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Interim Measures

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Interim Measures

The term “interim measure” covers a wide range of orders. Most interim measures are granters at an early stage of a dispute and is a temporary order given by the court that requires a party to perform or refrain from performing a specific act with a view to preserve the status quo. In an ordinary circumstance, an interim measure would be granted in the event where the applicant would otherwise face a risk of serious and irreparable harm, or to prevent the dissipation of assets or evidence. It is usually granted on a provisional basis pending a final resolution of the dispute, i.e. they are subject to later adjustment or setting aside by the arbitral tribunal. However, sufficient grounds for a party to request interim measures in arbitration and the scope of what those measures may be depend on the arbitration agreement, any applicable arbitration rules and the detailed provisions of any national law in force at the seat of arbitration.

For example, in Thai litigation, a plaintiff may submit a request for an interim measure together with the plaint at any time before the court renders its judgment for certain specific measures, such as the following:

The seizure or attachment of the whole or part of a property in dispute, or the property of the defendant, including any money or property of a third person due to the defendant;
A temporary order restraining the defendant from repeating or continuing to perform a wrongful act, breach of contract, or other order with the purpose of minimising the damage and injury the plaintiff may sustain, until the case becomes final or until the court orders otherwise;
An order directing the Registrar, competent official or any other person with authority and duty under Thai law to cease the registration, modification or cancellation of the registration pertaining to the property in dispute or the property of the defendant; or
The provisional arrest and detention of the defendant.

In order for the court to grant the specific interim measure, the plaintiff must prove to the satisfaction of the court that: (i) the submitted plaint has merit; and (ii) there are sufficient grounds to grant the measure, depending on the specific measure requested.

In this regard, even though initially, interim measures may only be granted by a court with wider acceptance and promotion of arbitration worldwide, this issue became relevant as a result of the New York Convention 1958, which allows arbitration awards to be enforceable in most countries worldwide, typically on the same level as the judgment of the court. It is thus arguable that the interim measures issued by the arbitral tribunal should also be recognised as valid and enforceable.

1 Interim Measures under the UNCITRAL Model Law

Due to the fact that arbitration has gradually become more accepted around the world, the United Nations Commission on International Trade Law (the “UNCITRAL”) published a prototype law on arbitration in 1985 to be implemented by countries around the world known as the “UNCITRAL Model Law on International Commercial Arbitration” (the “Model Law”). The Model Law was designed to assist countries in reforming and modernising their laws on arbitral procedure, and was amended in 2006 (the “2006 Model Law”). The amendments, amongst others, introduced a more comprehensive legal regime to deal with interim measures in support of arbitration.

Specifically, Article 17 and Article 17 H of the 2006 Model Law provides as follows:

“Article 17. Power of arbitral tribunal to order interim measures

(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim measures.

(2) An interim measure is any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party to:

(a) Maintain or restore the status quo pending determination of the dispute;
(b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself;
(c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or
(d) Preserve evidence that may be relevant and material to the resolution of the dispute.”

“Article 17 H. Recognition and enforcement

(1) An interim measures issued by an arbitral tribunal shall be recognized as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which it was issued, subject to the provisions of article 17 I (Grounds for refusing recognition or enforcement).

(2) The party who is seeking or has obtained recognition or enforcement of an interim measure shall promptly inform the court of any termination, suspension or modification of that interim measure.

(3) The court of the State where recognition or enforcement is sought may, if it considers it proper, order the requesting party to provide appropriate security if the arbitral tribunal has not already made a determination with respect to security or where such a decision is necessary to protect the rights of third parties.”

From the above two Articles, it is quite clear that the 2006 Model Law intends to grant the arbitral tribunal with the authority to issue interim measures in accordance with the request of a party. Additionally, such measures would be binding and may be enforced by the court without the needs for the party to request the same measure with the court again. The measures could also be enforced irrespective of the country of origin, whilst the court of the country where the measure is to be enforced may only refuse the recognition and enforcement of the interim measures under very limited grounds.

Nevertheless, even though the 2006 Model Law was issued to be an example of a model arbitration law, it would still depend on each specific country as whether it has implemented the Model Law into its national law, and to what extent.

