Concurrent jurisdiction of courts and arbitration in the application of interim measures: regulations and recommendations

During the arbitration proceedings, the request for interim measures by the dispute resolution body is an option that the parties may use if necessary. Although this request does not significantly affect the arbitral proceedings and the proceedings continue as usual, the question arises as to whether the jurisdiction of the court limits the jurisdiction of the arbitral tribunal when both dispute resolution mechanisms have concurrent jurisdiction to resolve the party's request for interim measures. This article will focus on the concurrent jurisdiction of courts and arbitration in the application of interim measure.

Jurisdiction of Courts and Arbitration Tribunals in applying interim measures

Firstly, it should be noted that the Law on Commercial Arbitration 2020 ("LCA 2010"), Resolution No. 01/2014/NQ-HDTP, and the Civil Procedure Code 2015 ("CPC 2015") do not provide a specific definition of interim measures. Instead, these regulations provide an enumerated list of specific interim measures (6 measures). This approach can be interpreted as limiting the power of the arbitral tribunal to apply interim measures, as it only permits the implementation of measures listed in Clause 2, Article 49 of the LCA 2010. This means that the arbitration tribunal does not have the authority to independently determine and apply interim measures beyond those provided for in the existing legal instruments. Therefore, if a party's request is outside the scope of the arbitral tribunal's authority, the application of interim measures will be supported by the court and must be requested by the party seeking the interim measure.

Secondly, with respect to the timing of the request for interim measures, Article 48.1 of the LCA 2010 represents an improvement over the Arbitration Decree 2003 by allowing any party to the dispute to request the arbitral tribunal or the court to apply interim measures from the commencement of the proceedings. Furthermore, Resolution No. 01/2014/NQ-HDTP specifies that a party may request interim measures immediately after filing a request for arbitration.[1]

However, the application of interim measures by an arbitral tribunal is subject to the constitution of the arbitral tribunal to resolve the dispute. In cases where the arbitration proceedings have commenced but the arbitral tribunal has not yet been constituted, the requesting party may apply to a competent court for assistance in applying interim measures, even though the arbitral tribunal has jurisdiction to resolve the dispute. In such cases, the assistance of the court will ensure that interim measures are applied promptly and effectively, taking into account the urgent nature of such measures to protect the rights of the parties to the dispute.

Based on the provisions of Clause 2, Article 48 of the LCA 2010, the power of the court to apply interim measures is not considered a basis for excluding the jurisdiction of the arbitral tribunal. This is because the court's intervention is considered at the request of one of the parties to the dispute. Therefore, a request for the Court's assistance in applying interim measures is not considered a rejection of the arbitration agreement or a waiver of the right to settle the dispute by arbitration. The purpose of this mechanism is to ensure that the arbitral proceedings are conducted with the assistance of the court, a state authority with coercive powers.

In such cases, the competent court may intervene or issue a decision on the application of interim measures, particularly if the arbitral tribunal's decision on the application of interim measures against a third party is not really effective. Unlike civil law, an arbitral tribunal does not have the power to enforce interim measures against a third party. Moreover, as a general principle, interim measures should not be applied simultaneously by the court and the arbitral tribunal. If a party has already applied to the court for interim measures, the arbitral tribunal must refuse to apply such measures, as provided in Clause 3, Article 49 of the LCA 2010. For example, in disputes concerning a factory owned by a disputing party in connection with a lease agreement between the parties, but where the lessor has mortgaged the property to a commercial bank without notifying the lessee, the lessee may institute arbitration proceedings in accordance with the agreement. However, if the lessee perceives a risk of the disputed asset being transferred to another party before the arbitration tribunal is constituted, the lessee has the right to request the court to apply the measure of "seizure of the disputed asset". If the arbitral tribunal is constituted at that time and also receives a request for interim measures from a party, it must refuse the request. In addition, a request for interim measures to the arbitration tribunal may face practical difficulties in execution, as the mortgage bank is not a party to the dispute and the decision of the arbitration tribunal is not binding on third parties. In this sense, a request to the court for a decision on the application of interim measures is not considered contrary to the arbitration agreement entered into[2], and the arbitration agreement is not invalidated by the court's power to decide on requests for interim measures if necessary.

However, this provision raises concerns about the potential impact on the independence of arbitration as a dispute resolution mechanism. The overlapping jurisdiction between courts and arbitral tribunals in granting interim measures could lead to inconsistencies and undermine the autonomy of arbitration. In practice, there have been numerous cases of overlapping jurisdiction in relation to applications for interim measures.

