The Arbitration Act 1996 is being freshened up

Theresa Mohammed is a partner and Laura Lintott is a senior associate at Trowers & Hamlins LLP

The Arbitration Act 1996 reform is in full stride and on its way. On 30 November 2021, the Law Commission announced that it will begin the process of reviewing the Arbitration Act 1996 – a piece of legislation that has served us well for more than 25 years but may need a bit of freshening up.

When the Arbitration Act came in it was a breath of fresh air, as it brought together disjointed pieces of legislation and case law, and provided a solid basis for the UK to rise and shine in the international arbitration landscape. The English Law is currently one of the most popular choices of law in international arbitration disputes and the aim of the reform is to maintain this position.

The law ages too

One might ask what brought about the need for reform, considering the Arbitration Act has stood the test of time and provided a solid ground for more than a quarter of a century.

“To maintain the UK’s position on the international arbitration stage, it needs to stay ahead of the alternative dispute resolution game”

The answer is simple: the Law Commission wants to ensure we don’t rest on the laurels of our forefront position. The fact is, like everything, the law ages as well. Modernisation, the COVID-19 pandemic and the increasing competitiveness of other jurisdictions mean that to maintain the UK’s position on the international arbitration stage, it needs to stay ahead of the alternative dispute resolution game.

While the Law Commission’s initiative is still in its infancy, the areas that it is currently considering include those listed below.

  • The power to summarily dismiss unmeritorious claims or defences in arbitration proceedings. One could argue that this power could be viewed as beneficial for arbitral tribunals (a panel of unbiased adjudicators, which is convened and sits to resolve a dispute by way of arbitration). However, we must not forget the need for a balanced approach to ensure a party’s right to be heard is not dismissed.
  • The courts’ powers exercisable in support of arbitration proceedings. Section 44 of the Arbitration Act has been subject to some criticism around the uncertainty surrounding the courts’ powers against third parties.
  • The procedure for challenging a jurisdiction award. Currently, it is the court and not the arbitration tribunal that has the last word in relation to jurisdiction. In reality, this could lead to a claimant facing a plethora of undesirable applications in the arbitration as well as in court.
  • The availability of appeals on points of law. The current scope of section 69 of the Arbitration Act has been a point of discussion for quite some time. On the one hand, compared with other jurisdictions, a narrower scope would be the way forward to show a more arbitration-friendly approach. However, there is opposition to this view, which cheers for the section’s scope to be widened.
  • The law concerning confidentiality and privacy in arbitration proceedings. While confidentiality is one of the key characteristics of arbitration, the Arbitration Act itself is silent on this point; it is the common law that implies confidentiality. The reform could lead to the need for confidentiality to be enshrined in legislation.
  • Electronic service of documents, electronic arbitration awards and virtual hearings. This is a proposition that would catch up with the needs of the 21st century. It would also fit well into the current emerging trend of green drafting – particularly with a focus on the Campaign for Greener Arbitrations in the international context.

The Arbitration Act is the current backbone and propeller behind the UK, and London in particular, with it being such a popular destination for international arbitrations. Considering that, for example, the International Federation of Consulting Engineers’ suite of standard-form construction contracts sets out arbitration as the default final dispute resolution process, it is understandable that the construction industry has reserved its front seats to watch the reform’s progress with anticipation.

 

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