In a recent landmark judgment delivered on 7 October 2022, the Singapore High Court ruled that emergency awards, passed in foreign seated arbitrations, are enforceable in Singapore under the International Arbitration Act 1994 (2020 Rev Ed) (IAA). In this short note, we critically analyse the court's pro-arbitration ruling in CVG v CVH [2022] SGHC 249 (CVG) which has cleared the air on enforceability of foreign emergency awards and analyse what it means for Indian parties involved in such emergency arbitrations.

Factual Background

In CVG, the parties were engaged in a franchisee business governed by four different franchise agreements. The contractual arrangement between the parties provided for resolution of disputes by arbitration seated in Pennsylvania, USA, administered by the International Centre for Dispute Resolution (ICDR), and governed by Pennsylvanian law.

Upon disputes arising between the parties, the defendant terminated the agreements in May 2022, which it alleged was accepted by the claimant (by its conduct). Soon thereafter, the claimant commenced arbitration under the ICDR Rules and sought emergency interim reliefs, including reliefs to enforce post-termination provision of the franchise agreements. Though its initial case was premised on the fact that the agreements had been terminated, however, at the stage of submitting its post-hearing closing submissions, the claimant advanced an alternative case seeking to restore status quo on the basis that the agreements were not terminated.

Emergency Award

On 15 June 2022, the emergency arbitrator (Mr Grant Hanessian) issued an award granting status quo of parties to the position before the termination of the agreements on the basis that the claimant did not treat the agreements as terminated. Following this, the claimant filed an application to enforce the award in Singapore.

Findings in CVG

The moot issue for Singapore High Court's consideration was whether foreign emergency awards are enforceable in Singapore under section 29 of the IAA, which deals with enforcement of foreign awards.

Part 3 of the IAA, which deals with the recognition and enforcement of foreign arbitral awards in Singapore, defines arbitral awards in section 27(1). Section 27(1) provides:

'arbitral award' has the meaning given by the Convention, but also includes an order or a direction made or given by an arbitral tribunal in the course of an arbitration in respect of any of the matters set out in section 12(1)(c) to (j).

A plain reading of the above shows that section 27(1) is silent on whether arbitral award includes an emergency award. The reference to "Convention" is a reference to the New York Convention, which also does not define emergency award.

Notably, section 2(1) of the IAA, defining "arbitral tribunal" was amended by the Singapore Parliament, in 2012, to include a specific reference to emergency arbitrator. However, section 2(1) does not apply to Part 3 of the IAA which is where sections 27 and 29 are found. There is no definition of "arbitral tribunal" in section 27(1) or anywhere else in Part 3 of the IAA. Relying on this, the defendant argued that the Parliament's legislative intent was to exclude emergency awards from Part 3 and the same are not enforceable in Singapore.

Rejecting the defendant's contentions and adopting a purposive interpretation of the 2012 amendments to the IAA, Singapore High Court found that "arbitral award" under section 27(1) includes awards by emergency arbitrators and consequently, foreign emergency awards are enforceable under section 29 of the IAA.

Though the High Court clarified the legal position surrounding enforcement of foreign emergency awards, it rejected the claimant's application for enforcement of the emergency award on the ground that the emergency arbitrator did not give the defendant an opportunity to present its case against the claimant's alternative case, which was raised at the stage of post-hearing submissions. It went on to hold that if permitted, the defendant's arguments could have reasonably impacted the arbitrator's decision.

Comments

Recent trends show an increasing inclination in parties to resort to emergency arbitrations across the world to obtain expeditious interim reliefs. However, legal developments in this area of law are still at nascent stages, with domestic legislations of majority jurisdictions being silent on the enforceability of the emergency awards (i.e., both domestic and foreign emergency awards in such jurisdictions). Pertinently, the UNCITRAL Model Law itself does not provide any guidance on the inclusion of emergency arbitrators within the ambit of arbitral tribunal.

While jurisdictions like Singapore have tried to remedy this defect by amending section 2(1) of the IAA to include an emergency arbitrator within the scope of arbitral tribunal (and thus make any award of such emergency arbitrator as enforceable), there remained uncertainty regarding enforcement of foreign seated emergency awards. Given this, Singapore High Court's decision in the present case is a welcome development which removes uncertainty with respect to enforcement of foreign emergency awards and paves way for other jurisdictions to follow suit.

Unlike Singapore, India is a jurisdiction where the issue of enforcement of foreign emergency awards is yet to be clarified by the legislature or the judiciary. While the Indian Supreme Court, in the case of Amazon.com NV Investment Holdings Inc. v. Future Retail Ltd (2022) 1 SCC 209, adopted a progressive approach to enforce an India seated emergency award despite lack of a specific provision/recognition under domestic legislation, the fate of foreign emergency awards is yet to be decided. It is likely that any future case dealing with this issue will take the purposive interpretation adopted by the Singapore High Court in CVG.

With this judgment, Singapore has strengthened its position as one of the most prominent arbitral hubs, especially for Indian parties, who can now seek to enforce emergency awards (passed in India-seated arbitrations or arbitrations seated outside Singapore) against award-debtors holding assets in Singapore or those who are incorporated / resident in Singapore. This eases any enforcement wrinkles which were previously associated with emergency awards, involving Indian parties, that were not seated in Singapore because any violation of the emergency award can potentially attract Singapore court's contempt jurisdiction. With Singapore increasingly becoming a preferred jurisdiction for Indian parties, the judgment in CVG should be taken note of by Indian parties that may have any sort of nexus with Singapore i.e., including, having an alternate place of business, holding assets or having family offices in the city state.

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