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Interim Measures Prior to an Award from Arbitration Proceedings.
KANOKPAN CHONCHAVALIT
Introduction
In arbitration proceedings, interim measures are essential to protect the interests of the relevant parties, which is similar to provisional protection measures before a ruling is made in court proceedings. In other words, when a dispute arises, the process that takes place prior to an arbitration award by an arbitrator or tribunal makes often takes a long time. In the meantime, there may be a need for temporary safeguards that needs to be put in place to protect or prevent damage that is currently occuring or may be caused to either parties, or for the benefit of the future enforcement of the award. However, presently, Thailand does not have a provision that explicitly authorizes the arbitration tribunal to issue temporary protective measures, thus, causing problems in the interpretation of the authority to issue temporary protection measures of the arbitration tribunal, which also affects the relationship between the court and the arbitration tribunal. It is of the author’s opinion that amendments to the Thai Arbitration Act to explicitly allow arbitration tribunals to issue interim measures may help in resolving such problems, thereby, making the Thai Arbitration Act to be more consistent on an international level. In this study, the author has taken the UNCITRAL law model [1] and examples of foreign laws which contain provisional safeguards issued by arbitration tribunals; i.e. models from Japan and Germany laws, for analysis in combination with the presentation of opinions with the objective to act as a guideline for the future development of the Thai arbitration law.
1. General
It is of the author’s view that, the principles and concepts of the authority to issue interim measures in arbitration cases, apart from the courts, should also be allowed for arbitration tribunals as well. This can be seen from the prototype law [2] and the arbitration laws of several countries, which expressly certify the authority to issue provisional safeguards by arbitration tribunals, such as laws from Japan, Germany, Hong Kong, France, Singapore, etc. [3]
As a result, in 2006, UNCITRAL considered amending the prototype law to make the interim measures issued by arbitration tribunals to become more effective and enforceable by also including the provisions on the enforcement of provisional safeguards issued by the arbitration tribunals. In addition, domestic laws of some countries, such as Germany, Hong Kong and Singapore, also require courts to enforce provisional safeguards issued by arbitration tribunals. However, it must be acknowledged that presently, there are very few countries with internal laws that stipulates the enforcement of interim measures issued by arbitration tribunals. Even countries that have a provision recognizing interim measures by arbitration tribunals, such as Japan, have no provisions on the enforcement of such orders.
For Thailand, the Arbitration Act B.E. 2545 was enacted based on the original law of 1985 A.D. which served as the prototype of the law. However, the Act only accepted the provisions that gave the courts the power to issue interim measures in arbitration cases [4] without bringing along provisions that relate to the authority of the arbitration tribunal in issuing interim measures according to Section 17 of the prototype law [5]. For this reason, it was thus interpreted that the lawmakers deliberately omitted Section 17 of the prototype law, and can be assumed that lawmakers wished to preserve such authority for the courts only [6]. However, there was also contradicting opinion that, although there is no law explicitly stating the authority of the arbitration tribunal to issue interim measures, the tribunal in general has the authority to issue interim measures [7]. Presently, this issue is not yet been resolved and the Supreme Court’s ruling has not yet been established [8]. Although later, the Arbitration Act B.E. 2545 was amended, the revision, the Arbitration Act (No. 2) B.E. 2562, has still yet to include the authority of the arbitration tribunal to issue interim measures, resulting in a situation that, should Thailand be designated as a “place of arbitration”, issues would still persist with regards to the interpretation on whether the arbitration tribunal has the authority to issue interim measures or not. Or even in the case whereby the arbitration tribunal is recognized to have the authority to issue interim measures, but if there is a request for a Thai court to enforce such interim measures, will a Thai court be able to conduct such an enforcement? Or in cases where the interim measures issued by the courts and those issued by the arbitration tribunal are in conflict, which interim measures would be considered as valid.
In addition, the court’s and that of the arbitration tribunal’s interim measures, are also different in several ways, such as
(1) The extent of the interim measures that can be ordered, that is, the court cannot issue interim measures other than those provided by the domestic law of that particular State, while the arbitration tribunal’s interim measures is not restricted as far as the law of the place where the arbitration is located.
