MPs back Arbitration Bill as corruption concerns linger


Dakin: Bill is part of growth agenda

The Arbitration Bill sailed through its second reading in the House of Commons this week, with the government saying the legislation did not need to address arbitral corruption.

The bill, which has already been scrutinised by the House of Lords, won support from both the Conservatives – whose pre-election Arbitration Bill Labour revived – and the Liberal Democrats.

Justice minister Sir Nic Dakin said the measures “must now proceed at pace through the House. Dispute resolution matters”.

He explained: “The bill will enact long-awaited reforms to our arbitration law framework, which will enable more efficient dispute resolution for domestic and international parties alike.

“It will attract international legal business and promote UK economic growth—not just directly because arbitrations happen here, but because it promotes the UK as a one-stop shop for business.

“Our arbitrations are respected, and so too are our lawyers engaged in arbitrations – lawyers who are then engaged for transactional businesses; that is funded by our banks, underwritten by our insurers and mediated through our trading houses; and trading houses that also offer arbitral services in a mutually reinforcing offering.”

The Law Commission, whose recommendations the bill 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.

Sir Nic added: “So arbitration and the bill are part of our growth agenda for our great country. However, as arbitration is a largely private affair, we may speculate that its direct value is likely to be even greater than that £2.5bn.”

The one note of discord in the House of Lords came from Labour peer and former lawyer Lord Hacking, who raised the issue of corruption during the second reading, and proposed a general duty on the tribunal to “safeguard the arbitration proceedings against fraud and corruption”.

However, the government did not accept this and Sir Nic outlined its position: “We take corruption very seriously. However, we have concluded that arbitral corruption is not caused by any issue with our domestic arbitral framework.

“The Arbitration Act 1996 and common law already provide remedies to deal with corrupt conduct. The courts are empowered to set aside arbitral awards where there are serious irregularities, as they have done recently in the well-known case of Nigeria v P&ID.

“Furthermore, arbitrators are under a statutory duty to be impartial and to reach a fair resolution of the dispute. They can issue an award that prevents the corrupt party from benefiting.

“Although arbitration procedures are often private, corruption can be exposed. Common law allows an exception to confidentiality when disclosure is in the public interest.”

But the minister stressed the need for arbitral practitioners and institutions across the world to ensure their practices were continually developing to weed out attempts to exploit them.

“We shall support and keep track of initiatives that are under way, such as that of the International Chamber of Commerce’s anti-corruption taskforce. We will engage with the sector to adopt the very best practices as they are developed.”

Dr Kieran Mullan, the Conservative justice spokesman, acknowledged the concerns raised by Lord Hacking “and agree that that matter warrants further consideration”.

He added: “Even if, ultimately, the need to get the bill on to the statute book for all the benefits that it brings means that it would not be appropriate to do that through the current legislation, we should continue to monitor and revisit that issue.”




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