1. Interim and conservatory measures have for long been an important weapon in international commercial arbitration. The relief sought may be needed to protect the status quo, the subject matter in dispute or the rights and interests of a party to the arbitration or a third party. On occasion, interim relief may be sought by one party as a weapon to oppress the other party.

ICC awards involving interim and conservatory measures

2. There have been approximately 75 ICC cases,1 over the past 15 years, in which some form of interim relief has been sought. In this issue of the ICC International Court of Arbitration Bulletin, extracts from 23 ICC awards, during the years 1991-1999, are published. This note comments on some of the issues concerning interim relief raised in these awards.

3. In themselves these awards are of limited legal value. First, there is little precedent in international commercial arbitration. 2 At best, an award may be persuasive as to how an arbitration tribunal could deal with a particular matter. Second, every arbitration is different in many respects: the origin of the parties; the subject matter; the number and nationality of the arbitrators; the law governing the substance of the arbitration; and the place of arbitration. The only constant factor is that the ICC Rules of Arbitration applied: 21 awards under the 1988 Rules and two awards under the 1998 Rules. Third, it would be inappropriate to draw too general conclusions from a sample of 23 awards. 3

Underlying issues

4. In considering these awards, there are three underlying factors which are relevant:

(i) the differences, as concerns interim and conservatory measures, under the 1988 and 1998 Rules;

(ii) the fundamental differences between the interim and conservatory measures available under different legal systems; and

(iii) the arbitrators' dilemma to uphold the status quo but not to prejudge issues.[Page24:]

(i) Differences between the 1988 and 1998 ICC Rules

5. The 1988 Rules gave no express authority to arbitrators to make awards or issue orders for interim measures. Article 8(5) provided:

Before the file is transmitted to the arbitrator, and in exceptional circumstances even thereafter, the parties shall be at liberty to apply to any competent judicial authority for interim or conservatory measures, and they shall not by so doing be held to infringe the agreement to arbitrate or to affect the relevant powers reserved to the arbitrator.

Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat of the International Court of Arbitration. The Secretariat shall inform the arbitrator thereof.

This left ambiguity as to whether, in what circumstances and what type of interim or conservatory measures an arbitrator could order. 4

6. The 1998 Rules adopt clear provisions as to arbitrators' powers. These Rules were influenced by the recent developments in national legislation and case law around the world on this topic. 5

7. Article 23(1) of the 1998 Rules provides that as soon as the file has been sent to the arbitral tribunal, it is expressly empowered to award or order any interim or conservatory measure, subject to appropriate security being furnished by the requesting party, where necessary. The tribunal must give reasons for its decision.

8. Before the file has been transmitted to the tribunal, or in appropriate circumstances even after, a party can apply to a competent judicial authority for interim or conservatory measures. This is expressly stated not to be an infringement or waiver of the arbitration agreement or the tribunal's powers. (Article 23(2))

(ii) Fundamental national law differences on interim relief

9. Traditionally, only national courts were empowered to grant interim or conservatory measures. 6 The power to grant such measures was thought to be a prerogative of the courts because of public policy considerations. The national courts' power was supported by the perceived problems of enforcing provisional measures issued by an arbitral tribunal, and the fact that an arbitral tribunal did not have any coercive power to enforce its orders or award for these measures.

10. However, in recent years, increasingly, national courts have come to see their role as supportive of the international arbitration process. This role owes much to the fact that arbitration as a dispute resolution mechanism has demonstrated its reliability. This role is reflected both in national legislation7 and in case law. 8

11. The difficulty of direct enforcement has not been an obstacle to the development of the new supportive role of the courts, whose coercive powers are not necessarily required to ensure the effectiveness of interim and conservatory measures. In some respects, the fact that arbitral tribunals can draw adverse conclusions from failure to comply with their decisions concerning these measures encourages voluntary compliance with such orders. In any event, a measure for [Page25:] interim or conservatory relief can, if necessary, be enforced through competent judicial authorities.

(iii) The arbitrators' dilemma

12. Generally, arbitrators wish to consider the evidence and hear the arguments of the parties before reaching any conclusions which affect the rights of the parties. Where a party seeks interim relief there is often a prima-facie dilemma.

13. Interim and conservatory measures are aimed at protecting parties' rights pending the final resolution of the dispute. Although the major issue is whether such exceptional interim relief is necessary, arbitrators will in some cases need to consider and take a view on part of the substantive dispute. Whilst wishing to protect a situation so the award can be effective and meaningful, they will also be reluctant to show their thinking in advance when all the evidence and argument has not been considered.