2 Interim Measures under the Thai Arbitration Act

The Thai Arbitration Act B.E. 2545 (2002), which adopted the Model Law before its amendment in 2006, includes the following provision with regard to interim measures in arbitration proceedings:

“Section 16

A party to an arbitration agreement may file a motion requesting the competent court to issue an order imposing interim measures to protect his interest before or during the arbitral proceedings. If the court opines that has such proceedings been conducted in the court, the court would have been able to issue such order, the court may proceed as requested. The provisions governing interim measures under the Civil Procedure Code shall apply mutatis mutandis.

Where the court issues an order at the request of the party pursuant to Paragraph One, if the party filing the motion fails to carry out the arbitral proceedings within thirty days from the date of the court’s order or within the period prescribed by the court, that order shall be deemed cancelled upon the expiration of such period of time.”

Under the Thai Arbitration Act, the parties are required to file a motion requesting the competent court to issue the interim measures. However, the Thai Arbitration Act is silent on the issue as to whether an arbitral tribunal has the power to issue interim measures.

Article 39 of the Thailand Arbitration Institute Rules (the “TAI Rules”) provides that an arbitral tribunal may grant interim measures for the protection of a party as it deems appropriate. However, despite being included in the TAI Rules, we are not aware that an arbitral tribunal in Thailand has ever granted interim measures; the most likely reason being that the parties have proceeded directly to Court pursuant to the Thai Arbitration Act in order to avoid any legal uncertainty. The TAI Rules also contain provisions to the effect that any request for interim measures of an arbitral tribunal will not affect the “right of a party to request the court to grant interim measures”. Furthermore, “Such request shall not be deemed to be incompatible with the arbitral proceedings under [those] Rules”.

3 Interim Measures under the Laws of Other Countries

(i) Japan

The Japan Arbitration Act (Law No. 138 of 2003) includes provisions regarding interim measures or provisional measures, as follows:

“Article 15 (Arbitration Agreement and Provisional Order by the Court)

An Arbitration Agreement shall not preclude the parties from filing a petition, before the commencement or during the course of the arbitration procedure, for a provisional order with the court, in regard to the civil dispute which is the subject of the Arbitration Agreement, and the court that has received such petition from issuing a provisional order.”

“Article 24 (Interim Measures or Provisional Measures)

(1) Unless otherwise agreed by the parties, an Arbitral Tribunal may order any party to take interim measures or provisional measures as the Arbitral Tribunal may consider necessary in respect of the subject matter of the dispute, upon the petition of a party.

(2) An Arbitral Tribunal may order any party to provide appropriate security in connection with the interim measures or provisional measures set forth in the preceding paragraph.”

In summary, the Japan Arbitration Act provides that the parties may file a petition, either before the commencement of the arbitration procedure or during the course of such procedure, to request for a provisional order with the court. Additionally, the parties may also submit a petition requesting for interim measures or provisional measures with the arbitral tribunal, and the arbitral tribunal has the power to order accordingly.

Under Japanese law, interim measures issued by the arbitral tribunal may not be enforceable in court.¹ As such, in the event that the party refuses to act in accordance with the interim measures issued by the arbitral tribunal, the requesting party may be required to resubmit the same request with the court.

(ii) Singapore

The Singapore International Arbitration Act 1994 (the (“IAA”) contains provisions regarding the power of the arbitral tribunal, as follows:

“Section 12 Powers of arbitral tribunal

(1)Without prejudice to the powers set out in any other provision of this Act and in the Model Law, an arbitral tribunal has powers to make orders or give directors to any part for –

(i)an interim injunction or any other interim measure; and

(6)All orders or directions made or given by an arbitral tribunal in the course of an arbitration are, by permission of the General Division of the High Court, enforceable in the same manner as if they were orders made by a court and, where permission is so given, judgment may be entered in terms of the order or direction.”

“Section 12A Court-ordered interim measures

(1)This section is to apply in relation to an arbitration –

(a)to which this Part applies; and
(b)irrespective of whether the place of arbitration is in the territory of Singapore.

