers and jurisdiction to order interim measures of protection in

international commercial arbitration from several sources, in some cases those same sources could

operate to limit the powers of the tribunal. When it comes to limiting judicial interference in the

international arbitral process and particularly in the granting of interim measures of protection,

potential pitfalls exist, which hinge on the agreement of the parties as to how to deal with such

41

interference. In the area of enforcement of tribunal ordered interim measures, while there may be some

scope for harmonisation through an international instrument, whether this will happen in the near

future is left to be seen.

BIBLIOGRAPHY

Statutes

Arbitration Act 1996 (United Kingdom)

Federal Arbitration Act (United States)

The Convention On The Recognition And Enforcement Of Foreign Arbitral Awards (New York

Convention)

United Nations Commission On International Trade Law Model Law

Arbitration Rules

China International Economic And Trade Arbitration Commission Arbitration Rules

International Chamber Of Commerce Arbitration Rules

42

London Court Of International Arbitration Rules

United Nations Commission On International Trade Law Arbitration Rules

Case Law

Baychar Inc V Frisby Technologies Inc 01-Cv-28-B-S (2001) (United States)

Case C-391/95 Van Uden Maritime Bv V. Kommanditgesellschaft In Firma Deco-Line, [1998] Ecr I-7091

(Ecj)

Channel Tunnel Group Ltd V Balfour Beatty Construction Ltd [1993] A.C. 334 (United Kingdom)

Itarumã Participações S.A. V Participações Em Complexos Bioenergéticos S.A. – Pcbios, Resp No.

1,297,974-Rj (Brazil)

Mantovani V Caparelli Spa [1980] 1 Lloyd's Rep 375 (United Kingdom)

Resort Condominiums International Inc. V. Ray Bolwell And Resort Condominiums (Australasia) Pty. Ltd

(1993) 118 Alr 655 (Australia)

Books

Albert Jan Van Den Berg, ‘Annex II: Examples Of Interim Measures Issued By An Arbitral Tribunal’ In

Albert Jan Van Den Berg (Ed), 50 Years Of The New York Convention: ICCA International Arbitration

Conference (Kluwer Law International 2009)

Albert Jan Van Den Berg, New Horizons For International Commercial Arbitration And Beyond (Kluwer

Law International 2005)

Albert Jan Van Den Berg, The New York Arbitration Convention Of 1958: Towards A Uniform Judicial

Interpretation (Kluwer Law International 1994)

43

Ali Yesilirmak , Provisional Measures In International Commercial Arbitration (Kluwer Law International

2005)

Casey Dwyer And Peter E. Greene, ‘Chapter 37: Interim Measures In Antitrust Matters Before

Arbitrators’ In Gordon Blanke And Phillip Landolt (Eds), EU And US Antitrust Arbitration: A Handbook For

Practitioners (Kluwer Law International 2011)

Cecil Branson, ‘The Enforcement Of Interim Measures Of Protection "Awards"’ In Albert Jan Van Den

Berg (Ed), International Commercial Arbitration: Important Contemporary Questions (Kluwer Law

International 2003)

Christopher Boog , ‘The Laws Governing Interim Measures In International Arbitration’ In Franco Ferrari

And Stefan Kröll, Conflict Of Laws In International Arbitration (Sellier European Law Publishers 2011)

Christopher R. Drahozal, ‘Party Autonomy And Interim Measures In International Commercial

Arbitration’ In Albert Jan Van Den Berg (Ed), International Commercial Arbitration: Important

Contemporary Questions (Kluwer Law International 2003)

Daniel Busse, ‘Chapter I: Issues Specific To Arbitration In Europe, “Rome I” And “Rome II”: Applicability

In International Arbitration’ In Christian Klausegger, Peter Klein Et Al. (Eds), Austrian Yearbook In

International Arbitration (Manz’sche Verlags-Und Universitatsbuchhandlung 2013)

Donald Francis Donovan, ‘The Allocation Of Authority Between Courts And Arbitral Tribunals To Order

