Article 17 of the UNCITRAL Model

Risha Sharma, Research Associate

The UNCITRAL is a core legal body of the United Nations system in the field of international trade law. It is a legal body with universal membership specializing in commercial law reform worldwide for over 40 years. Briefly, the UNCITRAL’s business is the modernization and harmonization of rules on international business. Trade means faster growth, higher living standards, and new opportunities through commerce. In order to increase these opportunities worldwide, UNCITRAL has been involved in the formulation of modern, fair, and harmonized rules on commercial transactions. These also include conventions, model laws and rules, which are acceptable worldwide, legal and legislative guides and recommendations of great practical value, updated information on case law and enactments of uniform commercial law, technical assistance in law reform projects and finally regional and national seminars on uniform commercial law.
On June 21, 1985 after years of analysis and discussion, the United Nations Commission on International Trade Law adopted a final trade model on International Commercial Arbitration, called the Model Law ((Saturnino Lucio, The UNCITRAL Model on International Commercial Arbitration, Vol.17 No.2, 1986, The University of Miami Inter- American Law Review)). The Model Law was adopted keeping in mind the manifold problems encountered by parties contemplating an international arbitral remedy. The uncertainties which thus are cast upon the parties in their efforts to develop a workable arbitration agreement highlight the reasons UNCITRAL has attempted to unify measures in this field. It was drafted and developed by the Working Group on International Contract Practices, which was entrusted with the project in 1981. The new model has been intended to serve as a model of domestic arbitration legislation, harmonising and making more uniform the practice and procedure of international commercial arbitration while giving international arbitration freedom from the parochial law of any adopting state. The UNCITRAL model law approach, rather than looking to national law, which is generally geared toward domestic arbitration as opposed to international arbitration issues, emphasizes the will of the parties as the governing principle. The model law leaves the parties free to determine the composition of the arbitral tribunal, to select the rules to govern appointment and challenge procedures, and to choose the rules of law applicable to the substance of the dispute ((Mcnerney Mary , Esplugues A. Carlos, International Commercial Arbitration: The UNCITRAL Model, Vol. 9 Article 3, 1986 Boston College International and Comparative Law Review)). This freedom is subject to certain mandatory provisions guaranteeing due process of law. The approach undertaken by the UNCITRAL model balances the national legal system with the freedom and the will of the parties. Model Law by virtue of its nature is flexible and allows the states to adopt easily the principles contained in the documents. Initially, UNCITRAL considered preparing a protocol to supplement and clarify the 1958 New York Arbitration Convention but UNCITRAL dropped this approach in favor of a model uniform law to serve as the basis for national arbitration laws ((Ibid)). The UNCITRAL provides for the harmonization and unification of the national laws regulating international commercial arbitration. The UNCITRAL model law, therefore, is designed to prevail over any domestic law limiting the scope of international commercial arbitration. This approach is in contrast with Article 1(3) of the 1958 New York Convention which limits the Convention’s scope to only those relationships which the state’s domestic law defines as commercial. The Model Law is intended to be interpreted in a non-restrictive manner and has a broad application.
Article 17 gives the arbitral tribunal a concurrent power to order interim measures of protection, although the range of such measures is more limited than those provided for under Article 9. The text requires that the interim measure pertain to the subject-matter of the dispute, and the measure may only be directed to a party. Additionally, the arbitral tribunal lacks power to enforce these orders. As a result compliance may require assistance of the courts, assuming the national procedural law gives the court the authority to act ((Ibid)).

Article 17 of the original UNCITRAL Model Law stated:

“Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute. The arbitral tribunal may require any party to provide appropriate security in connection with such measure.”
It basically provided that based on the agreement between the parties, the tribunal was empowered to, at the insistence of one of the parties, to take an interim measure of protection such as requiring any party to provide sufficient security with regard to the subject matter of the dispute. This has been expanded by the new Article 17 of the UNCITRAL Rules.