(2) Legal effectiveness. The interim measures issued by the court are legally enforceable, while on the other hand, as long as there is no explicit provision regarding the interim measures of the arbitration tribunal, it is thus not enforceable by law, and must only rely on the voluntary compliance of the disputing parties.
(3) The court can issue interim measures to third parties, while the arbitration tribunal arises from the arbitration agreement and is therefore, binding on only the relevant arbitrating parties. The arbitration tribunal cannot issue interim measures to enforce third parties.
From the above differences, when it is thought that both the court and the arbitration tribunal should have the authority to issue interim measures in arbitration cases, it is therefore necessary to analyze the nature of the relationship between interim measures issued by courts and arbitration tribunals. Whether each party should have the authority to set interim measure based on a free choice model, or should one party be empowered to sever the authority of the other, for example, in the case of an arbitrator being appointed, should the court complimentarily serve based on a court-subsidiary model [9]. However, the laws of each country may have different principles and analytical concepts.
2. Foreign law
(1) Prototype Law (1985 and 2006)
In the original law of 1985, there was no provision present regarding the relationship between the exercise of the court’s jurisdiction and the arbitration tribunal in issuing interim measures. However, upon analyzing the prototype law, a consensus was agreed upon in which each party should have the authority to issue interim measures, and such authority should not sever the authority of the other party based on the fact that the interim measures of the courts and arbitration tribunals each possessed differing characteristics. In practice, conflicts regarding interim measures of both organizations are rare [10]. Therefore, according to the 1985 prototype law concept, it can be assumed that both the courts and the arbitration tribunal do possess the same authority, and gives the relevant parties the freedom to choose as to which organization they should apply for interim measures [11].
Later, in the 2006 prototype law, the provisions on interim measures issued by arbitration tribunals were amended. The adoption and enforcement of interim measures issued by arbitration tribunals also includes the provisions on the criteria for consideration for issuing interim measures by the court, but at the same time, does not mention the relationship on the use of authority between the courts and the arbitration tribunal. Therefore, it can be assumed that the 2006 prototype law still shares the same principles and concepts as the 1985 model, i.e. giving both the courts and arbitration tribunals the same authority and the freedom of the relevant parties to choose the organization in which they would like to apply for interim measures.
(2) Japan [12]
With regards to the courts’ jurisdiction, Japan has long acknowledged that the courts has the authority to issue interim measures in arbitration cases even before the introduction of the Arbitration Act of 2003, with the Tokyo Metropolitan Court ruling, stating that the arbitration agreement does not prejudice the right to request interim measures to the court [13]. The Japan Code of Provisional Protection also provides the court the authority to issue interim measures in arbitration cases [14]. Later, with the enactment of the Arbitration Act, it also included an explicit provision stating that the arbitration agreement does not prejudice the right of the parties to submit a petition for interim measures to the court that is in connection with the dispute arising from the arbitration agreement, either before or during the arbitration [15].
In the past, the authority of the arbitration tribunal had no clear provisions in this regard which led to different interpretations. One party was of the opinion that the arbitration agreement was merely severing the court’s jurisdiction, but in no means crippled the authority to apply interim measures as well, and if the party requests for protection of interests, they must apply to the competent court only and the arbitration tribunal has no authority to issue such interim measures. However, on the other hand, the contradicting party was of the opinion that, despite having an arbitration agreement, the arbitration tribunal has the power to issue interim measures only when it contains an explicit contractual clause. It was not until later when Article 17 of the UNCITRAL prototype law of 1985 with regards to the authority of the arbitration tribunal in issuing interim measures was explicitly adopted, thereby eliminating the problem of interpretation on the matter [16].
However, as the Japanese law does not contain any provision with regards to the relationship between the courts and arbitration tribunals authority in issuing interim measures, therefore, two separate opinions still existed. The first opinion agreed that the arbitraion tribunal should play a key role in issuing interim measures with the court taking on as an additional role, i.e. if there was any need to seek interim measures, the parties must first submit a petition to the arbitration tribunal. If there were reasons that the arbitration tribunal was unable to issue such measures, then it would have to be submitted to the court. (Court-subsidiary) [17]. On the other hand, the opposing opinion viewed that, as long as there were no other agreement otherwise, the parties have the option to choose whether to lodge a petition with a court or an arbitration tribunal (free choice) [18].
