Sackman: Act supports growth
The Arbitration Act received Royal Assent yesterday, with the government declaring it would keep the UK “ahead of the rest”.
The Law Commission, whose recommendations the Act implements, estimated that at least 5,000 arbitrations took place in England and Wales each year, directly contributing at least £2.5bn a year to the economy in fees alone.
The legislation was originally proposed by the Conservative government but fell when the election was called last year. Labour took it forward and it passed easily through Parliament, with the only note of contention being whether it should address arbitral corruption.
Among the reforms the Act introduces are a statutory default rule that, where the parties have not expressly agreed on the law which applies to the arbitration agreement, the law of the seat of the arbitration will apply.
It also provides a power for arbitrators to dispose summarily of issues that have no real prospect of success and a statutory duty on arbitrators to disclose any circumstances which might give rise to justifiable doubts about their impartiality.
The Ministry of Justice said modernising arbitration law would “ensure the UK remains the global destination of choice for the legal sector, outstripping competitors such as Singapore, Hong Kong and Paris. This will help generate greater employment in the sector to bring even more investment into the UK”.
Minister Sarah Sackman added: “Companies from across the world look to the UK for our legal services and dispute resolution. This new Act ensures that arbitration law keeps this country ahead of the rest and supports economic growth as part of this government’s Plan for Change.”
Cristen Bauer, head of policy at the Chartered Institute of Arbitrators, said he was pleased that the majority of its recommendations were included in the Law Commission’s report, and that all of the commission’s recommendations were adopted.
“The Arbitration Act will strengthen London’s position as an arbitration seat, and continue to set a high standard internationally.”
The date the new law will be commenced through regulations has not yet been confirmed but the government said it would be “as soon as practicable”.
Bar Council chair Barbara Mills KC said it particularly welcomed “the greater clarity afforded by the new legislation on the law applicable to arbitration agreements, which we anticipate will result in more disputes being arbitrated in England and Wales”.
Robert Campbell, a partner in the London office of US firm Faegre Drinker, said the Act reflected the Law Commission’s view that the Arbitration Act 1996 was “generally still fit for purpose”.
He continued: “The amendments made by the Act are neat and sophisticated. They address issues that have faced parties, practitioners and arbitrators in every-day practice, consuming substantial amounts of court time and legal costs in the process.
“Consequently, while there are practice points emerging from it, the Act is to be welcomed. It promises to maintain London’s status as a premier seat for international arbitrations for decades to come.”
Matthew Saunders, a partner at Ashurst, added: “Volatility in international trade against the backdrop of a threat of tariff wars underscores how important reliable and swift international dispute resolution is – reform of the Arbitration Act is especially timely in this respect…
“It will now be incumbent on English arbitration practitioners to promote London as a place to arbitrate and to market it effectively, just as those in Singapore and Paris have done so well for their cities in recent years.”
George Burn, partner and global co-leader for international arbitration at BCLP, said the Act was “consistent with the English courts’ philosophy of ‘Maximum support, minimum interference’ for commercial arbitration”.
However, he said it was a “shame” that the Act remained silent on the question of confidentiality in arbitration.
“Knowing that arbitration will be confidential is valuable to many businesses who opt for it. Common law principles already apply in this area, but some other jurisdictions have addressed confidentiality in statutory form.
“In my opinion, embedding a presumption of confidentiality in the Arbitration Act would have been a positive move.”
The Act also:
- Extends arbitrator immunity against liability for resignations, unless shown to be unreasonable, and the costs of the application to court for their removal, unless they have acted in bad faith.
- Simplifies the procedure for challenging arbitral awards on substantive jurisdiction under section 67 of the Arbitration Act 1996 by requiring that they contain no new evidence or new arguments, meaning they will not become rehearings;
- Gives emergency arbitrators the same court pathways to enforce their orders as other arbitrators; and
- Allows the court to make orders in support of arbitral proceedings against third parties.
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