Bases for interim relief

14. When faced with a request for interim measures, a tribunal will first look to see whether it has jurisdiction to grant the relief requested. To make that determination, the tribunal will generally examine the parties' agreement, the relevant arbitration rules and the applicable law, i.e. usually the law of the place of arbitration. 9 Where the power to grant a measure is contained within an agreement of the parties to arbitration, the tribunal usually upholds that agreement. 10

15. It is, however, rare for parties to international commercial contracts expressly to empower the tribunal to grant interim measures. Where an arbitration agreement is silent, the tribunal will examine the applicable arbitration rules referred to in the parties' agreement. These rules, by reference, become a part of that agreement. If the rules empower the tribunal to grant the interim relief requested, it can do so subject always to the mandatory law of the place of arbitration.

16. In addition to mandatory law there are other restrictions on arbitrators' powers to grant interim measures, all arising out of the contractual nature of arbitration. For example, the power of a tribunal may be limited by the parties' agreement. 11 The English Arbitration Act 1996, sections 38 and 39, give arbitrators power to grant interim relief of certain kinds, provided parties do not agree otherwise. Furthermore, an arbitral tribunal only has jurisdiction over the parties to the arbitration agreement; it has no power over third parties to the arbitration agreement. 12 Moreover, the arbitral tribunal's jurisdiction derives from a private agreement and no state has yet entrusted use of coercive powers directly to private individuals. As a result, an arbitral tribunal cannot grant such measures as attachments, which require use of coercive powers. 13

17. The 1998 ICC Rules, as indicated above, expressly empower an arbitral tribunal to grant 'any interim or conservatory measure it deems appropriate', unless the parties have otherwise agreed. (Article 23) [Page26:]

Analysis of awards

18. As already noted, a sample of 23 awards cannot be regarded as proving any definitive practice. It is only indicative of how some arbitrators have dealt with certain interim relief applications. There are, however, some principles to be drawn on criteria that arbitrators, coming from different legal backgrounds and sitting in different venues, have seen as relevant factors for consideration. These are considered below.

Requirements to grant interim measures

19. In a national jurisdiction, the law of the forum will spell out what circumstances must exist before the court can grant interim or conservatory measures, e.g. urgency of issue, risk to subject matter in dispute, whether money damages can compensate for the alleged abuse, rights of parties inter se, impossibility of any other effective remedy. 14 What conservatory measures are possible and their criteria for issue are all subject to national laws. National laws have developed these rules over time.

20. In the international arbitration area, there are no clear guidelines to the types of relief available or when they should be granted. When asked to issue orders for interim relief a tribunal must first determine whether the factors justifying the relief sought exist. Article 23(1) of the 1998 Rules provides no real help: it merely confirms the power of the tribunal to give relief. The only apparent help is from Article 15(1), which offers two options to the tribunal. This provides that the tribunal may fix the procedural rules for the arbitration, and these may, but need not necessarily, be the rules of procedure of a national law.

21. Accordingly, where the parties have not agreed otherwise, arbitrators can either use the rules available under the law applicable to the arbitration, or settle the issue without making any reference to the applicable law.

22. The first approach - i.e. for the arbitrators to rely on a national law - is the safer but less rational one. It means that there may be little consistency, due to the diversity in handling requests for interim measures.

23. The interim award (1996) in case 8786 is an example of that approach. In a dispute between Turkish and German parties, where the place of arbitration was Switzerland, the tribunal declined to grant the protective measures sought but relied for its authority to do so on Article 183 of the Swiss Private International Law Act.

24. Similarly, in the final award (1997) in case 8879, the tribunal having its place of arbitration in Toronto, relied on both the laws of Ontario (the lex arbitri) and Mexico, both of which expressly allowed the arbitrators to grant conservatory measures. (Interestingly, the tribunal also relied on the UNCITRAL Model Law on International Commercial Arbitration which it said granted the power to the arbitrators and 'in substantially the same terms' as the Mexican and Ontario legislation.) [Page27:]

25. On the other hand, the second approach - i.e. determining the issue of whether to grant relief without reference to any national law - would appear to be more common. 15 This is an area where, increasingly it would appear, an international arbitration practice has emerged. 16

26. In numerous awards the arbitrators have resorted directly to the facts to decide whether or not to grant the relief sought. There has been little discussion as to whether they have authority to grant the measures other than by reference to the ICC Rules.

