Ponsonby: Legal system too must continue to adapt and evolve
Peers from all sides of the House of Lords have backed the Arbitration Bill to pass into law quickly during the first debate since it recommenced its journey through Parliament.
The bill – implementing reforms recommended by the Law Commission – fell in May after Parliament was dissolved for the election but the new Labour government has reintroduced it at once in the same form.
Speaking on its second reading on the Lords on Tuesday – the last day before the summer recess – justice minister Lord Ponsonby said it was clear from his time on the public bill committee for the previous bill that the reforms “commanded strong support from the sector and were the result of extensive consultation”.
He continued: “By supporting our arbitration sector, this bill will help to deliver one of this government’s guiding missions: to secure economic growth.
“The benefits that arbitration brings to this country are plain to see. The Law Commission estimates that the sector is worth at least £2.5bn to the British economy each year, while according to industry estimates, international arbitration grew by some 26% between 2016 and 2020. Of course, London remains the world’s most popular seat for arbitration by some stretch.”
However, the UK faced “healthy competition” from Singapore, Hong Kong, Sweden and Dubai, all of which have updated their arbitration frameworks in recent years.
“Our legal system too must continue to adapt and evolve if we are to remain ahead of the curve. The changes this government bring forward now will undoubtedly be a foundation for future success, although we are also clear that they represent evolution not revolution.
“I am therefore delighted that this government have been able to prioritise time so early in this session to legislate for these reforms to the 1996 [Arbitration] Act and to support this crucial sector.”
Lord Ponsonby’s predecessor at the Ministry of Justice, Lord Bellamy, and for the Liberal Democrats Lord Beith both strongly backed the legislation.
Lord Bellamy said: “In our view, the bill has, for one reason or another, been delayed long enough, and should now reach the statute book as early as possible.”
Labour peer and former lawyer Lord Hacking raised the issue of corruption in arbitration proceedings, citing the high-profile ruling last November of Mr Justice Robin Knowles, in which he held that an $11bn arbitral award against the Federal Republic of Nigeria was obtained by fraud.
Calling for talks about whether corruption should be addressed by the bill, he cited his experience as an international arbitrator in a number of commodity cases relating to Ukraine and Russia. “Corruption was evident all the time, and we had to be very careful in reaching our decision.”
Peers recalled that this had been raised in relation to the last bill and that Lord Bellamy had written to various arbitral institutions to see what they were doing to ensure that their frameworks were not used as a device for corruption.
Lord Ponsonby said he would find out if responses had been received, but cautioned that “we do not want anything that will hold up the current bill”.
Among the reforms in the bill are:
- A power on arbitrators to dispose summarily of issues that have no real prospect of success on application by any party;
- Introducing a statutory duty on arbitrators to disclose any circumstances which might give rise to justifiable doubts about their impartiality;
- Extending 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;
- Providing that the law governing an arbitration agreement will be the law of the seat chosen for arbitration unless parties expressly agree otherwise;
- Simplifying 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;
- Giving emergency arbitrators the same court pathways to enforce their orders as other arbitrators; and
- Allowing the court to make orders in support of arbitral proceedings against third parties.
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