(2)Subject to subsections (3) to (6), for the purpose of and in relation to an arbitration referred to in subsection (1), the General Division of the High Court has the same power of making an order in respect of any of the matters set out in section 12(1)(v) to (j) as it has for the purpose of and in relation to an action or a matter in the court.

(4)If the case is one of urgency, the General Division of the High Court may, on the application of a party or proposed party to the arbitral proceedings, make such orders under subsection (2) as the General Division of the High Court thinks necessary for the purpose of preserving evidence or assets.

(5)If the case is not one of urgency, the General Division of the High Court is to make an order under subsection (2) only on the application of a party to the arbitral proceedings (upon notice to the other parties and to the arbitral tribunal) made with the permission of the arbitral tribunal or the agreement in writing of the other parties.

(6)In every case, the General Division of the High Court is to make an order under subsection (2) only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively.

(7)An order made by the General Division of the High Court under subsection (2) ceases to have effect in whole or in part (as the case may be) if the arbitral tribunal, or any such arbitral or other institution or person having power to act in relation to the subject matter of the order, makes an order which expressly relates to the whole or part of the order under subsection (2).”

Section 3 (1) of the IAA, the Model Law, except for Chapter VIII (Recognition and Enforcement of Awards) also has the force of law in Singapore. As such, the provisions regarding the powers of the arbitral tribunal to order interim measures and the recognition and enforcement of such interim measures, as aforementioned, would also be applicable.

In short, under the IAA, the arbitral tribunal has the power to issue interim injunctions or any other measures as necessary, and such orders are enforceable in the same manner as if they were orders made by a court. Additionally, a judgment may be entered in the same terms as the orders if permission has been granted. Under Section 12A of the IAA, even though the court has the same power to issue an interim injunction or any other interim measures as the arbitral tribunal, the court may only do so: (i) in the case of urgency for the purpose of preserving evidence or assets; and (ii) with the permission of the arbitral tribunal or by written agreement of the other parties. In any event, the court may issue an interim injunction or other interim measures in arbitral proceedings only where the arbitral tribunal (and any arbitral institution or person vested by the parties with power in such regard) has no authority or is unable to act effectively for the time being.

In other words, to request for an interim injunction or interim measure, the parties to arbitral proceedings would generally be required to submit their requests to the arbitral tribunal (whereby the orders issued therein would be enforceable in the same manner as if they were an order made by a court), and only in certain cases can the parties apply directly to the court.

(iii) United Kingdom

Under the English Arbitration Act 1996, an arbitral tribunal has the power to grant interim measures as follows:

“Section 39 Power to make provisional awards

(1)The parties are free to agree that the tribunal shall have power to order on a provisional basis any relief which it would have power to grant in a final award.

(2)This includes, for instance, making –

(a) a provisional order for the payment of money or the disposition of property as between the parties, or
(b) an order to make an interim payment on account of the costs of the arbitration.

(3)Any such order shall be subject to the tribunal’s final adjudication; and the tribunal’s final award, on the merits or as to costs, shall take account of any such order.

(4)Unless the parties agree to confer such power on the tribunal, the tribunal has no such power. This does not affect its powers under section 47 (awards on different issues, &c.).”

“Section 42 Enforcement of peremptory orders of tribunal

(1)Unless otherwise agreed by the parties, the court may make an order requiring a party to comply with a preemptory order made by the tribunal.

(2)An application for an order under this section may be made –

(a) by the tribunal (upon notice to the parties).
(b) by a party to the arbitral proceedings with the permission of the tribunal (and upon notice to the other parties), or
(c) where the parties have agreed that the powers of the court under this section shall be available.

(3)The court shall not act unless it is satisfied that the applicant has exhausted any available arbitral process in respect of failure to comply with the tribunal’s order.

(4)No order shall be made under this section unless the court is satisfied that the person to whom the tribunal’s order was directed has failed to comply with it within the time prescribed in the order or, if no time was prescribed, within a reasonable time.

(5)The leave of the court is required for any appeal from a decision of the court under this section.”

