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Executive Summary

Interim relief (also known as preliminary, provisional or conservatory measures) is relief that an arbitral tribunal or court may order on a temporary basis in order to protect the interests of a party to the dispute before final resolution. A common feature in civil litigation regimes under the domestic law of various countries, interim relief also is available in international arbitration — both investor-state and commercial. Classic forms of interim relief include measures for maintaining the status quo, preserving and collecting evidence, non-aggravation of the dispute, preservation of assets, protection of the general integrity of the proceedings, and security for costs.

1.0 Introduction

Most institutional and ad hoc arbitral rules contain provisions addressing the power of arbitral tribunals to award interim relief. It is also common for such provisions to be present in an applicable treaty, investment agreement, arbitration agreement or law of the place of arbitration.

According to reported statistics from major arbitral institutions, e.g., the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the Hong Kong International Arbitration Centre (HKIAC), the Singapore International Arbitration Centre (SIAC), and the International Centre for Dispute Resolution (ICDR), applications for interim measures are on the rise in international arbitrations. Previously (from the mid-1970s through the early 2000s), the practice of many parties was to seek interim measures from national courts rather than arbitral tribunals. The increase in applications to tribunals for interim measures has coincided with the rising popularity of the appointment of emergency arbitrators,¹ as well as changes in institutional arbitration rules that are more conducive to the grant of interim measures.

2.0 Interim Measures under Institutional and Ad Hoc Arbitration Rules

Most institutional arbitration rules do not provide specific criteria for awarding interim relief and do not specify the types of relief that may be granted. For example, Article 28 of the ICC Arbitration Rules simply provides that the arbitral tribunal may order “any interim or conservatory measure it deems appropriate.” Similarly, Article 47 of the ICSID Convention provides: “Except as the parties otherwise agree, the Tribunal may, if it considers that the circumstances so require, recommend any provisional measures which should be taken to preserve the respective rights of either party.” (Emphasis added). In turn, ICSID Arbitration Rule 39 sets forth no specific guidance on what interim measures may be granted or any substantive criteria for deciding such requests.

Other institutional rules provide slightly more specificity. For example, Article 25 of the LCIA Rules provide that the tribunal shall have to power to order: (a) any party to provide security for the amount in dispute, (b) the preservation of documents or other things relating to the subject-matter of the arbitration, or (c) on a provisional basis, any relief which the tribunal has the power to grant in a final award.

Other rules provide still even more specificity, both as to the types of relief that may be granted and the criteria for so doing. Particularly noteworthy is Article 26 of the

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UNCITRAL Arbitration Rules which provides examples of four types of relief that may be ordered and sets out three criteria for ordering such relief: (i) the movant has a reasonable possibility of success on the merits of its claim; (ii) there exists a risk of irreparable harm unless the relief requested is granted, i.e., harm that cannot be compensated with an award of monetary damages; and (iii) the relief requested is “proportional,” i.e., that the potential irreparable harm outweighs the harm to the non-movant from granting the requested relief.

In addition to these three criteria, arbitral tribunals (in particular emergency arbitrators) often examine the “urgency” of the relief requested.

When considering the question of whether and in what circumstances interim relief is available in a particular proceeding, the first step should be to review the applicable rules and all other sources of authority, i.e., any applicable treaty, investment agreement, arbitration agreement or the law of the arbitration.

3.0 Concurrent Jurisdiction of National Courts — Whether to Proceed in Court or Before the Tribunal?

In many cases, the power of an arbitral tribunal to order interim measures exists concurrently with the power of a national court to order such measures. This is reflected in various arbitral rules. For example, Article 26(d) of the UNCITRAL Rules states that: “A request for interim measures addressed by any party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate, or as a waiver of that agreement.” Similarly, ICSID Arbitration Rule 39(6) provides:

Nothing in this Rule shall prevent the parties, provided that they have so stipulated in the agreement recording their consent, from requesting any judicial or other authority to order provisional measures, prior to or after the institution of the proceeding, for the preservation of their respective rights and interests.

Given this concurrent jurisdiction, a question often arises as to whether it is better to request interim measures from the arbitral tribunal or the national courts. While each case must be analysed on its own particular circumstances, the general arguments in favour of proceeding before the arbitral tribunal are that the arbitrators, in comparison to the courts, may have more familiarity with the facts of the case, have specialised legal or technical knowledge relevant to the requested interim measures, provide a neutral forum as compared to potentially unfriendly domestic courts, and protect the confidentiality of the parties and issues.

