Latest News
Stop Gap Arrangements in Arbitration: A Practical Guide
Stop-gap arrangements are interim measures that can be ordered by an arbitral tribunal or a court to preserve the status quo, prevent irreparable harm, or secure the enforcement of the award. They can take various forms, such as injunctions, attachments, orders to provide security, or orders to perform or refrain from performing certain acts.
Some examples of stop-gap arrangements are:
- An order to freeze the assets of a party or a third party to prevent their dissipation or transfer.
- An order to restrain a party from taking any action that would harm the other party or the arbitration process, such as initiating parallel proceedings, disclosing confidential information, or terminating a contract.
- An order to compel a party to take positive steps to preserve evidence, cooperate with the tribunal, or comply with a contractual obligation.
- An order to require a party to deposit a certain amount of money or provide a bank guarantee as a security for the potential award or the costs of the arbitration.
Stop-gap arrangements can be sought from the arbitral tribunal itself or a national court. The choice depends on several factors, such as the availability and effectiveness of the tribunal, the applicable law and arbitration rules, the urgency and nature of the relief sought, and the risk of conflicting or inconsistent decisions.
Some advantages of seeking stop-gap arrangements from the tribunal are:
- The tribunal has a better understanding of the dispute and the parties' interests.
- The tribunal can tailor the relief to suit the specific circumstances of the case.
- The tribunal's decision is more likely to be respected and enforced by the parties and other tribunals or courts.
Some disadvantages of seeking stop-gap arrangements from the tribunal are:
- The tribunal may not have the power or jurisdiction to grant the relief requested, especially if the arbitration agreement does not expressly provide for it.
- The tribunal may not be constituted or available in time to deal with the urgent request.
- The tribunal's decision may not be enforceable in some jurisdictions or may be challenged or set aside by a court.
Some advantages of seeking stop-gap arrangements from a court are:
- The court may have broader powers and jurisdiction to grant the relief requested, especially if it relates to third parties or non-arbitral matters.
- The court may be more accessible and expeditious than the tribunal.
- The court's decision may have more coercive force and may be easier to enforce in some jurisdictions.
Some disadvantages of seeking stop-gap arrangements from a court are:
- The court may not have sufficient knowledge or expertise on the dispute and the arbitration process.
- The court may interfere with the autonomy and confidentiality of the arbitration.
- The court's decision may conflict or interfere with the tribunal's decision or jurisdiction.
To avoid or minimize these potential problems, parties should consider the following practical tips when seeking stop-gap arrangements in arbitration:
- Draft clear and comprehensive arbitration agreements that address the issue of interim relief and specify the powers and procedures of the tribunal and/or the court.
- Choose an arbitration seat and rules that support and facilitate interim relief, such as those that allow for emergency arbitrators, expedited formation of tribunals, or recognition and enforcement of interim measures.
- Communicate and coordinate with the other party and the tribunal or court before making or responding to a request for interim relief, to avoid surprises, delays, or misunderstandings.
- Provide sufficient evidence and arguments to support the request for interim relief, such as showing a prima facie case on the merits, a risk of irreparable harm, a balance of convenience in favour of granting the relief, and adequate security for costs or damages.
- Respect and comply with any interim measure ordered by the tribunal or court, unless it is successfully challenged or modified by a higher authority.
Stop-gap arrangements are useful tools that can help parties protect their rights and interests during arbitration proceedings. However, they also entail risks and challenges that require careful planning and execution. By following these practical tips, parties can maximize their chances of obtaining effective and enforceable interim relief in arbitration.
- Stop gap arrangements are interim measures that can be ordered by an arbitral tribunal or a court to preserve the status quo, prevent irreparable harm, or secure the enforcement of the award.
- Stop gap arrangements can be sought from the tribunal or the court, depending on various factors, such as the availability and effectiveness of the tribunal, the applicable law and arbitration rules,
- Some advantages and disadvantages of seeking stop gap arrangements from the tribunal or the court are discussed.
