One of the new features of the updated ADR Institute of Canada (ADRIC) Arbitration Rules, which came into effect at the end of 2014, is the express provision for “Urgent Interim Measures”.
Unlike Superior Court judges, arbitrators have no inherent jurisdiction. They depend upon the Act and the arbitration agreement for their jurisdiction. In some situations, it has been unclear whether an arbitrator has the authority to grant interim relief. In others, delays in the appointment of the arbitrator made it impossible to obtain urgent relief. If parties have to go to court for such relief, it may result in more cost and delay.
The ADRIC Arbitration Rules now include, in section 3.7, specific provisions for the appointment of an interim arbitrator and the granting of interim relief.
A party may apply to the Institute for Urgent Interim Measures either before a tribunal has been appointed –before or after a notice of request to arbitrate has been delivered – or if the appointment of an arbitrator has been challenged. This means a party can get urgent relief even if a procedural wrangle has delayed the arbitration.
The interim arbitrator can be appointed even if the tribunal’s jurisdiction is disputed, so a party can seek urgent interim measures in a situation where the other party is denying that the dispute is subject to arbitration or is refusing to co-operate in the appointment of an arbitrator.
The applicant must provide a statement of the interim measures it is seeking and the reasons why they can’t wait for the tribunal to be constituted. The application can be made on notice to the other parties to the arbitration, or if the circumstances warrant, it can be made without notice.
The Institute must appoint an interim arbitrator as soon as possible, normally within two days of receiving the application. Any challenge to the appointment must be made within 24 hours.
The interim arbitrator is required to set the procedure for the urgent interim measures application as quickly as possible, normally within two days of being appointed, and must conduct the proceedings in a manner that takes the nature and urgency of the application into account. The interim arbitrator is also required to take into account the fundamental purpose of the Rules, which state:
The Rules’ purpose is to enable parties involved in a dispute to reach a just, speedy, and cost-effective determination of it, taking into account the values that distinguish arbitration from litigation.
Rule 3.7 further states that the interim arbitrator’s decision must be make within 15 days unless the parties agree or the interim arbitrator orders otherwise.
This gives the interim arbitrator an explicit mandate to conduct the application for urgent interim measures quickly and expeditiously.
The determination of the application is made in the form of an order and is binding on the parties.
The interim arbitrator has the full authority and discretion to grant any interim relief he or she considers appropriate, taking into account the need for the requested relief, the urgency of the matter and the effect on the parties of granting or refusing the relief. This includes the power to grant immediate relief until a decision is made on the application for Urgent Interim Measures.
If interim relief is granted without notice, the interim arbitrator must give the other parties the opportunity to be heard as soon as practicable and the order is valid only until a further decision is rendered on notice to all the parties.
An interim arbitrator’s order does not bind the tribunal with respect to the issues decided in the order. The tribunal has full discretion to modify, terminate or annul an interim arbitrator’s order. So does the interim arbitrator, if either party requests it. The parties may pursue further claims related to the Urgent Interim Measures application, including recovery of the costs of the application and claims related to compliance or non-compliance with an order.
There are some limitations to the scope of Rule 3.7. It applies only to parties who are signatories to an arbitration agreement and their successors. And it does not apply if the parties have agreed to another procedure that provides for conservatory, interim, or similar measures.
Nothing in Rule 3.7 prevents a party from seeking interim measures in court, either before or after applying for Urgent Interim Measures under the ADRIC Rules.
I was appointed interim arbitrator in an application for Urgent Interim Measures earlier this year. It was a commercial dispute flowing from the termination of a contract and involved issues relating to the performance of the contract and the payment of outstanding invoices. The application for Urgent Interim Measures related to a request for the delivery of property that the applicant claimed belonged to it under the terms of the contract.
The application was dealt with in 15 days from the date of appointment to the date of the order. There is no doubt that this aggressive schedule was hard on the parties and their counsel. It was also a challenge for the arbitrator who had to review the material to prepare for a hearing and render a decision very quickly.
The evidence at the hearing included affidavits and exhibits from both sides, including significant detail about all of the issues in dispute, not just those relating to the interim relief that was requested. In most cases, I suppose, the equities claimed on both sides will include some of the broader issues in dispute.
A half-day hearing was held, at which each side had the opportunity to cross examine the other on their affidavits. Each side also provided the arbitrator with briefs of their legal arguments and made oral arguments at the hearing.
The order was delivered three days later.
The schedule was roughly this:
- Day 1 – appointment of arbitrator
- Day 2 – initial conference call with counsel to set schedule
- Day 6 – response to application and respondent’s affidavits due (over a weekend)
- Day 8 – reply affidavits due
- Day 11 – factum due from each party
- Day 12 – hearing
- Day 15 – Order made
After the order was delivered, the parties sought clarification and amendment on certain aspects of the order. Beyond that, as far as the arbitrator is aware, the parties complied with the order and the arbitration did not proceed any further. Whether that means the other issues in dispute were resolved or not is not known.
A few additional observations:
As noted above, Rule 3.7 does not apply if the parties have agreed to another procedure that provides for conservatory, interim, or similar measures. This means that the typical arbitration clause that excludes certain matters from arbitration, such as injunctive relief or disputes over ownership of intellectual property, may preclude an application for Urgent Interim Measures. Courts often measure urgent relief in months, rather than days or weeks. Commercial lawyers may want to take another look at their standard arbitration clauses in light of the new ADRIC Arbitration Rules.
The 15-day deadline in the Rule is very aggressive. In almost every case, at least one of the parties (usually the respondent) will argue for extra time. In some cases, both sides may want more time. But the wording of the Rule is mandatory. The decision must be made within that time unless the parties agree otherwise, or the arbitrator decides more time is needed. Extensions can be granted, but the Rule implies that they should not be automatic and should be as short as possible.
Nothing in the interim order is final. Each party can ask the interim arbitrator for a further order, if they wish. And they can raise any of the issues again with the tribunal. This would seem to make it appealing for parties to seek Urgent Interim Measures where appropriate. They have very little to lose. If the relief sought is denied, the applicant can still seek the same relief from the arbitration tribunal. If relief is granted, it may effectively end the arbitration or at least take those issues off the table. On the other hand, the respondent can seek to have the order modified or annulled and can seek further redress from the tribunal if it disagrees with the decision of the interim arbitrator.