Emergency Relief in Arbitration

massachusetts

Volume 48 Issue No. 51 December 23, 2019 Emergency relief in arbitration

By Gordon P. Katz submissions, are permitted. AAA Rule 38(d). in court, there is no guarantee that a busy clerk A dispute has arisen that If the emergency arbitrator is satisfied that or judge, particularly one who also manages a cannot be settled. You turn the absence of emergency relief would result in criminal docket, will allocate the time for your to the parties’ contract and immediate irreparable law, and that the moving matter. And even if the court elevates your discover that all disputes are party is entitled to relief, the emergency arbitrator emergency motion to the top of its docket, the to be resolved by arbitration. may enter an interim order or award granting the case has a greater likelihood of being bogged You next file on behalf relief but must state the reasons for the order or down in procedural issues and appellate review of your client a demand for award. AAA Rule 38(e). than does the same matter submitted to an arbitration. But what if you JAMS provides a similar emergency relief emergency arbitrator. need preliminary relief — procedure in its Rule 2(c). Indeed, the specific Should you choose emergency arbitration, the maybe an injunction, maybe security? What do provisions of JAMS rules are virtually identical to courts will still be open to confirm an emergency you do? those of the AAA. arbitration award and thereby give your client a There is an answer. You may seek emergency forum with teeth — i.e., a place to seek contempt if relief through either the arbitral authority — for example, the American Arbitration Association, While emergency arbitration the award or order, once confirmed, is disobeyed. if that is the parties’ chosen arbitral forum — or “An arbitrator has the power to grant preliminary you can go directly to court for emergency relief. proceedings are still relatively injunctive relief, and district courts have the In short, you have options. power to confirm and enforce such awards of Rules of the AAA permit an arbitrator to make new, their use is growing. equitable relief.” Bowers v. Northern Two Cayes interim awards (Rule 37, AAA Commercial Rules) Company Limited, 2016 WL 3647339 at p. 2 and provide a valuable and efficient procedure In addition to emergency arbitral relief, there (W.D.N.C. Cir. 2016). for a party to an arbitration agreement to obtain is usually an available judicial path for emergency Recent court cases demonstrate the efficiency “emergency measures of protection.” (Rule 38, relief, even when the parties’ contract specifies of first seeking emergency arbitral relief and then AAA Commercial Rules). that all disputes must be resolved via arbitration. judicial enforcement of the arbitrator’s order. In If you are governed by the AAA rules, Rule 38 Commercial, employment and other contracts Zurich American Ins. v. Trendsetter HR, LLC, 2016 is particularly useful. It provides that a party has often provide that, while all disputes must be WL 4453694 (N.D. Ill. 2016), for example, the the opportunity to obtain emergency relief within submitted to arbitration, parties may still seek court confirmed a pre-judgment security award days. According to AAA Rule 38(a) and (b), ordered by an AAA arbitrator of approximately when a party in need of emergency relief notifies injunctive relief in court in order to obtain relief $4.5 million. the AAA of the nature of, and reasons for, such needed quickly. Indeed, even where such a clause In other cases, courts have confirmed requested relief, “the “AAA shall appoint … within is absent, courts often retain power to grant an emergency arbitration orders enjoining violations one day of receipt … a single emergency arbitrator interim preliminary injunction, where justified, of confidentiality and non-compete provisions designated for rule on emergency applications.” for the time needed to get the case to arbitration. The emergency arbitrator is required to disclose See Next Step Med. v. Johnson & Johnson, Int’l, contained in a consulting agreement. See Johnson immediately any circumstance likely to impact his 619 F. 3d 67, 70 (1st Cir. 2010). See also Gold v. v. Dentsply Sirona, Inc., 2017 WL 4295420 (N.D. impartiality. The appointment and circumstances, Maurer, 251 F. Supp. 3d 127, 137 (D.D.C. 2017). Okla. 2017). if any, are then communicated to the parties, who Which option to choose: emergency And in a notable tech case, Yahoo Inc. v. have one day following receipt to challenge the arbitration or judicial intervention? There are Microsoft Corp., 983 F. Supp. 2d 310 (S.D.N.Y. appointment of the emergency arbitrator. AAA reasons favoring both. If you go to court to seek 2013), the court upheld an emergency arbitral Rule 38(c). preliminary relief, there are appellate guardrails decision ordering Yahoo to continue its No later than two business days after if the lower court makes a legal or significant contractual performance during the pendency of appointment, the AAA emergency arbitrator factual error. the parties’ dispute resolution. must establish a schedule for consideration of the However, if speed and a decision-maker’s While emergency arbitration proceedings application for emergency relief. The schedule focused attention are more important in the are still relatively new, their use is growing. must provide a reasonable opportunity for all particular circumstances of your case, your client Accordingly, the possibility of emergency parties to be heard, but it need not be in person. may be better off seeking emergency relief via arbitration proceedings, and all that such Telephone or video conferences, or written arbitration. As noted above, AAA and JAMS proceedings entail, are yet additional factors to rules require that those bodies act within days to be added to the calculus when parties decide Gordon P. Katz is a litigation partner in process an emergency application. whether or not to include an arbitration clause in the Boston office of Holland & Knight. While speed of resolution may also be found their contract.