The what, when and how of emergency arbitration at the SCC
Imagine the following scenario: Two companies are involved in a commercial dispute, and they are preparing for arbitration. Then, one of the companies moves to sell the unique products at the center of the dispute to a competitor. This is an example of a situation that may call for emergency arbitration. SCC Legal Counsel Evelina Wahlström answers three questions about what tends to be an action-filled process.
Between June and August this year, the SCC received six applications for the appointment of an emergency arbitrator.
In what type of situations do parties use emergency arbitration?
"The purpose of this mechanism is to protect a party’s claim in an upcoming arbitration. An emergency arbitrator can issue interim measures preventing a party from doing something that will cause another party irreparable damage – the classic example is to prevent a disputed asset from being sold. An emergency arbitrator could also order a party to continue doing something, like supplying key components, until the dispute is resolved. Emergency arbitration is designed for extremely urgent situations, where the parties simply cannot wait for regular arbitration."
A decision made by an emergency arbitrator can be revoked by the tribunal in a subsequent arbitration proceeding, so what is the benefit of the emergency decision to the parties?
"The interim decision is binding on the parties when it is rendered. But then the parties must file for arbitration to permanently resolve the dispute, and the arbitrator or tribunal appointed in that proceeding can amend or revoke the emergency decision. The emergency decision also ceases to be binding if an arbitration proceeding is not commenced within 30 days, or if the case has not been referred to an arbitrator within 90 days."
"Our users inform us that emergency decisions tend to be respected and followed. So the main value of this mechanism is to temporarily maintain the status quo, and ensure that the parties’ claims are protected while the dispute is pending in arbitration."
What is the procedure at the SCC secretariat?
"When an emergency arbitration is initiated, we go through the same steps as in an ordinary arbitration procedure, but everything is done much faster. Under the SCC Rules, the SCC should appoint an emergency arbitrator within 24 hours of receiving a complete application. Upon appointment, the application is immediately referred to the emergency arbitrator, who then has five days to render a decision."
"On a practical level, the SCC secretariat has a dedicated e-mail address for these applications, which we monitor closely. The 24-hour timeframe for appointing an emergency arbitrator begins when an application is received, regardless of time of day and day of the week, so we start working right away. To appoint the right arbitrator, we must first learn the details of the dispute and assess what qualifications and experience are necessary for the assignment. Then we identify several candidates that meet those criteria, and we contact all of them to check availability and conflicts of interest. Once we have one or more matches, the SCC Board confers and makes an appointment. The decision to appoint an emergency arbitrator is made either by the SCC Chairperson or by at least two Board members jointly."
"As you can see, this procedure requires quite an effort. We take pride in always appointing an arbitrator within the 24-hour timeframe. We have only missed the deadline once – and that was because the applicant had sent the application to the wrong email address."
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SCC Practice Note, Emergency Arbitrator Decisions Rendered 2017 – 2018 here
SCC Practice Note, Emergency Arbitrator Decisions Rendered 2015-2016 here
The SCC offers a number of different dispute resolution services to both Swedish and international businesses. Arbitration clauses referring to the SCC are found in many agreements, making arbitration the most frequently used service at the SCC.
If the parties have agreed on SCC arbitration, it is possible to apply for the appointment of an Emergency Arbitrator in urgent situations in which one party risks irreparable harm.
The SCC will appoint an Emergency Arbitrator within 24 hours upon receipt of the application and the decision is to be delivered within five days.
An interim decision is binding upon the parties but ceases to be binding e.g. if the Emergency Arbitrator or an Arbitral Tribunal so decides or the Arbitral Tribunal makes a final award.