By: Akintola Michael Phillips, LL. B (Lagos), B.L, ACArb
Introduction
In litigation, there exist the equitable remedy termed “Injunction” which is decreed or ordered
by the Courts to restrain or compel the doing of a particular act or obligation for the
preservation of the subject matter of the suit after the Applicant must have satisfied the
requirements for the grant of an injunction. One of the requirements for the grant of an
injunction by the Courts is that the Applicant must show that there is real urgency and that
damages will not be an adequate compensation.
This poses the questions, what happens where one party in Arbitration sees that the other
party needs to be restrained from destroying the rest of the Arbitral proceeding during the
pendency of the arbitration? What is to be done when parties have an arbitration clause in
their contract, and one party is about to terminate the subject matter of the dispute before both
parties submit to arbitration?
All these are answered in this article.
Meaning and Scope of Interim Measures in Arbitration
Interim measures are designed to protect the position of parties and/or preserve the status quo
pending the outcome of the reference.
Section 21(3) of the Lagos State Arbitration Law 2009 defines interim measure as any temporary measure, whether in the form of an award or in another form, prior to the issuance of the award by which the dispute is finally decided.
The UNCITRAL Arbitration Rules 2013 is explicit in its definition of interim measures by including also the scope of its application in Article 26(2) thus: “An interim measure is any temporary measure 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, for example and without limitation, 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
c. Current or imminent harm or
d. Prejudice to the arbitral process itself.
e. Provide a means of preserving assets out of which a subsequent award may be satisfied; or
f. Preserve evidence that may be relevant and material to the resolution of the dispute.
Conditions for the Grant of Interim Measures
The following are conditions that must be present before Interim Measures can be granted by
a tribunal:
- They must be a matter which is either to be submitted to arbitration or is currently pending before an arbitral panel that the parties have voluntarily submitted to
- Delay may cause hardship, great reduction of the value of potential award, depletion of the property in dispute, risk of abuse of the property in dispute by the party in possession and to prevent waste in the case of perishable goods.
- The parties must not have agreed otherwise in their agreement in relation of the power of the Arbitral tribunal to order interim measures.
- Harm not adequately reparable by an award of damages is likely to result if the measure is not ordered, and such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted.
- There is a serious issue to be determined on the merits of the claim, provided that any determination shall not affect the discretion of the Arbitral Tribunal in making any subsequent determination.
- There is a reasonable possibility that the requesting party will succeed on the merits of the claim. The determination on this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination.
- Provision of adequate security where required to do so by the Tribunal.
Who Can Order Interim Relief in Arbitration?
There are three categories of persons who can grant interim reliefs and they are;
A. The Arbitrator/Arbitral Panel
B. The Court
C. An Emergency Arbitrator
A. The Arbitrator/Arbitral Panel
A clear reading of Section 13 of the Arbitration and Conciliation Act LFN 2004 shows that the Arbitral Tribunal or the Arbitrator (as the case may be) is clothed with the apparent authority to order interim measures where a party has applied for one. The Statutes and rules of procedure under consideration herein are unanimous about the power of Arbitrators involved in an arbitral matter to order interim measures.
B. The Court
The Arbitration and Conciliation Act does not explicitly grant the Courts the power to order interim measures. However, where the dispute has occurred, and the matter has not been submitted to arbitration, a party can approach the court for interim orders against the adverse party.
In Confidence Insurance Ltd. v. Ondo State College of Education Staff Pension (1999)
2 NWLR (Pt. 591) 372, the Court held that the inclusion in an agreement to submit a dispute to arbitration does not generate the heat of ouster of jurisdiction of the Court. Since the arbitration clause does not serve as an ouster clause, a party who senses imminent danger to the res of the matter before submission to arbitration can approach the High Court for an injunction before the Horse bolts away from the stable. Article 26(9) of the UNCITRAL Arbitration Rules 2013, also provides that “a request for interim measures addressed by any party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate or as a waiver of that agreement”.
C. An Emergency Arbitrator
The trend of appointing an Emergency Arbitrator is found where the dispute is submitted to an Arbitral Institution. The jurisdiction of the Emergency Arbitrator arises from the parties’ Arbitral clause or their agreement to arbitrate.
Goldstein opines that an Emergency Arbitrator should only assume jurisdiction where he is satisfied that a duly constituted Arbitral Tribunal will have the jurisdiction to hear the merits of the matter. The various Arbitration Institutions such as The Nigerian Institute of Chartered Arbitrators (NICArb) all have their various rules that allows for the appointment of an Emergency Arbitrator where the need arises.
Effect of An Interim Measure
Under the Arbitration Rules, contained in the first schedule to the Arbitration and Conciliation Act, an arbitral tribunal is entitled to make interim awards. The award shall be made in writing and shall be final and binding on the parties. The act further places an obligation on the parties who undertake to carry out the award without delay. The arbitral tribunal is duty bound to state the reasons upon which the award is based, unless the parties have agreed that no reasons are to be given.
The award must be signed by the arbitrators and it shall contain the date on which and the place where the award was made. Where there are three arbitrators and one of them fails to sign, the award shall state the reason for the absence
of signature. The award may be made public only with the consent of both parties. Copies of the award signed by the arbitrators shall be communicated to the parties by the arbitral tribunal.
Conclusion
Following from all narrated above, it is recommended that the principal arbitration statute in Nigeria i.e. Arbitration and Conciliation Act be amended to include more expansive provisions on interim measures and the enforcement of those measures in Nigeria. It is also advised that the Courts should decline to enforce its concurrent jurisdiction to order interim measures where an arbitral tribunal has been set up. This is to enable the tribunals to effectively deal with the issues seriatim. Arbitrators should also embrace the culture of the courts when it comes to injunctions, to ensure that interim measures are only ordered where there is no other available solution, so as not to arm one party with a stick to beat the other.
One way to do this is by making it a procedural order that the proceedings will not begin until the interim reliefs/measures are complied with.
References:
- Kotoye v CBN (1989) 2 SC (Pt. 1) 1; Falomo v. Banigbe (1998) 7 NWLR (Pt.559)
679; Hakeem v UNIBADAN (2002) FWLR (Pt 85) 221 - Sutton, Kendall and Gill;Russell on Arbitration (21st edn, Sweet & Maxwell 1997)
205. - E-Systems Inc. v. Islamic Republic of Iran, Bank Melli Iran (1983) 2 Iran-U.S. Cl.
Trib. Rep. 51,57 - J.O Orojo & M.A. Ajomo; Law and Practice of Arbitration and Conciliation in
Nigeria (1st edn Mbeyi & Associates (Nigeria) Limited 1999) 179. - Arbitration and Conciliation Act, LFN 2004, S. 13(b); UNCITRAL Arbitration Rules
2013, Art. 26(6); Coppee-Lavalin SA/NV v. Ken-Ren Chemicals and fertilizers Ltd
(In Liquidation) (1994) 2 All E.R. 449, H.L. - Marc J. Goldstein, A Glance into History for the Emergency Arbitrator, Fordham
International Law Journal (2017), Vol. 40(3), p. 780