Practical difficulties regarding the jurisdiction of the arbitral tribunal

Although the current legal system has been Although the current legal system has been adjusted to allow arbitration tribunals to issue decisions on the application, modification, supplementation, or revocation of interim measures concurrently with courts, there are still some practical challenges that need to be addressed. Notably, arbitrators and courts have different interpretations and applications of the provisions on interim measures. Moreover, the flexibility and discretion in applying interim measures in arbitration can affect the dispute resolution process due to the lack of clarity regarding urgent requests.

The first limitation lies in the fact that arbitration tribunals face more restrictions on the types of interim measures they can apply compared to civil courts. If a party requests an interim measure that is not listed in Clause 2, Article 49 of the LCA 2010, the arbitration tribunal must, in principle, refuse the request. This limitation not only hinders the legal process but can also delay the resolution of urgent matters. Consequently, a mechanism for courts to support arbitration tribunals in applying interim measures within the arbitration tribunal's jurisdiction has been established under Article 53 of the LCA 2010 and Clause 2 of Resolution No. 01/2014/NQ-HDTP. In such cases, the court can only support the requested interim measure when:

1. The request of a party to the dispute is outside the jurisdiction of the arbitral tribunal; or
2. The requesting party seeks multiple interim measures simultaneously, and the arbitral tribunal lacks the authority to grant some or all of those measures;"

The second limitation relates to the arbitration tribunal's authority of the arbitral tribunal to grant interim measures against third parties. Arbitral tribunals do not have the power to order interim measures against third parties who are not parties to the arbitration agreement. As a result, such requests are usually made to a court. To date, there has been no guidance on the arbitral tribunal's power to issue interim measures against third parties, nor any interpretation of Clause 3, Article 49 of the LCA 2010. In other words, it is generally understood that, due to the nature of arbitration, arbitral tribunals cannot issue interim measures against third parties who are not parties to the dispute. Therefore, the court's jurisdiction in such cases serves as an effective mechanism for resolving disputes in arbitration, especially with regard to interim measures, until further legislative amendments or guidance from the competent authorities.

There is a need to expand the authority of the arbitral tribunal to order interim measures, both before and after the constitution of the arbitral tribunal.

According to Resolution No. 01/2014/NQ-HDTP, the parties to a dispute have the right to request a court to order interim measures immediately after filing a request for arbitration. However, the current legal framework seems to favour court intervention, as there is no clear provision for requesting the appointment of an arbitrator to deal with such matters before the arbitral tribunal is constituted. In cases where the arbitral tribunal has not yet been constituted and an urgent situation arises, requesting interim measures from the court is the only way to protect the parties' urgent interests without violating the arbitration agreement. Conversely, once the arbitral tribunal is constituted, such requests are less problematic and are clearly regulated in the Law on Commercial Arbitration 2010. It is questionable whether it would be appropriate to consider granting arbitrators the power to deal with requests for interim measures before the arbitral tribunal is formally constituted, without the need for court intervention.

Referring to international legal standards, Article 42(f) of the Arbitration Rules of the Netherlands Arbitration Institute (NAI) allows the Institute to immediately appoint an arbitrator to decide on interim measures without the involvement of a court. Similarly, the arbitration rules of the International Chamber of Commerce (ICC) and the Singapore International Arbitration Center (SIAC) have also granted arbitrators the power to decide on interim measures in their latest rule amendments.[3] Such provisions allow arbitrators to resolve requests by claimants or respondents without recourse to local courts. Therefore, one solution to consider is to establish a mechanism that allows arbitral tribunals to order interim measures without court intervention, by clearly defining the tribunal's powers in the early stages of the arbitration or by appointing an arbitrator to deal with interim measure requests, especially in urgent cases.

With the expansion of the arbitral tribunal's power to order interim measures and the accountability of the tribunal and arbitrators in the event of wrongful orders, the only remedy for a party adversely affected by an interim measure is to bring an action for damages in court. This remedy is not automatic for damages resulting from decisions of the arbitral tribunal or arbitrators, but requires a separate action. In order to increase the effectiveness and accountability of arbitral tribunals, it is proposed that claims for damages should first be dealt with by the arbitral tribunal itself. Only if the claimant remains dissatisfied should he or she be able to bring a court action.

Courts and arbitration are two independent dispute resolution mechanisms, the assistance of the courts is necessary. However, due to the limited conditions for the application of interim measures, the time frame for resolving urgent and temporary requests, and the actual implementation of interim measures by arbitral tribunals, there are often significant difficulties. With the mechanism for enforcing arbitral awards on interim measures provided by the Civil Enforcement Law, it is necessary to adjust the legal provisions to facilitate the application of interim measures and protect the legitimate rights of the disputing parties. These proposals aim not only to improve the arbitration process, but also to enhance transparency and fairness in the resolution of commercial disputes.