27. For instance, in the final award (1994) in case 7589, the tribunal stated:

The arbitration clause … does not expressly confer jurisdiction on the Arbitral Tribunal to order conservatory or provisional measures at all. . . . However, by implication, Article 8.5 of the ICC Rules does confer jurisdiction on the arbitrators to issue conservatory or provisional measures, but there remains a question as to the extent of such jurisdiction and whether any such jurisdiction would be exclusive. [Citation omitted.]

However, the tribunal declined to order the relief because the measures were in relation to third parties.

28. Similarly, in the final award (1994) in case 7210, the tribunal stated:

By virtue of Article 8.1 of the [1988] ICC Rules, the parties have submitted themselves ipso facto to ICC rules insofar as this arbitration is concerned. Article 11 of the same rules establishes that rules governing proceedings before an arbitrator are to be those resulting from the rules. ICC rules do not restrict the powers of an arbitrator where the granting of conservatory or injunctive relief are concerned. In the circumstances and for these reasons, the Tribunal considers that it has jurisdiction to grant relief of the type envisaged in Issue 2(a). It should be noted that subsequent to the framing of the Terms of Reference the Defendants expressly accepted, in their submissions of . . . 1993 that the Tribunal had this jurisdiction. 17

29. In the context of merely proceeding to determine whether or not to grant the relief sought, it would appear from the practice of several tribunals that there are mainly three requirements for the granting of an interim measure: no pre-judgment of the merits of a case, urgency, and irreparable or substantial harm.

30. In dealing with a request for an interim measure, an arbitral tribunal must refrain from pre-judging the merits of the case. By way of illustration, an arbitral tribunal will generally refuse to grant such a measure, where the request essentially covers what it is asked to resolve in the substantive arbitration. 18 The underlying principle is clear: if the request for relief is made on both an interim and a permanent basis, only the latter will, in principle, be granted. A tribunal will always wish to leave the parties the opportunity for their full cases to be heard. Although a tribunal should not pre-judge the merits of a case, the applicant should nevertheless demonstrate the prima-facie establishment of its case.

31. Urgency is another requirement for the grant of an interim measure. 19 In principle, where the request for a measure can await the final resolution of a dispute, logically there is no reason to grant the measure requested, provided no irreparable damages will be caused to the property and the rights of the parties can ultimately be upheld by a damages award.

32. The demonstration of irreparable or perhaps substantial harm is also necessary for [Page28:] the grant of a measure. 20 This is because it is not appropriate to grant a measure where no irreparable or substantial harm comes to the movant in the event the measure is not granted. The final award offers the means of remedying any harm, reparable or otherwise, once determined. 21

Forms for interim and conservatory measures: orders and awards

33. The arbitral decisions on interim measures may, in accordance with Article 23(1), take two forms: an order or an interim/partial award. In both cases, the tribunal should provide the reasons for its decision.

34. As a general rule, an order will be quicker than an award: reasons may be more limited and there is no need to go through the scrutiny process as for an award. The main distinction22 between an interim/partial award and an order is that the award can be enforced under the New York Arbitration Convention 1958 whereas there is no such enforcement regime for enforcement of the order. 23 Orders may be enforced if there is a mechanism for it under the relevant national law. 24

35. A request for an interim measure may not specify the form of the measure sought or may specify both order and award as alternative forms. 25 In such circumstances, it is within the discretion of a tribunal to decide the suitable form. However, where the request is made for a specific form, then the tribunal should not use any discretion. Frequently, parties are anxious to have the tribunal's order, whatever its form. 26

36. In cases where there is urgency, the tribunal may give its decision on interim measures initially in the form of an order, subsequently incorporated into an award. 27 This allows for concerns over speed and enforceability to be satisfied. Such an approach can also be interpreted as a strong reminder to the disobedient to comply with the tribunal's previous decision.

37. Once a decision on an interim measure is given, it cannot, in principle, be appealed or objected to so long as the circumstances under which the measure is granted remain the same. 28 However, where new circumstances arise making the measure redundant, the tribunal has power to revise or revoke its previous decision on interim measures. 29

Compliance and enforcement of interim and conservatory measures

38. An arbitral tribunal which orders a measure expects it to be obeyed 'in good faith without delay'. 30 Where its decision is disobeyed, the tribunal can use reminders as a tool to achieve enforcement. 31 If the decision is still not obeyed, the tribunal is generally 'empowered to take a failure to obey an order for interim measures into account in its final decision, particularly in any assessment of damages'. 32 An arbitral tribunal could make an enforceable penalty order for failure to comply. In the final award (1998) in case 9154 the claimant sought interim relief and an order [Page29:] that if the defendant failed fully to comply with the tribunal's award, a sanction of US$1 million per day be imposed. There would probably be significant difficulty enforcing such a sanction - if a tribunal was prepared to order one.

