New York District Court in Favor of Injunctive Relief Granted by Emergency Arbitrator

On 21 October 2013, the District Court of New York upheld an arbitration award ordering injunctive relief rendered on 14 October 2013 by an emergency arbitrator appointed by the American Arbitration Association (AAA) in a dispute raised by Microsoft against Yahoo! on 26 September 2013.

This decision illustrates how much the enforcement of decisions rendered by emergency arbitrators is crucial for the effectiveness of this procedure, which was adopted by the AAA since 1999 and more recently by numerous arbitral institutions such as the ICC through ICC Arbitration Rules of 2012 (article 29, as completed by Appendix V “Emergency Arbitrator Rules”).

The emergency arbitration was initiated by Microsoft pursuant to a Search and Advertising Services and Sales Agreement (the “Agreement”) entered into in 2009.

The dispute resolution clauses contained in the Agreement provided for, inter alia, emergency arbitration in accordance with the AAA Optional Rules for Emergency Measures of Protection (the “Optional Emergency Rules”) in respect of certain claims.

On 14 October 2013, the arbitrator issued a decision finding that Yahoo! had breached the Agreement and issued an injunction that “restores the parties to the activities they were ready to proceed with before the pause”, ordering that Yahoo! is “restrained and enjoined from continuing any pause in transitioning”.

Yahoo! seized the District Court of New York of a motion to vacate the award, arguing that the arbitrator had exceeded his authority by awarding Microsoft final permanent relief.

The District Court found that there was no basis to vacate the award, considering that the language in the Agreement suggests that the parties empowered an emergency arbitrator to grant non-monetary relief necessary to restore the status quo. Being “mindful of the time-sensitive nature of Yahoo!’s compliance with the injunction”, the District Court granted Microsoft’s cross-petition to confirm the award.

Decisions have yet to be rendered on the basis of the ICC Emergency Arbitrator Rules. The interest of this decision is to illustrate the nature of emergency arbitrator decisions under the point of view of a US District Court, even though Yahoo! has appealed the district court’s decision.

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