A Collection is a selection of features, articles, comments and opinions on any given theme or topic. It allows you to stay up‑to‑date with what interests you most.
Login here to access your saved articles and followed authors.
We have sent you an email so you can reset your password.
Sorry, we had a problem.
Tags related to this article
Published 23 enero 2017
In Gerald Metals SA v. Timis & Others  EWHC 2327 (Ch) a Commercial Court judge has in effect held that the Emergency Arbitrator provisions now in some arbitration rules will, on occasion, in effect "trump" the court powers exercisable in support of arbitration proceedings that might, in the absence of those provisions, be available under s.44 of the Arbitration Act 1996.
Paragraph 9.4 of Article 9B of the LCIA Arbitration Rules provides that:
"In the case of emergency, at any time prior to the formation or expedited formation of the arbitral tribunal any party may apply to the LCIA court for the immediate appointment of a temporary sole arbitrator to conduct emergency proceedings pending the formation or expedited formation of the arbitral tribunal".
In August 2016 Gerald Metals, a commodity trading company, began LCIA Arbitration proceedings against trustees of the Timis Trust (owners of the business interests of Mr Timis) in respect of a share transfer agreement, claiming that the conditions in the deed had not been met. Gerald Metals also applied to the LCIA for the appointment of an emergency arbitrator with a view to seeking emergency relief, including an order to prevent the trustees from disposing of the Trust's assets.
As it turned out the trustees responded to that application by giving undertakings not to dispose of any assets other than for full market value and at arm's length, and to give seven days' notice to Gerald Metals before disposing of any asset considered to be worth more than £250,000. After those undertakings had been given, the LCIA rejected Gerald Metals' application for the appointment of an emergency arbitrator.
Paragraph 9.12 of Article 9B provides:
"Article 9B shall not prejudice any party's right to apply to a state court or other legal authority for any interim or conservatory measures before the formation of the arbitration tribunal and it shall not be treated as an alternative to or substitute for the exercise of such right".
On 22 August 2016 Gerald Metals issued proceedings in the Commercial Court seeking urgent relief under s.44 of the Arbitration Act 1996 in the form of a freezing injunction with an upper limit of $80,000 and for the provision of certain information as to the details of, and location of, certain assets. That application was then heard on 21 September 2016 and judgment given on 22 September 2016.
S.44 gives the court powers to make orders in support of arbitral proceedings about matters which include the preservation of evidence and the granting of an interim injunction. Subs. (3) provides:
"If the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets".
This is subject to subs. (5), which provides:
"In any case, the court shall act only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively."
It was accepted in the case that the test of urgency under subs. (3) is to be assessed by reference to whether the arbitral tribunal has the power and practical ability to grant effective relief within the relevant timescale. It was also common ground that there can be situations where the need for relief, for example in the form of a freezing injunction, is so urgent that the power to appoint an emergency arbitrator is insufficient and the court may properly act. The applicant in this case submitted that there were nonetheless cases that lay in a gap that existed between cases which are not emergencies but which were nonetheless cases of urgency within the meaning of that word in s.44.
The court disagreed. It would be uncommercial to interpret the LCIA Rules as creating such a gap. The obvious purpose of Articles 9A and 9B was to reduce the need to invoke the assistance of the court in cases of urgency by enabling the arbitral tribunal to act quickly in an appropriate case. Accordingly it would only be in cases where those powers, as well as the powers of a tribunal constituted in the ordinary way, were inadequate, or where practical ability is lacking to exercise those powers that the court may act under s.44.
In consequence the relief sought was refused. The LCIA had decided to refuse the application on the basis of the undertakings given and that was as far as it could be taken. The LCIA could not have been persuaded that the application was so urgent that it needed to be decided before the arbitral tribunal in the ordinary way. Effectively there was no "re-run" in court under s.44.