39. In any event, a decision of a tribunal on interim measures given in the form of an award is potentially enforceable. 33 Its existence will place direct and indirect pressure on the party against whom the order is made to comply voluntarily. The party who has requested the order may be able to convert the order into a local order in some national courts. There may also be a basis for enforcement on the grounds of the implied agreement of the parties to respect and comply with the decisions of the tribunal. 34

Types of interim and conservatory measures granted

40. In accordance with Article 23(1), an arbitral tribunal is empowered to take any appropriate measure. It is clear that there is no restriction on the types of measures under the Arbitration Rules. A potential restriction though may arise from the mandatory rules of the competent law.

41. The interim measures are generally (i) protective of the status quo; (ii) protective of hearings; (iii) security for the costs of the respondent; (iv) orders that a party should cease to do something, or should not do it in the future, e.g. misuse of intellectual property, or holding itself out; (v) orders to do something, e.g. specific performance; and (vi) orders which improve an ongoing obligation on the tribunal, e.g. maintaining an escrow account.

42. The interim measures of protection issued by tribunals as illustrated in these published awards include:

· parties to deposit shares in a trust and not to be removed unless agreed by the parties or ordered by the tribunal; 35

· certain moneys to be held in an escrow account under the joint control of the parties pending issuance of the tribunal's award; 36

· respondent ordered to hand over original customs declarations for goods, to disclose where goods are to be found and to refrain from using those goods; 37

· claimant ordered to pay a certain sum to escrow account controlled by the tribunal; 38

· claimant enjoined from any further selling of the respondent's products. In case of a breach of this order claimant was ordered to pay a penalty for each item it would sell; 39

· respondent ordered to reimburse the amount in full envisaged in the letter of guarantee in the event that respondent would call it; 40

· respondent requested to petition the relevant administration to cancel the manufacturing licence and importing registration of raw materials of pharmaceuticals in question; 41

· respondent ordered to pay a certain sum as a provisional payment and subject to the claimant providing a guarantee of like amount; 42 and

· claimants initially ordered to make provisional payment in instalments43 and then authorized to suspend an instalment of that payment subject to providing the respondent with a bank guarantee of like amount. 44[Page30:]

Conclusion

43. Arbitration practice has moved a long way in recent years. It is now beyond question that arbitrators have the power to grant interim and conservatory measures. The only question is the circumstances in which arbitrators should issue such measures. What these awards show is that arbitrators have accepted the responsibility to consider whether to grant the various forms of interim relief. National courts retain the residual authority, both in the first instance and in its supporting role. However, increasingly, the real power is the arbitral tribunal, not only under the ICC Rules, but under international arbitration practice. All that remains outstanding to make this fact really effective is the much discussed amendment or addition to the New York Convention to cover orders of the tribunal, especially in respect of interim relief and conservatory measures.

1
A. Yesilirmak, 'Interim and Conservatory Measures in ICC Arbitral Practice', published in this issue of the ICC International Court of Arbitration Bulletin.

2
J. D. M. Lew, 'The Case for the Publication of Arbitration Awards', in J.C. Schultsz & A. J. van den Berg, eds., The Art of Arbitration (1982) 223; H. A. Grigera Naón, Editorial (1988) 5:2 J. Int'l Arb. 5; K. P. Berger, International Economic Arbitration (1993) at 509-525; and R. A. Schutze, 'The Precedential Effect of Arbitration Decisions' (1994) 11:3 J. Int'l Arb. 69.

3
At first glance, in nine cases some interim relief was granted; in nine cases, interim relief was refused; the other awards discuss some form of interim relief even though there was no formal application. The subject matter of these awards can be broken down as follows: five awards each concerned distribution or agency agreements, and agreements for sale of goods or services; four awards concerned shareholder/joint venture disputes; two awards concerned intellectual property licences; and one award each was concerned with energy, construction, servicing and mining arrangements.

4
W. L. Craig, W. W. Park & J. Paulsson, International Chamber of Commerce Arbitration, 2nd ed. (1990) at 416 where they state that 'ICC arbitrators have the inherent power to make interlocutory orders . . .'

5
See, e.g., infra notes 7 and 8.

6
See, e.g., Article 26 of the Swiss Concordat and Article 658 of the Greek Code of Civil Procedure. See also Article 753 of the Argentine National Code of Civil and Commercial Procedure and Article 818 of the Italian Code of Civil Procedure.

