Author: Mohannad A. El Murtadi Suleiman*
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Introduction
Interim measures are valuable tools in international arbitration to deal with cases in which one of the parties stands the risk of suffering harm in connection with its claims before a tribunal renders a final decision on such claims. But despite their frequent use in international arbitration, the arbitral community has yet to agree on standards that tribunals should employ in dealing with them. Those standards will depend on the type of the requested measure—whether the requested measure is a mandatory or prohibitive injunction, an anti-suit injunction, an order for the preservation of assets or evidence, an order compelling a party to post security for costs, or any other form of interim measure. For mandatory or prohibitive injunctions, the debate about the appropriate standards centers on two factors. The first relates to the level of harm that the applicant could suffer in the absence of interim measures—whether it should be irremediable and what is meant by the harm being irremediable. The second relates to the strength of the applicant’s case on the merits—whether such a case should be strong enough to allow one to conclude that the applicant will likely succeed in its claim. This post argues for adopting high standards regarding these two factors.
An Abstention from Stating Clear Standards
Under most arbitration rules, it has long been accepted that an arbitral tribunal deciding the parties’ claims is empowered to grant interim measures in connection with those claims. Yet, most of those rules provide no guidance regarding the appropriate standards that tribunals should apply when deciding interim measures applications. For example, Article 28 of the ICC Arbitration Rules states that a tribunal may issue “any interim or conservatory measure it deems appropriate” without clarifying any conditions. Article 25 of the LCIA Arbitration Rules similarly states that a tribunal may issue interim measures “upon such terms as the tribunal considers appropriate in the circumstances” without any guidance regarding the requirements for such measures. Article 37 of the SCC Arbitration Rules provides that a tribunal can order “any interim measure it deems appropriate” without explaining its requirements. Exceptionally, Article 26 of the UNCITRAL Arbitration Rules sets standards for issuing interim measures, but those standards are low. Under such standards, a tribunal may grant a request for interim measures upon the applicant showing that it could suffer harm “not adequately reparable” by a damages award and that such harm substantially outweighs the harm that the opposing party could suffer from the requested measures, and that there is a “reasonable probability” that the applicant will prevail on the merits.
Applying Low Standards
The lack of clear requirements in the providers’ rules has led some tribunals to apply low standards to interim measures applications, granting such measures in cases in which the applicant’s case is not frivolous (or not manifestly without merit). For example, in Sergei Paushok, CJSC Golden East Company, CJSC Vostokneftgaz Company v. The Government of Mongolia, the tribunal granted the claimants’ interim measures application based on its determination that their claims were not “frivolous or obviously outside the competence of the Tribunal.”[1]
Other tribunals have granted interim measures requests in cases in which the harm alleged by the applicant could be remedied by a monetary award. For example, in PNG Sustainable Development Program Ltd. v. Independent State of Papua New Guinea, the tribunal granted the claimant’s request for interim measures even though the harm alleged by the claimant was remediable by an award of damages, ruling that “the term ‘irreparable’ harm is properly understood as requiring a showing of a material risk of serious or grave damage to the requesting party, and not harm that is literally ‘irreparable’ in what is sometimes regarded as the narrow common law sense of the term.”[2]
In addition, some tribunals have considered that an alleged increase in the applicant’s harm between the alleged breach and the tribunal’s final ruling justified ordering interim measures to mitigate the applicant’s losses. For example, in ICC Case No. 10596, the tribunal ruled that such an increase in the applicant’s harm justified granting the applicant’s request for interim measures even though any additional harm could have been remedied with a monetary award. The tribunal stated that such an increase “should be avoided rather than remedied” and that it is “unreasonable to expect that a party waits for the final award” when any additional losses could be avoided.[3]
Justifications for Lowering the Standards
Proponents of applying low standards for interim measures applications often argue that a tribunal should avoid conducting a serious analysis of the claims’ merits at an early stage of the proceedings.[4] Thus, when faced with an application for interim measures, a tribunal should give the applicant the benefit of the doubt regarding the applicant’s claim and grant the requested measures so long as such a claim is not manifestly without merit. In addition, to assuage concerns regarding the harm that the opposing party could suffer as a result of a meritless application, those proponents call for applying a proportionality test regarding the applicant’s request,[5] under which a tribunal would deny such a request if the harm that the opposing party could suffer outweighs the harm alleged by the applicant. Furthermore, they assert that the requirement of irreparable harm—as the term is understood in common law jurisdictions—is incompatible with international arbitration, given the difficulties that a creditor could face in enforcing a monetary award.[6]
