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Interim Measures: The Roll of the Arbitral Tribunal and the Court
(A Synopsis)
By: Eduardo R. Ceniza

Interim measures; nature in general

The Model Law and the UNCITRAL Arbitration Rules refer to them as "interim measures of protection". In the English version of the ICC Rules, they are known as "interim or conservatory measures." In the Swiss law on international arbitration, they are called "provisional or conservatory measures". Whatever the nomenclature, they operate as ho1dirlg orders, pending the final outcome of the arbitration proceedings.

Who can issue interim measures?

There are still some countries — like Italy, Greece and the People's Republic of China —whose arbitration laws do not grant to arbitrators the power to issue interim measures of protection. Today, however, most modem arbitration laws — influenced by the Model Law, which has become a benchmark for many countries seeking to modernize their arbitration laws — grant to arbitrators the power to issue interim measure of protection.

Under the Model Law, both the arbitral tribunal (Art. 17) and the competent court (Art. 7) are given the power to grant interim measures of protection. Since the arbitral tribunal and the competent court have concurrent power to grant interim measures of protection, the question then is: When does a party apply with the arbitral tribunal and when does it apply with the competent court?

Interim measures under the ADR Act of 2004 (RA. No. 9285), which adopted the Model Law, with some modifications, as the Philippine law on international arbitration.

Section 28, paragraph (a) states that: "It is not incompatible with an arbitration agreement for a party, before constitution of the arbitral tribunal, to request from a Court and interim measure of protection and for the Court to grant such measures. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection, or modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral tribunal has no power to act or is unable to act effectively, the request may be made with the Court. x x x"

The basic assumption in the ADR Act of 2004 is that once the arbitral tribunal is constituted, applications for interim relief that are within the power of the arbitral tribunal to grant should be filed with the arbitral tribunal.

Interim measures the arbitral tribunal can grant

Section 28 of the ADR Act enumerates the interim or provisional relief that may be granted during arbitral proceedings, to wit:

"(b) The following rules on interim or provisional relief shall be observed:

(1)    Any party may request that provisional relief be granted against the adverse party.

(2)    Such relief may be granted:
(i)    to prevent irreparable loss or injury;
(ii)    to provide security for the performance of any obligation;
(iii)     to produce or preserve any evidence; or
(iv)     to compel any other appropriate act or omission.

(3)    The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order.

(4)    Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be and the party against whom the relief is sought, describing in appropriate detail the precise relief, the party against whom the relief is requested, the grounds for the relief, and the evidence supporting the request.

(5)    The order shall be binding upon the parties.

(6)    Either party may apply with the Court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal.

(7)    A party who does not comply with the order shall be liable for all damages resulting from noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the order’s judicial enforcement."

Section 29 of the ADR Act grants to the arbitral tribunal further power to issue, at the request of a party, interim measures of protection in respect of the subject-matter of the dispute, which may include preliminary injunction, appointment of receivers or detention, preservation, inspection of property that is the subject of the dispute in arbitration. Either party may apply with the Court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal.

It can thus be seen that our ADR Act is more expansive in granting to the arbitral tribunal powers to issue interim measures of protection than the Model Law1, the UNCITRAL Arbitration Rules2 or the ICC Rules3.

Instances where the arbitral tribunal is without power to act or is unable to act effectively

The first instance is the inability of the arbitrators to act before the constitution of the arbitral tribunal.

The second factor is that the powers of the arbitral tribunal are limited to the parties to the arbitration itself.

The third factor is that, since the arbitral tribunal does not have jurisdiction over third parties, it cannot compel by subpoena the attendance of witnesses who are not parties or who are not employees or agents of the parties.

A fourth factor is the fact that an arbitral tribunal, unlike a court, does not have the power to grant provisional remedies, such as preliminary attachment.

Another factor is the fact that interim measures, by definition, do not finally resolve the substantive merits of the dispute. Therefore, an interim measure issued by an arbitral tribunal does not qualify as a final award that can be recognized and enforced in another country under the New York Convention.