However, when considering the concept of the 1985 model, which is the origin of Japanese law, it viewed that each party should have the authority to issue interim measures, and there was no need for the exercise of authority of either side severing the authority of the other. Therefore, it can be surmised that, from the perspective of Japanese law, the courts and arbitration tribunals should have simultaneous authority, and the disputing parties have the right to choose whether to apply for interim measures from a court or arbitration tribunal as well.
(3) Germany [19]
German arbitration law was established as part of the Civil Procedure Code (Chapter 10, Articles 1025 – 1066), with the UNCITRAL Model Law of 1985 serving as a prototype of the draft. As a result, German law explicitly recognizes both the authority of the courts [20] and of the arbitrator [21] in issuing interim measures in arbitration cases.
However, regarding the relationship of interim measures issued by the courts and those issued by the arbitration tribunal, in addition to the 1985 prototype law, the German law also stipulated on the enforcement of interim measures. The content of Section 1041 (2) states that, if the parties to the arbitration submits a request, the court may issue an order to enforce interim measures issued by an arbitration tribunal, unless it appears that there has been a request for interim measures in connection with the court. However, the court may recast the interim measures of the arbitration tribunal for the benefit of enforcing such interim measures.
When considering the content of Section 1041 (2) which states that, “….the court may issue an order to enforce the interim measures issued by the arbitration tribunal, unless it appears that there has been a request for temporary protection in matters relating to the court.…”, it can then be surmised that under German law, the arbitral parties can apply for interim measures to both the courts and the arbitration tribunal on the same matter. Assuming that the exercise of authority of both parties is within their own authority, and the disputing parties have the freedom to choose whether to submit their petition to a court or arbitration tribunal (free choice).
From a point of observation regarding the provisions of Section 1041, in the event that one of the parties submits a request for interim measures in connection with the matter both to the court and the arbitration tribunal, what will the effect of the enforcement of interim measures issued by the arbitration tribunal be will depend on the period that the parties submit the petition, i.e. if the parties submit their petition for interim measures to the arbitration tribunal first and the tribunal issues an interim measure before the parties submits a request for the same matter to the court. The court may, in its discretion, enforce the interim measures of the arbitration tribunal. However, the court may issue an order to enforce the interim measures only if it is stipulated by law in accordance to the Principle of Legal Certainty, which requires those who are subjected to interim measures to be able to know in advance of the legal consequences they will have to comply with. In other words, the court will not enforce an order other than what the law stipulates. Therefore, in order to ensure that interim measures ordered by the arbitration tribunal can actually be enforced under the German Civil Procedure Law, the law therefore provides the court with discretion to recast the nature of the interim measures issued by the arbitration tribunal. It is a method in which the court has the authority to prescribe by law [22]. The amendment to the interim measures of the arbitrators is in the form an amendment to the form and not an amendment to the content of the order. In other words, the court will not reconsider the contents of the interim measure and alter the decision of the arbitration tribunal. Rather, it is a temporary modification of the method to be enforceable within the scope of the national law.
However, this issue has been observed that, in actual practice it is not always easy to alter the form of an arbitration tribunal’s ruling in order to conform to the type of provisional legal means in any case because the arbitration tribunal can issue a much wider range of interim measures [24].
On the other hand, if one of the parties had already filed for an interim measure claim to the court prior to submitting it to the arbitration tribunal, or before the arbitration tribunal issues an interim measure, the court may not be able to enforce the interim measure issued by the arbitration tribunal. This is due to the fact that the court will not enforce interim measures of the arbitration tribunal issued after the parties have submitted the same interim measure request to the court. To this effect, the court’s refusal to enforce the measures of the arbitration tribunal does not result in the interim measures losing its effectiveness, but the inability to enforce in accordance to the law could render the arbitration tribunal’s interim measure meaningless in practice [25].
