Letting well alone

  • Legal Development 23 September 2022 23 September 2022
  • UK & Europe

  • International Arbitration

In its long-awaited consultation paper, the Law Commission has recommended making a limited number of changes to the English Arbitration Act 1996. These promote the speedy resolution of issues without merit, clarify the law on arbitrators’ impartiality, and strengthen their immunity, which should support the finality of awards. Among the more minor changes proposed is a measure promoting greater diversity among arbitrators. However, no changes are proposed regarding other hot topics such as third party funding - an indication, perhaps, of how well the 1996 Act has stood the test of time. 

It is now more than a quarter of a century since English arbitration law was revised root and branch, firmly establishing England and Wales as one of the most arbitration-friendly jurisdictions.  In general, the Arbitration Act 1996 works well, and there is no widespread support for radical reform.  However, other countries have revised their arbitration legislation more recently, and the Law Commission is concerned that English’s statue should be ‘state of the art’ so that London continues to be (with Singapore) the world’s first choice for international commercial arbitration.[1]  It has therefore published a consultation paper setting out what it sees as necessary changes.[2]

In fact, only a handful of major changes are proposed in the paper.  The most significant of these is the introduction of an express summary judgment procedure to dispose of issues that are not worth deciding in the usual way.  In contrast to English judges, arbitrators are often reluctant to deal quickly with issues that have no real prospect of success and where there is no other compelling reason to continue to a full hearing.  This is partly because arbitration laws (in England and elsewhere) give them little encouragement to do so, and arbitrators are naturally reluctant to take any step that might lead their award to be challenged for procedural irregularity.  However, some arbitration rules do now contain an explicit summary disposal procedure  -  for example, the 2020 LCIA arbitration rules expressly permit the ‘early determination' of claims, counter/cross-claims, defences, and so on, where these are manifestly outside the tribunal's jurisdiction, inadmissible or manifestly without merit (Art 22.1(viii)).[3]  The Law Commission suggests that a broadly similar provision should be included in the Arbitration Act itself, although they recommend that it be non-mandatory in case parties do not like the idea. 

A further major proposal is to codify the common law on arbitrator impartiality, which requires an arbitrator to disclose circumstances which might reasonably give rise to justifiable doubts as to their impartiality.  There is no proposal to introduce an express duty of independence, however, since the Law Commission regards this as “not practicable” in many areas of arbitration.  In addition, the paper proposes strengthening arbitrator immunity so as to preclude liability for court costs.  The thinking here is that greater immunity should support the finality of arbitrator awards by discouraging satellite litigation. 

These are not the only reforms recommended in the consultation paper. For example, the Law Commission suggests that section 44 (court powers exercisable in support of arbitral proceedings) should be changed to allow orders made against third parties.  It is also concerned that the appointment of an emergency arbitrator, which is now allowed by many arbitration rules, should not backfire, so to speak, and restrict access to the court. Another proposal is that the procedure for challenging the jurisdiction of the tribunal under section 67 should be by way of an appeal rather than a rehearing. Internationally, it is quite common for parties to have a rehearing in these circumstances[4]; however, this can be wasteful of time and money, and is arguably unfair.  It allows the challenging party to have a second bite of the cherry, obtaining new evidence and developing new arguments to present to the court. 

Finally, the Law Commission (like many other bodies) is concerned that diversity in arbitral appointments has improved to some extent, but not nearly enough.  One of its proposals is therefore to adopt the language of the Equality Act 2010 (including the concept of ‘protected characteristics’) so as to prevent arbitral appointments being challenged for reasons that are discriminatory.  The paper also discusses removing gendered language from the Arbitration Act, in line with UK government policy.

[1] Queen Mary University of London ‘2021 International Arbitration Survey: Adapting arbitration to a changing world’ at page 6, available at: https://arbitration.qmul.ac.uk/media/arbitration/docs/LON0320037-QMUL-International-Arbitration-Survey-2021_19_WEB.pdf

[2] Review of the Arbitration Act 1996, published 22 September 2022 and available at: https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2022/09/Arbitration-Consultation-Paper.pdf

[4] This is the case, for example, in Canada, Australia and Hong Kong, and under the US’ Federal Arbitration Act the court will conduct a de novo hearing unless the parties agree otherwise (see paragraphs 8.27 and 8.28 of the consultation paper, at page 77). 


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