7
Article 17 of the UNCITRAL Model Law 1985, Article 1696 of the Belgian Judicial Code 1998, Section 39 of the English Arbitration Act 1996, Article 1051 of the Netherlands Code of Civil Procedure 1986 and Article 183 of the Swiss Private International Law Statute. In respect of the regulation of interim measures under the arbitration rules of various institutions see, e.g., Article 21 of the AAA International Arbitration Rules, Article 11 of the French Arbitration Association Arbitration Rules, Rule 23 of the Geneva Chamber of Commerce and Industry Arbitration Rules 1992, Article 20 of the German Arbitration Institution DIS Arbitration Rules 1998, Article 25 of the LCIA Arbitration Rules 1998, Article 38 of the Netherlands Arbitration Institution Arbitration Rules 1993, Article 26 of the UNCITRAL Arbitration Rules 1976, Article 46 of the WIPO Arbitration Rules 1994 and Article 28 of the Zurich Chamber of Commerce International Arbitration Rules 1989.

8
See, e.g., Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd [1993] A.C. 334; Carolina Power & Light C. v. Uranex 451 F. Supp. 1044 (ND Cal. 1977); Cass. civ. 3e, 20 December 1982, S.C.I. Le Panorama v. Société immobilière et mobilière du Tertre (S.I.M.T.), Rev. Arb. 1986.233; and Cass. civ. 3e, 7 June 1979, Société d'exploitation du cinéma Rex v. Société Rex, Bull. civ. 1979.III, No.122, Rev. Arb. 1980.78. But see McCreary Tire & Rubber Co. v. Seat SpA 501 F.2d 1032 (3d Cir. 1974).

9
See, e.g., interim award (1998) in case 8879, interim award (1996) in case 8786 and partial award (1995) in case 8113.

10
See, e.g., interim award (1995) in case 7692.

11
See, e.g., partial award (1995) in case 8113.

12
See, e.g., final award (1998) in case 9324.

13
See, e.g., final award (1995) in case 7828.

14
See, e.g., section 44 of the 1996 English Arbitration Act.

15
As it is the case in most of the awards published in this issue.

16
See, e.g., partial award (1995) in case 8113.

17
See also ibid.

18
See, e.g., partial award (1995) in case 8113.

19
See, e.g., interim award (1997) in case 8894 and partial award (1995) in case 8113.

20
See, e.g., interim award (1997) in case 8894.

21
Partial award (1995) in case 8113.

22
See 'Final Report on Interim and Partial Awards' of a Working Party of the ICC Commission on International Arbitration (1990) 1:2 ICC ICArb. Bull. 26.

23
However, the United Nations Commission on International Trade Law is currently undertaking a study to tackle the issue of enforcement. See Report of the Working Group on Arbitration on the Work of its Thirty-Second Session (Vienna, 20-31 March 2000), UN Doc. A/CN.9/468, paragraphs 60-79.

24
Ibid.

25
See, e.g., final award (1998) in case 9154 and interim award (1998) in case 8879.

26
The 'Final Report on Interim and Partial Awards' expressed the view that interim measures of protection should not be issued in the form of an award due to the need to follow the scrutiny procedure. This opinion is no longer likely to have majority support in certain circumstances. See supra note 23.

27
See, e.g., interim award (1998) in case 8879.

28
See, e.g., final award (1998) in case 9154.

29
Ibid.

30
See interim award (1998) in case 8879.

31
See, e.g., final award (1998) in case 9593 and final award (1996) in case 7536.

32
Final award (1998) in case 9593. The tribunal quotes H. M. Holtzman & J. E. Neuhaus, A Guide To The UNCITRAL Model Law On International Commercial Arbitration: Legislative History and Commentary (1989) at 531.

33
See, generally, supra note 24 and text referred to therein.

34
Under section 40 of the English Arbitration Act 1996 parties are under an obligation to do everything necessary to effect the arbitration pursuant to the arbitration agreement. It can be argued that this obligation extends to complying with the interim measures of protection issued by a tribunal.

35
Interim award (1998) in case 8879.

36
Final award (1998) in case 9154.

37
Partial award (1999) in case 10040.

38
Final award (1996) in case 7536.

39
Final award (1994) in case 7895.

40
Final award (1998) in case 9324.

41
Interim award (1997) in case 8894.

42
Interim award (1996) in case 7544.

43
Interim awards (December 1995 and June 1996) in case 8670.

44
Interim award (December 1996) in case 8670.