A subsequent observation is that, in Section 1041 (3), the court may also change or revoke an enforceable order in accordance with the interim measures issued by the arbitration tribunal if the parties request it. Under these circumstances, it is not considered as a change or cancellation of the interim measures of the arbitration tribunal, but rather, it is the cancellation of the interim measure order of the arbitrators previously ordered by the court. As a result, the interim measures issued by the arbitration tribunal, although still in existence, will be considered as not enforceable. Therefore, the only course of action is the expectation that the other party will comply with the order voluntarily, or must submit a request for the same matter to the court only
3. Analysis and Recommendations
As mentioned earlier, the Arbitration Act B.E. 2545 contains no provision on the authority of the arbitration tribunal to issue interim measures. However, it may be interpreted that the arbitration tribunal has the authority to issue interim measures as part of the general conditions as stated in the arbitration agreement. Although Thai law does not mention in the event that the interim measures ordered by the courts and the arbitration tribunal might be in conflict of each other, but the opinion on is matter views that, in practice, circumstances in which interim measures would be in conflict of each other are rare. This may be due to the fact that each party are protect under different conditions. However, in the event of a conflict, a court ruling must take precedence [26]. Such an opinion is significant in the sense that a court’s order is legally enforceable. However, the author views that the arbitration tribunal would be in the most appropriate state to consider the necessity and the type of interim measures for a particular case. If a court order is to be considered as the main basis, it may diminish the effectiveness of the interim measures issued by the arbitration tribunal. It must also be considered whether such principles are contrary to the idea of promoting effective arbitration and autonomy from judicial proceedings.
In this regard, when considering the development of an independent arbitration process which is free from the intervention of the courts, by allowing the trial to be completed within the arbitration process itself, the idea of the court being a subsidiary would, therefore, carry more weight. However, if we were to consider it on an alternate aspect, it was found that, presently, the limitations of the interim measures issued by the arbitration tribunal are still high. As a result, there are cases in which the parties are still dependent on the rulings of the courts, such as the case where the court has to seize or freeze assets, or issue an order to force a third party, etc. In such cases, if the need arises to request for interim measures from the arbitration tribunal, it may not be able to serve interim measures that require urgency. The author, therefore, considers that the relationship between the exercise of court jurisdiction and the arbitration tribunal with regards to interim measures should be empowered mutually, and allow the disputing parties to freely decide according to the suitability and the circumstances of the case whether to file a complaint with either party (Free choice), which will enable the use of the arbitration process more appropriately and efficiently.
However, although the disputing parties have the freedom to apply for interim measures, and each party submits a petition on the same matter to both the court and the arbitration tribunal, it would then be necessary to analyze whether to abide by the interim measures issued by the courts or the arbitration tribunal. In this case, the author has adopted the German law and separately classified them into two parts.
Where part 1 is of the opinion that, the concept whereby the German law authorizes courts to amend the arbitration tribunal’s interim measures should be applied. In other words, the court can issue an order to enforce the interim measures of the arbitration tribunal if the court considers that such a measure is outside the category of interim measures that the judicial procedure may be ordered by the court. But the ruling can still also be adjusted for the benefit of the enforcement. The court shall have the authority to modify such interim measures so as to be in accordance with the interim measures as prescribed by the court.
However, in Part 2, the German law can require a court to issue an order to enforce an interim measure issued by an arbitration tribunal only if the tribunal has issued such measures prior to the same claim being submitted to the court. In the author’s opinion, this circumstance is inappropriate due to the fact that, even if the parties had already submitted a request for the same matter to the court, but if the arbitration tribunal issues an order on the same interim measure before the court, the court should also adhere to the interim measures issued by the arbitration tribunals. This is based on the fact that, when considering the status of the interim measures, the arbitration tribunal is in a better position in knowing all the relevant facts of the case than the court. Therefore, if requested to enforce the interim measures issued by the arbitration tribunal and it is also evident that the request for the same matter to the court is pending, the author believes that the court should dismiss the interim measure request filed by the parties to the court and issue an order to enforce the interim measures ordered by the arbitration tribunal. If the court deems it necessary for the benefit of the enforcement of such order, the court may revise the form of the interim measures of the arbitration tribunal accordingly as analyzed above.
However, the recommendations of the author in this study are based solely on presenting some of the issues and the recommended solutions. The study for the development of Thailand’s Arbitration Law, particularly with regards to interim measures in arbitration, there are still several other issues that need to be studied and analyzed, such as the authority for issuing interim measures in arbitration, unilateral considerations (ex parte), etc., all of which the author will subsequently study and present it at the next available opportunity.