The Need for Applying High Standards
While it may be difficult to trace the exact origins of the reluctance to seriously examine the merits of the applicant’s claim before ordering interim measures, a survey of international cases reveals that the first international courts to express this reluctance in an international dispute were the Permanent Court of International Justice (the “PCIJ”) and the International Court of Justice (the “ICJ”).[7] A review of the early interim measures orders of the PCIJ and ICJ reveals that many of those orders involved situations that threatened world peace and security,[8] and that, in refraining from seriously analyzing the merits of the applicant state’s claim, the PCIJ and ICJ were influenced by political concerns over accusations of prejudgment that could be made against them.[9]
While such concerns can inform the PCIJ and ICJ’s reluctance to seriously examine the merits of the applicant state’s claim (in the interest of acting quickly and avoiding political accusations of prejudgment), they should not be relevant to most of today’s arbitrations that involve commercial or investment disputes. Furthermore, regardless of whether a merits analysis in connection with provisional measures could lead to accusations of prejudgment, not undertaking such analysis is just as likely to lead to the same accusations from the opposing party, which can find itself required to comply with an interim order absent careful consideration of its position. The way to avoid such accusations cannot be to abstain from analyzing the merits.
In addition, even though the proportionality test may be a helpful tool in deciding an interim measures application, it is no substitute for conducting a serious examination of the merits of the applicant’s case. The test’s function is to weigh the cost of ordering the requested measure against its benefit, but such a balancing exercise should only come into play once the applicant has demonstrated that it would suffer irremediable harm in the absence of the measures and that it stands a good chance of prevailing on its claim. Applying the test before the applicant has demonstrated these elements can be misleading, as it could cause the opposing party to suffer losses in a case in which the applicant’s case lacks any merits or in which the applicant would not suffer any irremediable harm before the case’s final resolution. As the tribunal in Tanzania Electric Supply Company Limited (TANESCO) v. Independent Power Tanzania Limited (IPTL) ruled in rejecting IPTL’s interim measures application, “the balance of convenience, or, looking at it from a different perspective, the balance of harm,” cannot be “a sufficient ground on its own for granting this sort of relief.”[10]
Furthermore, any difficulties that the applicant could face in enforcing a monetary award cannot justify interim measures in the absence of irremediable harm inasmuch as such difficulties would also impact the opposing party’s ability to enforce a cost award as a result of a frivolous interim measures application. In any event, while enforcement of foreign awards may have been more difficult in the past, it has become easier, given the increase in the number of state signatories to the New York Convention and those that have adopted enforcement-friendly arbitration laws.
Finally, any alleged increase in the applicant’s remediable losses between the defendant’s breach and the tribunal’s ruling cannot be enough of a basis for ordering interim measures. As the tribunal in Occidental Petroleum v. Ecuador ruled, “[p]rovisional measures are not designed to merely mitigate the final amount of damages. Indeed, if they were so intended, provisional measures would be available to a claimant in almost every case.”[11]
While adopting uniform standards for interim measures applications is not an easy task, given that this will depend on each case’s specific facts, the best approach to truly balance the interests of both parties and avoid measures for meritless claims seems to be to require the applicant to establish irremediable harm and probable success on the merits. Doing so would allow interim measures to serve their intended objective of preserving the effectiveness of tribunals’ rulings while avoiding measures for meritless claims.
Requiring a demonstration of probable success on the merits would be consistent with how the ICJ has dealt with requests for interim measures in its more recent decisions. In such decisions, the ICJ has required applicants to establish that their claims are “at least plausible,”[12] a condition that avoids measures for claims that lack sufficient merit. Furthermore, requiring irremediable harm would be consistent with how many tribunals and the ICJ have dealt with requests for interim measures.[13]
Conclusion
“Provisional measures are extraordinary measures which should not be recommended lightly.”[14] While there will be cases in which tribunals must adopt a flexible approach, in many cases it would be appropriate to require irremediable harm and probable success on the merits before granting a request for interim measures. By their nature, interim measures applications create tension between the interest of protecting the parties’ rights pending the case’s resolution and the need to avoid a decision that prejudices those rights. Tribunals should not be quick to resolve this tension in the applicant’s favor by applying low standards for such applications.