With respect to national courts, a traditional argument is that the courts are immediately available to issue emergency relief, in comparison to arbitral tribunals that have to be constituted before a ruling can be issued. This advantage, however, has been substantially lessened in recent years with the above-referenced advent of provisions in most institutional arbitral rules that provide for the appointment of emergency arbitrators (e.g., Article 29 of the ICC Rules). A second traditional argument in favour of the courts is that court-ordered interim measures have the immediate effect of law and are immediately enforceable by the coercive authority of the state, without any agreement of the parties.

4.0 Practical Effect of Rulings on Interim Measures by Arbitral Tribunals

There is no dispute that a tribunal lacks the same coercive powers as a national court to enforce compliance with an interim measures order. It is debatable, however, whether this has any significant practical effect. Frequently, parties voluntarily comply with interim measures orders.² A good illustration of this is presented in the following case.

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Even though a tribunal’s ruling on interim measures may not have the effect of an order or immediate coercive power, a party disregards such a ruling at its own peril. Ultimately, a tribunal has the authority to issue a final award adjudicating the rights vis-à-vis the parties, and to draw adverse inferences and/or award costs against a non-compliant party. This combination of “hard” and “soft” power, and its effect on party conduct and the outcome of a case, was illustrated in Pope & Talbot. There, the use by the Tribunal of “soft” power dicta in denying a request for interim measures effectively restrained the government from exercising its general regulatory authority during the pendency of the arbitration. Also, the fact that the Tribunal then held the government liable for an independent NAFTA violation on the basis of the conduct complained of in the investor’s interim measures motion, illustrates the “hard” power that an arbitral tribunal always possesses over party conduct.

5.0 Ordering Interim Measures Against a Government — Special Considerations

In investor-state arbitrations, which by definition involve a foreign investor on one side and a sovereign state on the other, fundamental and practical questions exist concerning the authority that a tribunal has to order certain forms of interim relief against a sovereign.

The key issue is the extent to which a tribunal can legitimately restrict the exercise of a sovereign’s public powers. In such circumstances, the principle that a tribunal has the authority to order interim relief may, depending on the circumstances, conflict with another fundamental investor-state principle: that a tribunal does not have the authority to enjoin a sovereign from taking actions that violate international law, only to award compensation for such actions.

In this respect, it is worth noting that Article 39 of the ICSID Arbitration Rules, which concerns interim relief, speaks about a tribunal “recommending” “provisional measures” (interim relief) rather than “ordering” such relief:

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(1) Any time after the institution of the proceeding, a party may request provisional measures for the preservation of its rights be recommended by the Tribunal. The request shall specify the rights to be preserved, the measures the recommendation of which is requested, and the circumstances that require such measures. (Emphasis added).

That Rule 39 speaks in terms of a “recommendation” rather than an “order” has been considered a semantic distinction by ICSID tribunals, and almost all tribunals have held that the term “recommend” is equivalent to, and has the same legal effect, as “order”. That being said, this semantic distinction does nicely convey the difficulties that an arbitral tribunal can face in attempting to restrict the exercise of a sovereign’s public powers through interim measures orders. As discussed in the next section, this issue can be quite acute in the context of a sovereign’s authority to institute criminal proceedings.

5.1 Enjoining a State from Prosecuting Criminal Proceedings Against an Investor

Interim measures that go to the exercise of a state’s core public powers authority — for example, the criminal police powers — can be expected to be strictly scrutinised and require compelling proof. If any point of a claimant’s argument is in doubt, it may be difficult to obtain interim measures that would have the effect of commanding a government to cease the exercise of its sovereign authority within its own territory.⁸

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6.0 Security for Costs in Investor-State Arbitration

A traditional interim measure is security for costs. Such measure can take on added significance in international arbitration given the general principle that “costs follow the event”, and thus that a prevailing party often is awarded some or all of its legal fees and expenses. In the context of investor-state arbitration, a particular issue arises when a state faces claims brought by a claimant with few assets. (Claimants often argue that they have few assets as a result of the state “expropriating” their principal assets without adequate compensation.) With a low-asset claimant, any cost award in favour of the state can be a hollow victory. This situation, some argue, is further exacerbated when a low-asset claimant is funded by a third-party litigation funder, given that such funders ordinarily do not satisfy costs awards (see Chapter 16). This issue presented itself in the following case, with interesting results.

RSM Production in 2014 was the first ICSID case in which a request for security for costs was granted. Obtaining security for costs in investor-state arbitration is rare and was only granted with “exceptional circumstances” present. Evidence of out-of-court conduct by the parties may be considered by a tribunal in evaluating the risk that a party will not be able to satisfy any resulting costs award, as will the existence of third-party funding.

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Notes

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