I. Introduction
Globalization has led to an increase in trade between legal and natural persons. And as soon as this rise in trading between international natural and/or legal persons rise in number, also will the number of disputes arising as a product of bad business between parties which were involved in the agreement. Nowadays, litigating through court are not anymore the first choice in settling disputes between parties in relation to contractual or legal relationships, to a greater extent more people are now turning into International Arbitration such as the ICC as the alternative method to adjudicate their legal disputes. These organizations are regarded to be more reliable and will provide the parties with more neutral and fair judgments compared to choosing either party nationals conventional court litigation.
During the arbitration proceedings, situations of the dispute object might change, the dispute object may disappear, such case might happen when the respondent has foreseen or predicted that the arbitral award might be given in favour of the claimant, thus the respondent will take actions to withdraw all the money in the respondent's bank account in order to avoid seizure or freezing orders by the arbitral tribunal as a consequence of the arbitral award imposed upon the respondent, or find ways to transfer the company's assets to third parties before being seized or freezed as a result of an arbitration award.
In this case provisional and protective measure comes in and plays an important part, since it will secure the assets in dispute, and in the end of the arbitration process the winner of the arbitration proceeding can collect from the losing party's bank account or asset which is rightfully his on the basis of the arbitral award. The relevant question to this matter is whether an arbitration committee has the authority to award a provisional and protective measure to an asset as a provisional measure in order to safeguard the assets of the dispute as is usually given by judges in conventional court litigation?
This article will deal with the availability of a provisional and protective measure in international commercial arbitration proceedings and whether this provisional and protective measure awarded by the arbitration tribunal can be enforced against parties to the arbitration proceedings on the basis of the UNCITRAL Model Law on International Commercial Arbitration, although it only serves as a model law, nonetheless it can still be regarded to be the blueprint for national arbitration laws of nations.
II. Provisional and Protective Measures: The Terminology
First we look to the term provisional and protective measures, what does it really mean? What is the important use of these measures in private international law and in the course of arbitration?
We can explain provisional remedies in court litigation as a generic term for any temporary order of a court to protect a party from irreparable damage while a lawsuit or petition is pending, While the latter term, protective, can be described almost in the same way as provisional measures, which is an order given by the court which were given in order to protect the disputed assets.
So we can derive that provisional and protective measures are means to secure or maintain the current condition of the debtor's assets and to prevent the transfer of those assets to third parties in the time of the conduct of the proceedings. Feeder in his paper, published in the United Nations Publication stressed the importance of provisional and protective measures in arbitration in which 'an enforceable interim measure can maintain the status quo until the award is made and it can also secure assets out of which an award may be satisfied where a recalcitrant debtor is deliberately dissipating assets to render itself judgment proof'.
With its nature as a secondary decision to the final outcome or judgment of a case, then the period of this provisional and protective measure are also limited, in other words it is given on a temporary basis, that as soon as the final judgment on the merits of the case is decided, then it will cease to have validity, and the assets will either transfer or maintained by one of the party to the dispute.
III. The Existence of Provisional and Protective Measures in Arbitral Proceedings
An important question is whether provisional and protective measures exist in the course of an arbitral proceeding considering its vital role in securing or can we say maintaining the status quo of the disputed assets. The answer is not certain, while if we look closely at the main convention commonly used for regulating international arbitration proceedings which is the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, (hereinafter will be "New York Convention 1958") it neither provides provisions in requesting from and to give provisional and protective measures in arbitration proceedings by arbitral tribunals.
The problem lies in the power and authority of the arbitrators, in this case in giving orders of provisional and protective or interim measures. We can infer that the arbitrators do not actually have the "authority" to enforce an award upon parties to arbitration although an award given by an arbitral tribunal is final and binding against the parties. By observing the arbitration practice based in the award given by an arbitrator, it is regulated that to enforce an award against the losing party the winning party must complete another set of procedures which is a procedure of obtaining an exequatur from the court of the country in which the winning party seeks enforcement. This means that if the award were not to be obeyed voluntarily by the losing party then the arbitrator cannot do anything without the help of formal judicial authority such as the Court, the same goes with provisional and protective measures.
So as it may be, the provisional and protective measures or interim orders given by an arbitral tribunal can be accepted only as a recommendation to the parties. Thus what can be expected from a recommendation by the arbitral tribunal? There is a possibility that the party subject to obey the provisional and protective measures given by the court may not voluntarily submit. A sanction given by the end of the arbitration process by the arbitral tribunal might eliminate this difficulty, as H. Van Houte have proposed this solution 'indeed, in their final decision arbitrators can always impose sanctions on the party which did not comply with the provisional measures ordered, even if they were actually only recommendations'. But this is not always the case, it can possibly happen that although sanctions can be imposed upon the party defying the provisional and protective orders have already transferred the disputed object to third party, and so become that there is nothing can be done to reverse what has already happened.
The UNCITRAL Model Law on International Commercial Arbitration have also tried to tackle this problem by providing a model that is supposed to be used as a reference for the national arbitration rules of a country. Nonetheless this model law still serves only as model law, and therefore cannot be treated as a regulation to be enforced against the parties. Thus article 17 paragraph (1) contained suggestions on a model for regulation clauses regarding provisional and protective measures in arbitration which stated the following 'Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim measures.', we can interpret from this model clause that an arbitral tribunal, as the adjudicator of the arbitration proceedings, may give provisional and protective measures, only as far as both of the parties does not provide to set aside this in their arbitration agreement.
If integrated and applied correctly in international arbitration rules, then this article 17 paragraph (1) of the UNCITRAL model will provide the parties with the basis for requesting a provisional and protective measure in arbitration, provided that they have not set aside the possibility of applying a provisional and protective measures in front of an arbitral tribunal in their arbitration agreement.
However article 17 A (1) and (2) of The UNCITRAL Model law also provided some restrictions, measures to be considered by the arbitral tribunal in order to order a provisional and protective measure to a party in an arbitral proceedings, namely, first that the party requesting provisional and protective measures have to prove that the provisional measures requested are vital, that is if the order to temporarily seize the disputed assets are not taken it will cause irreparable damage to the party requesting provisional and protective measures, also by giving such order of measures it will not give the party subject to obey the provisional and protective measure given would not incur more damages than if those orders are not given by the arbitral tribunal. Second is that the arbitral must consider the likely chance of the requesting party will succeed in the outcome of proceedings.
On the contrary under article 17 G of The UNCITRAL Model Law the party requesting an interim measure can be held liable, therefore pay for damages caused to the other party in the proceeding if in the proceedings the arbitral tribunal found that the provisional and protective measures should have not been taken, that the interim measure have incurred damages unnecessary to the party subject to the provisional or interim measures.
IV. Conclusion
On the basis of the UNCITRAL Model Law on International Commercial Arbitration, provisional and protective measure do exist in arbitral proceedings, on the condition that the parties have not previously agrees to restrict this provisional and protective measure in their arbitration agreement. Thus contracts and/or arbitration agreements are one of the utmost important aspect to build a foundation of a provisional and protective measure given by an arbitral tribunal.
Although the arbitral tribunal does not have the authority to enforce these provisional and protective measures, the enforcement function of provisional and protective measures can be delegated to the national court to decide according to the lex loci arbitri, as also the same case with enforcement of final arbitral awards or decisions of the arbitral tribunal under the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