* Mohannad A. El Murtadi Suleiman is Counsel at Curtis, Mallet-Prevost, Colt & Mosle LLP, and a member of the firm’s International Arbitration Group. Mohannad is a member of the Libyan, New York, District of Colombia, and the United States Supreme Court Bars and a fellow of the Chartered Institute of Arbitrators. The views expressed in this article are the author’s and do not necessarily reflect those of Curtis or its clients.
[1] Sergei Paushok, CJSC Golden East Company, CJSC Vostokneftgaz Company v. The Government of Mong., UNCITRAL, Order on Interim Measures, ¶ 55 (Sep. 2, 2008), available at https://www.italaw.com/sites/default/files/case-documents/ita0621.pdf.
[2] PNG Sustainable Development Program Ltd. v. Papua N.G., ICSID Case No. ARB/13/33, Decision on the Claimant’s Request for Provisional Measures, ¶ 109 (Jan. 21, 2015), available at https://www.italaw.com/sites/default/files/case-documents/italaw4108.pdf. In Rizzani de Eccher S.p.A., Obrascón Huarte Lain S.A., and Trevi S.p.A. v. State of Kuwait, the tribunal adopted the same definition of the term “irreparable harm,” holding that this term “must be understood as requiring a material risk of ‘serious or grave damage to the requesting party, and not harm that is literally ‘irreparable.’” See Rizzani de Eccher S.p.A., Obrascón Huarte Lain S.A., and Trevi S.p.A. v. State of Kuwait, ICSID Case No. ARB/17/8, Decision on Provisional Measures, ¶ 103 (Nov. 23, 2017), available at https://www.italaw.com/sites/default/files/case-documents/italaw9396.pdf.
[3] ICC Case No. 10596 of 2000, Interlocutory Award, 30 ICCA Y.B. Com. Arb. 66, 72-73 (2005).
[4] See Gabrielle Kaufman-Kohler & Antonio Rigozzi, International Arbitration Law and Practice in Switzerland 343-44 (2015) (explaining that “arbitral tribunals are reluctant to venture an assessment of the merits at an often early stage of the proceedings when the record is still scarce; they are concerned about prejudging and giving the impression that they have lost their objectivity. As a result, they soften the traditional requirement and tend to be satisfied with a showing that the claim is not manifestly without merit.”).
[5] Francisco Gonzalez De Cossio, Interim Measure in Arbitration: Towards a Better Injury Standard, 18 ICCA Congress Series 260, 274-76 (2015).
[6] David Caron, Interim Measures of Protection: Theory and Practice in Light of the Iran-United States Claims Tribunal, 46 Zeitschrift für Ausländisches Öffentliches Recht und Völkerrecht 465, 493 (1986).
[7] See, e.g., The Electricity Company of Sofia and Bulgaria (Belg. v. Bulg.), Interim Measures Order, 1939 P.C.I.J. (ser. A/B) No. 79, at 9 (Dec. 5); U.S. Diplomatic and Consular Staff in Tehran (U.S. v. Iran), Provisional Measures Order, 1979 I.C.J. 7, ¶ 47(B) (Dec. 15); Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosn. & Herz. v. Yugoslavia (Serb. and Montenegro)), Provisional Measures Order, 1993 I.C.J. 3, ¶ 52(B) (Apr. 8); Land and Maritime Boundary (Cameroon v. Nigeria), Provisional Measures Order, 1996 I.C.J. 13, ¶ 49(1) (Mar. 15); Armed Activities on the Territory of the Congo (Dem. Rep. Congo v. Uganda), Provisional Measures Order, 2000 I.C.J. 111, ¶ 47(1) (July 1).