Interim Measures: A Survey Of Jurisdictions, The Work Of Uncitral And A Model Proposal’ In Albert Jan

Van Den Berg (Ed), New Horizons For International Commercial Arbitration And Beyond (Kluwer Law

International 2005)

44

Emmanuel Gaillard And John Savage, ‘Part 4: Chapter Iii- Provisional And Conservatory Measures In The

Course Of The Arbitration Proceedings In Emmanuel Gaillard And John Savage (Eds), Fouchard Gaillard

Goldman On International Commercial Arbitration (Kluwer Law International 1999)

Emmanuel Gaillard, ‘The Urgency Of Not Revising The New York Convention’ In Albert Jan Van Den Berg

(Ed), 50 Years Of The New York Convention: ICCA International Arbitration Conference (Kluwer Law

International 2009)

Gary Born, International Arbitration: Cases And Materials (Kluwer Law International 2011)

Gary Born, International Arbitration: Law And Practice (Kluwer Law International 2012)

Gary Born, International Commercial Arbitration (Kluwer Law International 2009)

Gary Born, International Commercial Arbitration In The United States: Commentary & Materials (Kluwer

Law And Taxation Publishers 1994)

Gary Born, International Commercial Arbitration: Commentary & Materials (Kluwer Law International

2001)

Georg Von Segesser And Christopher Boog, ‘Chapter 6: Interim Measures’ In Elliott Geisinger

And Nathalie Voser (Eds), International Arbitration In Switzerland, Second Edition Revised (2nd Edn,

Kluwer Law International 2013)

Jacomijn J. Van Haersolte-Van Hof, ‘Interim Measures Of Protection - A European And Continental

Perspective’ In Albert Jan Van Den Berg (Ed), International Commercial Arbitration: Important

Contemporary Questions, ICCA Congress Series (2002) 150 - 162

45

Jean Francois Poudret And Sebastien Besson Et Al, Comparative Law Of International Arbitration (Sweet

And Maxwell 2007)

Jeff Waincymer, Procedure And Evidence In International Arbitration (Kluwer Law International 2012)

Julian Lew And Loukas Mistelis Et Al, Comparative International Commercial Arbitration (Kluwer Law

International 2003)

Kaj Hobér, ‘Interim Measures By Arbitrators’ In Albert Jan Van Den Berg (Ed), International Arbitration

2006: Back To Basics? (Kluwer Law International 2007)

Luis Enrique Graham, ‘Interim Measures: Ongoing Regulation And Practices (A View From The Uncitral

Arbitration Regime)’ In Albert Jan Van Den Berg (Ed), 50 Years Of The New York Convention: ICCA

International Arbitration Conference (Kluwer Law International 2009)

Nael Bunni, ‘Interim Measures In International Commercial Arbitration: A Commentary On The Report

By Luis Enrique Graham’ In Albert Jan Van Den Berg (Ed), 50 Years Of The New York Convention: ICCA

International Arbitration Conference (Kluwer Law International 2009)

Nigel Blackaby And Constantine Partasides Et Al. Redfern And Hunter On International Arbitration

(Student Version) (5th Edn, Oxford University Press 2009)

Patricia Shaughnessy, ‘Chapter 5: Interim Measures’ In Ulf Franke, Annette Magnusson Et Al. (Eds),

International Arbitration In Sweden: A Practitioner’s Guide (Kluwer Law International 2013)

Phillip Landolt And Barbara Reeves Neal, ‘Chapter 19: Provisional Measures Concerning Competition Law

In International Arbitration’ In Gordon Blanke And Phillip Landolt (Eds), Eu And Us Antitrust Arbitration:

A Handbook For Practitioners (Kluwer Law International 2011)

46

Piero Parodi, ‘Interim Measures In Respect To Arbitration In The Construction Business’ In Albert Jan Van

Den Berg (Ed), Preventing The Delay And Disruption Of Arbitration/Effective Proceedings In Construction

Cases (Kluwer Law International 1991)

Pierre Karrer, “Interim Measures Issued By Tribunals And The Courts: Less Theory, Please’ In Albert Jan