Under the English Arbitration Act, regarding agreement by the parties, the arbitral tribunal has the power to order any relief it would have the power to grant in a final award, on a provisional basis. Additionally, an application to the court can only occur in the event that the parties have exhausted all available arbitral processes in respect of the failure to comply with the order of the arbitral tribunal. In other words, upon agreement by the parties, the parties must request for provisional relief with the arbitral tribunal and, unless agreed otherwise, the court shall have the power to order the opposing party to comply with the order of the arbitral tribunal but only in the case where all available arbitral processes have been exhausted by the requesting party.

4 Analysis on the Implementation and Development of Interim Measures through Arbitration in Thailand

From the example of the regulations related to arbitration and interim measures in arbitral proceedings as provided above; different countries have different approaches regarding interim measures in arbitral proceedings. Certain countries have minimal court interference regarding interim measures issued by an arbitral tribunal, e.g., in Singapore where an interim measures issued by an arbitral tribunal may be enforced in the same manner as measures issued by the court, while other countries requires that an interim measures to be issued by the relevant court to be fully enforceable, e.g. in Japan, even though the arbitral tribunal has the authority to issue interim measures, such measures may not be enforced by the court.

Certain jurisdictions allow the court’s interference only when necessary or in the event where the arbitral tribunal is unable to act effectively, e.g. in Singapore and England & Wales , the court may issue an order under certain conditions or only when necessary.

As for Thailand, under the Thai Arbitration Act, the arbitral tribunal has not been granted with a specific power to issue interim measures, although it is not explicitly prohibited, and parties are generally best advised to request interim measures with the court. Whilst the TAI Rules provide for interim measures to be granted, there is no legal basis under the Thai Arbitration Act, and it is uncertain whether such measures may be enforced. In such case, the requesting party may be required to re-request for the same measures with the court again. Moreover, it is also unclear whether parties in foreign arbitration proceedings may request a Thai court to enforce interim measures with regard to the property within Thailand which is the subject of arbitral proceedings, since the law is arguably unclear on the subject.

In order for arbitration proceedings in any country to be attractive in the eyes of foreign parties, minimal interference by the court is an advantage, for the reasons of bias and time efficiency. Since the Model Law has already been amended, it is generally considered as the new standard for arbitration regulations. As such, it is inevitable that sooner or later, Thailand will amend its Arbitration Act in order to be considered as one of the countries with arbitration proceedings that conform with international standards, and to continue to attract high levels of international investment.

As for the issue of how the Thai Arbitration Act should be amended, it would depend on the degree of court interference. If Thailand wishes to limit the power of the arbitral tribunal, then an amendment to the Arbitration Act may not be necessary. However, in the event that Thailand seeks to amend its arbitration regulation to conforms with international standards, the amount of court interference should be taken into consideration, and examples of arbitration regulations from countries with minimal court interference, such as Singapore and the United Kingdom, should be studied and followed.

¹ Hiroyuki Tezuka, Yutaro Kawabata, Japan Arbitration Guide (part of International Bar Association Arbitration Committee Arbitration Guide, updated January 2018), 12.

Authors

Jirapong SRIWAT

Partner
Bangkok

He advises on a wide range of merger-and-acquisition transactions, joint ventures, foreign direct investments, general corporate, international corporate finance, and restructurings. His expertise is advising, structuring and leading complex transactions both within and outside of Thailand. He regularly represents, among others, Japanese, Thai and international investors, international investment banks, international private equity investors, hedge funds and international corporations and financial institutions. His main areas of practice include public and private mergers and acquisitions (takeover rules), legal due diligence, joint ventures, fund raising, listings, block trades, stock exchange and securities exchange related laws, restructuring of shareholdings and general corporate advice. His additional areas of practice also cover banking and finance, renewable energy in Japan and Thailand, exchange control law, labor law, and debt restructurings. Before setting up the Bangkok office of Nishimura & Asahi in 2013, he worked with Linklaters for almost a decade. He is also a registered arbitrator of the Thai Arbitration Institute (TAI) with the areas of expertise in corporate M&A, joint venture, banking and finance, capital markets, debt restructurings and energy.

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