[8] See, e.g., Nuclear Tests (Austl. v. Fr.), Interim Protection Order, 1973 I.C.J. 99 (June 22); Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosn. & Herz. v. Yugoslavia (Serb. and Montenegro)), Provisional Measures Order, 1993 I.C.J. 3 (Apr. 8); Application of the International Convention on the Elimination of all Forms of Racial Discrimination (Geor. v. Russ.), Provisional Measures Order, 2008 I.C.J. 353 (Oct. 15).
[9] See, e.g., Fisheries Jurisdiction (U.K. v. Ice.), Interim Protection Order, 1972 I.C.J. 12, 16 (Aug. 17); Nuclear Tests (Austl. v. Fr.), Interim Protection Order, 1973 I.C.J. 99, 103 (June 22); Anglo-Iranian Oil Co. (U.K. v. Iran), Interim Protection Order, 1951 I.C.J. 89, 90-91 (July 5).
[10] Tanzania Electric Supply Company Limited (TANESCO) v. Independent Power Tanzania Limited (IPTL), ICSID Case No. ARB/98/8, Decision on the Respondent’s Request for Provisional Measures, ¶ 17 (Dec. 20, 1999), available at https://www.italaw.com/sites/default/files/case-documents/italaw8478_0.pdf.
[11] Occidental Petroleum Corporation and Occidental Exploration and Production Company v. Republic of Ecuador, ICSID Case No. ARB/06/11, Decision on Provisional Measures, ¶ 97 (Aug. 17, 2007), available at https://www.italaw.com/sites/default/files/case-documents/ita0576.pdf.
[12] See, e.g., Questions relating to the Obligation to Prosecute or Extradite (Belg. v. Sen.), Provisional Measures Order, 2009 I.C.J. 139, ¶¶ 57, 60 (May 28); Request for Interpretation of the Judgment of 15 June 1962 in the Case concerning the Temple of Preah Vihear (Cambodia v. Thai.), Provisional Measures Order, 2011 I.C.J 537, ¶¶ 33, 38 (July 18); Construction of a Road in Costa Rica along the San Juan River (Nicar. v. Costa Rica), Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v. Nicar.), Provisional Measures Order, 2013 I.C.J. 398, ¶¶ 15, 19 (Dec. 13); Questions relating to the Seizure and Detention of Certain Documents and Data (Timor-Leste v. Austl.), Provisional Measures Order, 2014 I.C.J. 147, ¶¶ 26, 28 (Mar. 3).
[13] See, e.g., Nuclear Tests (Austl. v. Fr.), Interim Protection Order, 1973 I.C.J. 99, ¶ 20 (June 22); Certain Criminal Proceedings in France (Congo v. Fr.), Provisional Measure Order, 2003 I.C.J. 107, ¶ 22 (June 17); Pulps Mills on the River Uruguay (Arg. v. Uru.), Provisional Measures Order, 2007 I.C.J. 3, ¶ 32 (Jan. 23); Plama Consortium Limited v. Republic of Bulg., ICSID Case No. ARB/03/24, Order regarding Provisional Measures, ¶ 46 (Sept. 6, 2005), available at https://www.italaw.com/sites/default/files/case-documents/ita0670.pdf; Phoenix Action Ltd v. Czech, ICSID Case No. ARB/06/5, Decision on Provisional Measures, ¶¶ 33, 39, 41 (Apr. 6, 2007), available at https://www.italaw.com/sites/default/files/case-documents/ita0667.pdf.
[14] Plama Consortium Limited v. Republic of Bulg., ICSID Case No. ARB/03/24, Order regarding Provisional Measures, ¶ 38 (Sept. 6, 2005), available at https://www.italaw.com/sites/default/files/case-documents/ita0670.pdf. See also Phoenix Action Ltd v. Czech, ICSID Case No. ARB/06/5, Decision On Provisional Measures, ¶ 33 (April 6, 2007), available at https://www.italaw.com/sites/default/files/case-documents/ita0667.pdf; Occidental Petroleum Corporation and Occidental Exploration and Production Company v. Republic of Ecuador, ICSID Case No. ARB/06/11, Decision on Provisional Measures, ¶ 59 (Aug. 17, 2007), available at https://www.italaw.com/sites/default/files/case-documents/ita0576.pdf.