Van Den Berg (Ed), International Arbitration And The National Courts: The Never Ending Story (Kluwer

Law International 2001)

Raymond Werbicki, ‘Chapter 8: Arbitral Interim Measures: Fact Or Fiction?’ In American Arbitration

Association Handbook On International Arbitration And Adr (2nd Edn Juris Net Llc, 2010)

William Craig, William Park And Jan Paulsson, International Chamber Of Commerce Arbitration (Oceana

Publications, 2000)

Yang Ing Loong, ‘Provisional Measures’ In Albert Jan Van Den Berg (Ed), 50 Years Of The New York

Convention: ICCA International Arbitration Conference (Kluwer Law International 2009)

Zhivko Stalev, ‘Interim Measures Of Protection In The Context Of Arbitration’ In Albert Jan Van Den Berg

(Ed), International Arbitration In A Changing World (Kluwer Law International 1994)

Journal Articles

Per Runeland And Gordon Blanke, ‘On Provisional Measures In English Arbitrations: A Brief Overview’

Arbitration (2007) 73(2), 189-198

Lina Bergqvist, Emma Olsson And Krister Azelius, ‘Making Use Of The New Scc Rules On Emergency

Arbitration. Why The Emergency Arbitrator’s Decision Cannot Be Enforced And How The New Rules May

Be Made Useful Nonetheless’ Sartryck Ur Juridisk Tidskrift (2009-10) Nr 4, 936-947

47

Walter Stuber And Adriana Maria Gödel Stuber, ‘Brazil: Arbitration- Interim Measures’ J.I.B.L.R. (2012)

27(11), 173-174

Christopher Huntley, ‘The Scope Of Article 17: Interim Measures Under The Uncitral Model Law’ V.J.

(2005) 9 69-98

Alan Redfern, ‘Arbitration And The Courts: Interim Measures Of Protection- Is The Tide About To Turn’

T.I.L.J. (1995) 30(1) 71-88

Regis Bismuth, ‘Anatomy Of The Law And Practice Of Interim Measures In International Investment

Arbitration J.I.A. (2009) 26(6) 773-821

Michael Dunmore, ‘Interim Measures By Arbitral Tribunals: The Enforceability Conundrum’ A.I.A.J.

(2012) 8(2) 222-231

Nakul Dewan, ‘Interim Measures In Arbitration: A Comparative Analysis Of Indian And English

Arbitration Acts’ I.B.L.J. (2003) 6, 667-695

Michael Pryles, ‘Limits To Party Autonomy In Arbitral Procedure’ J.I.A. (2007) 24(3) 327-339

Tijana Kojovic, ‘Court Enforcement Of Arbitral Decisions On Provisional Relief- How Final Is Provisional?’

J.I.A. (2001) 18(5) 511 - 532

Sandeep Adhipathi , ‘Interim Measures In International Commercial Arbitration: Past, Present And

Future’ (University Of Georgia School Of Law, Llm Theses And Essays 2003)

Trevor Hartley, ‘Interim Measures Under The Brussels Jurisdiction And Judgments Convention’ E.L.R.

(1999) 24(6), 674-683

Websites, Blogs And Other Papers

48

Brenton D. Soderstrum, ‘Litigation V. Arbitration: Pros And Cons’ (Winick, Graves, Gross, Baskerville &

Schoenebaum P.L.C. 2005) <Http://Www.Brownwinick.Com/Images/Newsletter/Single/Litigation%20v.

%20arbitration%20pros%20and%20cons.Pdf> Accessed 18 July, 2013

Oscar Ryden, ‘The Legal Frameworks And Substantive Standards Governing The Granting Of Interim

Measures In International Commercial Arbitration’ (Lund University Publications 2011) <

Http://Lup.Lub.Lu.Se/Luur/Download?Func=Downloadfile&Recordoid=2296168&Fileoid=2343343>

Accessed On 17 July, 2013

Tomasz Hara, ‘Reception And Enforcement Of International Arbitration Orders And Awards’ (University

Of Essex 2010)

49