Interim measures to preserve the status quo

There can be cases where one party is committing or threatening to commit an act which, unless restrained, will caused the other party irreparable and grave injury, such as damage to reputation or loss of business opportunities which, although real, are difficult to quantify. The aggrieved party may wish to file an application for the issuance of a preliminary mandatory or prohibitory injunction to address the problem. The question is: Does an arbitral tribunal have the power to issue a preliminary injunction to preserve the status quo?

It is doubtful whether an arbitral tribunal operating under the UNCITRAL Arbitration Rules or under any arbitration law that simply repeats the relevant provisions of the Model Law would have the power to do so. This is so because an arbitral tribunal's power in such matter is limited to "the subject matter of the dispute" and to "the conservation of the goods forming the subject matter of the dispute."

However, the arbitral tribunal would have the power to grant interim relief to preserve the status quo where its authority to grant interim measures is less restrictive as in the case of Article 23 of the ICC Arbitration Rules. ICC case law envisages the rule that ICC tribunals have the authority to grant injunctive relief precisely to avoid the aggravation of the dispute and to ensure the maintenance of the status quo of the parties.

In the Philippines, there is no question that the arbitral tribunal may order a party to cease and desist from doing an act that would disturb the status quo by exercising its express power to issue a preliminary injunction to prevent irreparable loss or injury.

May the arbitral tribunal issue ex parte a TRO?

A party may need to make an urgent ex parte application, for example, to freeze a bank account of the other party to prevent the transfer of funds abroad.

The laws of the most popular arbitration seats and the rules of the leading institutions do not currently expressly envisage such a power for arbitrators and some leading commentators have suggested that it is incompatible with the consensual nature of arbitration and the respect for due process.

Whether or not the arbitral tribunal should be granted authority to issue ex parte preliminary orders (as distinguished from interim measures) is still being debated in the UNCITRAL Working Group II in connection with the proposed revision of Article 17 of the Model Law.

In the Philippines, the ADR Act of 2004 expressly grants to the arbitral tribunal the authority to issue preliminary injunction to prevent irreparable loss or injury. On this basis and applying the rules and practice of the courts, it may issue a temporary restraining order (TRO) for a limited duration, on an ex parte application, where irreparable injury would result to the applicant before the matter can be heard on notice.

In Singapore, arbitrators have been known to exercise the power to grant interim injunctive relief on an ex parte basis following the same practice of the courts.

Also, CIAC arbitrators are known to issue ex parte interim measures of     protection following the rules and practice of the courts.

Conclusion

Quite often arbitration will proceed from start to finish without any of the parties applying with the arbitral tribunal or the competent court for interim measures of protection. But it is well that the arbitral tribunal be equipped with the power to issue interim measures.

It is a welcome development in Philippine arbitration law that the ADR Act of 2004 has expanded the otherwise restrictive language of Article 17 of the Model Law which limits interim measures of protection to those that are "necessary in respect of the subject matter of the dispute."

Following the example of modem arbitration laws the ADR Act does not limit the power of the arbitral tribunal to issue interim measures of protection to those "necessary in respect of the subject matter of the dispute" / but proceeds to enumerate the various types and forms of interim or provisional relief that the arbitral tribunal my issue and which mayor may not be necessarily related to the subject matter of the dispute, including the catch-all power "to compel any other act or omission."

Where the seat of arbitration is in the Philippines, the arbitral tribunal will have in its arsenal a wide array of interim measures of protection that can be used to facilitate the arbitral proceedings and to prevent any party from defeating the purpose of the arbitration or frustrating the enforcement of a future award — to the end that the interest of justice is duly served.

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Footnotes:

1    Article 17: "Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute. * * *."

2    Article 26(1): "At the request of either party, the arbitral tribunal may take any interim measures it deems necessary in respect of the subject matter of the dispute, including measures for the conservation of the goods forming the subject matter in dispute, such as ordering their deposit with a third person or the sale of perishable goods."

3    Article 23(1): "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 measures

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