The relevant part of Articles 17 reads:

(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.
(3) If an arbitral tribunal has granted an interim measure, the tribunal may, on the application of any party, make an award to the same effect as the interim measure.
Certain conditions have been laid down with regard to the grant of interim measures. The party requesting the grant of interim measures must satisfy the tribunal that harm not adequately reparable by an award of damages is likely to result if the measure is not ordered, and such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted. Also, there must be a reasonable possibility that the requesting party will succeed on the merits of the claim. The determination on this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination. The parties are empowered to make a request for an interim measure together with an application for a preliminary order directing the other party not to frustrate the purpose of the interim measure requested, without a prior notice to the party. The arbitral tribunal in its capacity may grant a preliminary order provided it considers that prior disclosure of the request for the interim measure to the party against whom it is directed risks frustrating the purpose of the measure. Immediately after the arbitral tribunal makes a determination in respect of an application for a preliminary order, the arbitral tribunal can given notice to all parties of the request for the interim measure, the application for the preliminary order, the preliminary order, if any, and all other communications, including by indicating the content of any oral communication, between any party and the arbitral tribunal in relation thereto. At the same time, the arbitral tribunal is empowered to give an opportunity to any party against whom a preliminary order is directed to present its case at the earliest practicable time. The arbitral tribunal can decide promptly on any objection to the preliminary order. A preliminary order expires after twenty days from the date on which it was issued by the arbitral tribunal. However, the arbitral tribunal may issue an interim measure adopting or modifying the preliminary order, after the party against whom the preliminary order is directed has been given notice and an opportunity to present its case. A preliminary order is binding on the parties but is not to be subjected to enforcement by a court. Such preliminary orders do not constitute an award. According to the amendment made, the arbitral tribunal may modify, suspend or terminate an interim measure or a preliminary order it has granted, upon application of any party or, in exceptional circumstances and upon prior notice to the parties, on the arbitral tribunal’s own initiative. The arbitral tribunal may require the party requesting an interim measure to provide appropriate security in connection with the measure. The amended Article 17 states that the arbitral tribunal requires the party applying for a preliminary order to provide security in connection with the order unless the arbitral tribunal considers it inappropriate or unnecessary to do so. If need be, the tribunal may require any party promptly to disclose any material change in the circumstances on the basis of which the measure was requested or granted. The party applying for a preliminary order has to disclose to the arbitral tribunal all circumstances that are likely to be relevant to the arbitral tribunal’s determination whether to grant or maintain the order, and such obligation shall continue until the party against whom the order has been requested has had an opportunity to present its case. The party requesting an interim measure or applying for a preliminary order is liable for any costs and damages caused by the measure or the order to any party if the arbitral tribunal later determines that, in the circumstances, the measure or the order should not have been granted. The arbitral tribunal can award such costs and damages at any point during the proceedings. Subject to the provisions given therein, an interim measure issued by an arbitral tribunal is to 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. As for the Courts, a court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of whether their place is in the territory of a State, as it has in relation to proceedings in courts. Recognition or enforcement of an interim measure can be refused only in specific cases such as the non-compliance of the tribunal’s decision with regard to interim measures or when the interim measure has been terminated by the tribunal or the empowered court of the State or under the law under which the measure was granted in the first place.
The existence of the Model Law is deemed to be of particular value not only in countries which benefit from modernisation but also those which may be adopting or expanding their arbitration laws for the first time ((Hoellering Michael, The UNCITRAL Model on International Commercial Arbitration, The International Lawyer 20 (1) : 327 – 41)). The model law has been well-received by Government representatives and international arbitration organizations, and the majority of comments emanating from conferences and symposia on the subject have been favourable. This article can be effectively summed up with the quote of The Right Hon’ble Sir Michael Kerr, Lord Justice of Appeal of the Supreme Court of Judicature U.K., “We should accept the concept of the model law if our trading partners do so, and we should then use it as a basis for a comprehensive and explicit restatement of our law, which is at present far too diffuse and inexplicit.”