Consultation on changes to the 1996 Arbitration Act: what you need to know

David Reed and David Horvath-Franco of Arnold & Porter outline the Law Commission’s most eye-catching proposed reforms to the 1996 Arbitration Act

In September 2022, the Law Commission published a Consultation Paper (No. 257) concerning the review of the 1996 Arbitration Act, the law governing arbitrations seated in England & Wales (primarily London) which has been in force for more than 25 years. 

The Commission’s review follows a request by the British Government in 2021 with the aim of identifying areas for improvement of the 1996 Act, “to ensure that it is fit for purpose and that it continues to promote the UK as a leading destination for commercial arbitrations.” The paper contains a useful discussion of the current law of arbitration in England & Wales, with many comparative law references, and of the considerations driving the proposed reforms. 

Based on market soundings, the Commission starts from the position that the 1996 Arbitration Act remains generally fit for purpose and works well. As a result, the proposed changes although wide-ranging are relatively modest. Certain market participants have urged the Commission to adopt more radical reforms. These are discussed in Chapter 11 of the Consultation Paper (and further below) but the Commission’s present view is not to embark upon a more ambitious reform in order to push through the changes that it does recommend more quickly. 

The main proposals 

The three most eye-catching reforms concern the duty of disclosure, summary disposal and jurisdictional challenges. 

The continuing duty of disclosure 

The Commission proposes expressly providing “that arbitrators have a continuing duty to disclose any circumstances which might reasonably give rise to justifiable doubts as to their impartiality.” This would codify the common law duty of disclosure and clarify that it is a continuing duty. However, it leaves open for consultation whether the duty should be based upon an arbitrator’s actual knowledge, or also upon what the arbitrator ought to know after making reasonable enquiries. 

Summary disposal 

The Commission proposes express statutory recognition of a summary disposal power, exercisable on a threshold of “no real prospect of success”. 

Jurisdictional challenges under s67 

The Commission proposes a significant curtailment of the s67 right to challenge a tribunal’s jurisdiction. It suggests that where a party has participated in the arbitral proceedings and challenges jurisdiction before the arbitral tribunal, any s67 challenge thereafter should be by way of appeal from the tribunal’s ruling rather than a rehearing. 

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Other proposals 

The Commission also proposes a number of smaller changes. Some are technical, including the correction of drafting inaccuracies (e.g. in s9), some clarificatory (e.g. as to the operation of s44) and some more symbolic, such as codification of solutions already established through case law (e.g. s70(3)). 

Chapter 11 proposals 

As mentioned above, while it has not opted to take them forward at this point, the Commission lists at Chapter 11 some quite significant further suggestions. These concern the interaction between arbitration law and other areas of law, such as private international law, the law on moratory interest and data protection law. These discarded proposals cover issues of importance in arbitration practice which, while excluded from the reforms as currently envisioned, may well be revisited in the future. 

Modest revisions 

The Commission calls for responses to its report by 15 December 2022. While in some instances, the Commission expresses a preference (e.g. s67), in others (e.g. liability of arbitrators for resignation), the Commission describes the arguments as finely balanced and consults without expressing a preference. 

Most of the revisions are relatively modest (although one or two, though modest, are ground-breaking, e.g. Equality Act protection for arbitrators). Nonetheless, they represent a step in the right direction, particularly with a view to cost efficiency for parties. The codification of the duty of disclosure (and whether it requires the exercise of due diligence), and the clarification that it is a continuing one, will bring needed clarity. The express summary disposal power will give tribunals confidence to expeditiously, albeit appropriately, deal with claims, allowing unnecessary delay and expense to be avoided. The Commission’s proposed reform of s67 – preventing parties from having “two bites of the cherry” by treating awards like first-instance judgments – will save parties both time and money. 

These proposals are welcome in the current climate of global arbitration trends, insofar as they boost London’s leading position in the fierce competition between arbitration seats. The reforms would follow similar reforms by other leading jurisdictions seeking to capitalise on new developments in international arbitration, such as in France (2011), Sweden (2019), Singapore (2020) and Switzerland (2021).   

The Commission does not expect to issue its final recommendations following the consultation until mid-2023. There is therefore some doubt as to whether the necessary political will and parliamentary time will be found during the present parliament (the next General Election is expected in 2024) to enact the necessary legislation.  On a positive note, Lord Bellamy KC, an experienced arbitrator, in addition to being one of the country’s foremost competition law experts, is now a Minister at the Ministry of Justice. However, it should be remembered that the 1996 Act was enacted in the dying days of the Major government, which lacked a sufficient Parliamentary majority to tackle more contentious issues and therefore gave parliamentary time to a relatively niche and uncontentious bill updating the law of arbitration. 

David Reed is a London-based international arbitration partner at Arnold & Porter, while David Horvath-Franco is an international arbitration clerk at the firm  

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