Article 17B UNCITRAL Model Law on International Commercial Arbitration of United Nations Commission (“Model Law”) stipulates that the Arbitral Tribunal has the right to issue IEM to the disputed parties. However, the Model Law does not directly govern cases where IEM are issued in relation to and against third parties who have not entered into an arbitration agreement. 

By stipulating the phrase “Unless otherwise agreed by the parties”, it can be understood that the Model Law ensures the principle of respecting the disputing parties’ right to freedom of agreement and providing “space” so that countries can modify the Model Law and incorporate it into national law depending on different socio-economic situations. This is consistent with the role of the Model Law as soft law, drafted according to general recommendations for countries to accept and internalize. Accordingly, the detailed adjustment of the role and powers of the Arbitral Tribunal in applying IEM involving third parties depends on the national arbitration law where the arbitration is located (seat of arbitration).   

a. Regulations of United Kingdom (UK) on the application of IEM in relation to third parties

Pursuant to Article 38 of the Arbitration Act 1996, the Arbitral Tribunal has the jurisdiction to issue IEM including (i) requiring a party to provide security to pay the costs of arbitration (unless that party is an individual living outside the Kingdom). UK or an organization established or whose management and control is located outside the UK); (ii) decisions to investigate, photograph, maintain status quo, seize or detain, request samples or examine any property that is the subject of arbitration that is owned or controlled by a disputing party; requires a party to maintain the status quo of any evidence of the case in its possession. Thus, the enforcement of the IEM carried out by the Arbitral Tribunal is only directed towards the parties in the dispute. 

Article 44 of the Arbitration Act 1996 allows the English Courts to issue IEM at the request of a party to the arbitration proceedings that the Court considers necessary to protect the evidence or property of the disputing party. Pursuant to Article 9B of the London Court of International Arbitration Rules 2016 (“LCIA Rules”), the Court will not intervene to issue IEM if the parties have requested an Emergency Arbitrator under Article 9B of the LCIA Rules. However, Article 44 does not clearly determine whether the arbitral measures applied during arbitration proceedings can be applied to a third party. [1]

Accordingly, the English Law Commission has proposed to amend the above regulations, clearly mentioning that IEM will be issued “whether in relation to one party or any other” [2], thereby demonstrating the spirit of the English court has the right to issue IEM against third parties when necessary to ensure the rights and interests of the parties participating in the arbitration case. It can be seen that the authority to issue IEM affecting third parties is still considered to belong to the Court’s authority, instead of being given to the Arbitral Tribunal. 

b. Chinese legal regulations on the application of IEM related to third parties

China also passed the 1982 Civil Procedure Code, which mentioned a number of measures to support arbitration proceedings through the Court in Article 194. This comes from the jurisdiction of the Arbitral Tribunal in general and the Arbitral Tribunal's right to issue IEM in particular are limited and are only binding on the parties participating in the arbitration proceedings. The Arbitral Tribunal does not have the jurisdiction to issue IEM for third parties, only the National Court has the jurisdiction to apply IEM for third parties to protect the interests of the parties in arbitration proceedings.[3]

c. Korean legal regulations on the application of IEM related to third parties

According to Korean legal framework, unless the parties have otherwise agreed, based on the request of a party, the Arbitral Tribunal has the jurisdiction to issue IEM. IEMs are detailed in Article 18 of the Korean Arbitration Law 2016 (“KAL”). The Korean Arbitration Act 2016 also regulates the enforceability in court of IEM issued by the Arbitral Tribunal. This is one of the most important changes of the KAL, compared to the previous law when the IEM were not considered final award and could not be enforced in Court. 

By applying most of the content of Articles 17 to 17-I of the Model Law, the Korean Arbitration Law 2016 now gives the right to the party who wants to have the IME issued by the Arbitral Tribunal recognized, to apply to the Court to request an award on deciding to accept that measure, and the party who wants to execute based on the law can also apply to the Court to request a decision to enforce the IEM. Through this method, the Korean Court can issue a valid enforcement decision against a third party. 

d. Legal framework of Singapore on the application of IEM related to third parties 

In Singapore, the emergency arbitrator of the Singapore International Arbitration Centre (“SIAC”) is the designated authority to review and make determinations on IEM before the constitution of the Arbitral Tribunal. The SIAC Rules stipulate that the emergency arbitrators shall have the power to order or award any IEM deemed necessary. Similarly, the Singapore International Arbitration Act also provides that the emergency arbitrators may order any party to take such IEM as the emergency arbitrator considers necessary given the subject matter of the dispute. However, unlike in similar proceedings in court, a notable limitation to emergency arbitration proceedings is the absence of IEM against third parties to the arbitration agreement.[4] 

Section 12 of the Singapore International Arbitration Act allows the Singapore courts to issue orders for IEM for the purpose of supporting arbitral proceedings. However, it does not address the enforcement of such powers against third parties. Consequently, whether a party may seek, from a Singapore court, an order for IEM against third parties to support arbitration proceedings will depend on the exact IEM sought and the prevailing procedural rules of the court. It can be seen that the application of the Singapore Court's Arbitration Rules to third parties is uncertain, similar to the UK Arbitration Act 1996 before its amendment. 

e. Vietnam's legal regulations on the application of IEM related to third parties 

Regarding the IEM regulated in Article 49 of the Law on Commercial Arbitration 2010 (“LCA 2010”), at the request of either party, the Arbitral Tribunal may apply one or more IEM to the disputing parties. This provision is similar to Article 17 of the Model Law; however, there is no regulation regarding the jurisdiction of the Arbitral Tribunal over third parties. This differs from the Court's jurisdiction, as the Court has the power to apply IEM against third parties upon request and upon finding sufficient grounds under the Code of Civil Procedure 2015. In the event the Arbitral Tribunal receives a request to apply IEM against third parties, it is necessary to clarify the relationship of the third parties with the arbitration agreement of the dispute. As according to Vietnamese contract law, an arbitration agreement is binding only on the parties to the agreement, not extending to third parties. 

However, according to Article 48.1 of the LCA 2010: “Disputing parties may request the tribunal or the Court to apply IEM under this Law and relevant laws, unless otherwise agreed by the parties.” Therefore, it can be understood that disputing parties may request the Court to apply IEM in accordance with the IEM stipulated in Article 114 of the Code of Civil Procedure 2015. On this basis, whether disputing parties can request the Court to apply IEM against a third party (a party that did not sign and participate in the arbitration agreement) remains unclear without specific guidance in practice. 

a. Dispute between Company A and Others v Company B and Others [2018] HKCU 3575 

In the dispute of Company A and Others v Company B and Others [5], the Claimants initiated arbitration proceedings against the Respondents before the International Chamber of Commerce (“ICC”) in Singapore, seeking full payment for shares transferred to the Respondents. Subsequently, the Claimants requested the ICC Emergency Arbitrator to apply IEM upon discovering that the Respondents were attempting to transfer the shares to a third party. As such, the ICC Emergency Arbitrator granted an emergency order restraining the Respondents from dealing with the shares or taking any other steps related to the transfer and/or pledging of the shares. However, the Respondents breached the IEM of the ICC Emergency Arbitrator's order and proceeded to transfer the shares to the third party. Consequently, the Claimants were compelled to apply to the Hong Kong Court for IEM, which was accepted by the Court, restraining the third party from dealing with the transferred shares.  

Although the tribunal of ICC in Singapore has the jurisdiction to issue orders for interim measures, it does not have the jurisdiction to enforce orders in the territories of other countries. In such cases, the Arbitral Tribunal must seek the assistance from the national Court – the competent authority to issue interim measures against a third party, who does not involve in the arbitration proceedings. 

b. The dispute Blue Coast Infrastructure Development v. Blue Coast Hotels and others  

In the dispute between Blue Coast Infrastructure Development and Blue Coast Hotels and others [6], the plaintiff, Blue Coast Infrastructure Development, initiated arbitration proceedings against Blue Coast Hotels (Respondent 1) and IFCI (Respondent 2). 

Blue Coast Hotels (Respondent 1) participated in the bidding process and won the contract from Delhi International Airport Limited (“DIAL”) to develop space for the New Delhi International Airport (“Project A”). DIAL simultaneously entered into agreements with Silver Resorts for infrastructure development and infrastructure development services for Project A. Subsequently, Silver Resorts and Blue Coast Infrastructure Development (the Plaintiff) entered into a Joint Development Agreement (“JDA”) to execute Project A. Additionally, Blue Coast Hotels (Respondent 1) entered into a Corporate Loan Agreement with IFCI (Respondent 2), whereby this agreement was secured by assets at Blue Coast Hotels (Respondent 1). After Respondent 1 breached its obligations under the Corporate Loan Agreement, Respondent 2 proceeded to auction the assets at Blue Coast Hotels to recover the debt.  

In this case, the Claimant requested the Court to apply the IEM as per the arbitration agreement in the JDA - an agreement to which Respondent 1 and Respondent 2 were not parties. The Claimant submitted the arbitration with the Delhi High Court ("Delhi Court") under Section 9 of the Arbitration and Conciliation Act, 1996 seeking an interim emergency order; whereby, regarding the recovered assets mentioned above, which the Plaintiff alleges Respondent 2 holds on behalf of Respondent 1, demanding that Respondent 2 deposit a certain amount with the Court or refrain from transferring this amount to Respondent 1 without the Court's permission. Respondent 2 argued that the request for interim relief was not admissible as Respondent 2 was not a signatory to the arbitration agreement within the JDA. 

The Delhi Court determined that the scope of Section 9 of the Arbitration and Conciliation Act, 1996 is not only limited to parties of the arbitration agreement but can also extend its applicability to third parties. Therefore, the Delhi Court rejected Respondent 2's argument and held that the Delhi Court could issue interim emergency orders for a non-signatory party to the arbitration agreement. 

The Delhi Court cited the case of Value Advisory Services v. ZTE Corporation & Ors (2008) to illustrate that a party would have the right to request the Court to apply the ACA if a third party holds assets belonging to it on behalf of a party to the arbitration agreement. 

c. Decision No. 03/2021/QĐ-BPKCTT dated September 14, 2021 of the Hanoi People's Court 

In Vietnam, the courts may also apply IEM to support arbitration proceedings, especially when involving third parties. Due to the confidentiality of information concerning disputing parties in arbitration cases, it is often difficult to identify an arbitration case in which one of the parties requests the court to apply IEM against a third party. In the course of researching and searching for publicly available information, here is an arbitration case in which the claimant requested the court to apply IEM concerning a third party. 

Specifically, the arbitration case at the Vietnam International Arbitration Center ("VIAC") between the Claimant (Construction Joint Stock Company) and the Respondent involves a dispute over a coal supply contract [7].  

To ensure contract performance, the Claimant and the Respondent opened letters of credit for their obligations under the contract. Subsequently, disputes arose regarding delivery deadlines and the quality of goods. The Claimant sued the Respondent seeking compensation for damages caused by the Respondent's serious breach of the delivery and sampling provisions at the unloading port. 

Accordingly, the Claimant requested the Hanoi People's Court ("Hanoi Court") to apply interim emergency measures regarding "requiring the Respondent not to request the TP Bank to settle the amount under the Letters of Credit for the Respondent's contract performance." Pursuant to Decision No. 03/2021/QĐ-BPKCTT dated September 14, 2021, of the Hanoi Court, the request to apply IEM by the Claimant was accepted, and the Respondent was ordered to maintain the current status of the Letters of Credit for contract performance until there is a decision by VIAC or another decision by the Hanoi Court. 

It can be seen that in Vietnam and some other countries worldwide, the Jurisdiction of the Arbitration tribunal proceedings is often limited concerning third parties (as third parties are not bound by the arbitration agreement). Therefore, Arbitration tribunal proceedings typically require the assistance of national courts to apply IEM concerning third parties. However, the current legal regulations in Vietnam are not entirely clear regarding whether courts have jurisdiction to apply IEM against third parties (parties who did not sign and participate in the arbitration agreement). 

In summary, the trend of using IEM by disputed parties when resolving disputes in arbitration is increasing. Especially for complex, high value of cases, and involving many parties, the application of IEM is a very important procedural tool. The legal regulations and practices applied in the countries studied in this article all show that the Arbitral Tribunal applies IEM related to third parties (not signing and participating in arbitration agreements) is very limited. Many countries with developed arbitration systems tend to expand the Court's authority to apply IEM to third parties when assets and evidence are the subject of a dispute or are related to the dispute. 

From the legal frameworks and experience of some countries, the author has some recommendations that the LCA 2010 should incorporate more explicit provisions regarding the jurisdiction of the Arbitral Tribunal and the Court in applying IEM related to the third parties; additionally, it is suggested that the law should include specific guidelines on how to request the Court to apply IEM. Specifically: 

(i) The author favors amending the LCA 2010 in a direction similar to Korea's, that is, stipulating the authority of the Arbitral Tribunal in applying IEM and these measures can be enforced by one party through the request procedure. The Court issues a decision for enforcement; 

(ii) In addition, the LCA 2010 needs to supplement specific provisions on the Court's jurisdiction to apply IEM to property or evidence held by a third party (a party that does not sign and participate in the arbitration agreement); 

(iii) Proposing to amend the LCA 2010 to provide that emergency Arbitral Tribunal are allowed to issue decisions on IEM  before the Arbitral Tribunal is officially established, and these sanctions can be enforced through the request procedure. request enforcement in Court.