Legal profession welcomes bill set to underscore London as leading arbitration hub

Bill implementing reform to Arbitration Act 1996 praised by arbitration professionals, but Bar Council hits back over underfunding of court system
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A new bill that is set to underscore London’s position as a leading hub for international arbitration has been broadly welcomed by arbitration professionals. 

The UK government’s plans to bring forward the Arbitration Bill, which will implement reform to the existing Arbitration Act 1996 proposed by the Law Commission of England and Wales, were confirmed in King Charles’s speech to parliament on Tuesday. 

In the speech, the king said the bill would modernise and clarify the law governing arbitration agreements, strengthen the courts’ supporting powers and facilitate quicker dispute resolution.

The bill would “bolster England, Wales and Northern Ireland’s world-leading domestic and international arbitration sector with benefits for individuals and businesses seeking to resolve disputes, as well as boosting economic growth”, he concluded.

Mayer Brown’s Luiz Aboim, international arbitration day lead for London International Disputes Week (LIDW), said the reforms would “strengthen an outdated Arbitration Act”. LIDW, he said, was “fully set to discuss these changes, exploring how they’ve cemented London’s predominance or if further reforms may be necessary”.

David Hunt of Boies Schiller Flexner noted that the 1996 act had not been amended since it was issued, despite economic and legal practice changes. He added that, with arbitration worth billions to the UK economy in fees alone, the UK government has a clear interest in preserving the competitiveness of this area of practice. 

Many noted the bill’s evolutionary rather than revolutionary nature, with James McKenzie of Eversheds Sutherland saying it would modernise and improve existing law while maintaining the consistency of outcome and stability that drew parties to the UK.

According to Shai Wade of RPC, critical revisions introduced by the bill would give arbitrators statutory powers to dismiss hopeless cases or defences on a summary basis, with Hunt saying it would be “an important tool in speeding up cases and dealing quickly with issues that have no real prospect of success”.

It would also codify arbitrators’ duty to disclose circumstances that might give rise to justifiable doubts about their impartiality, which McKenzie said would “strengthen their immunity as well as provide a revised framework on challenges”.

It would provide that the law governing arbitration agreements shall be the law of the seat unless otherwise agreed, which Hunt noted would effectively reverse the decision of the UK Supreme Court in 2020 in Enka v Chubb concerning the governing law of the arbitration agreement and replace it with a new set of principles.

Hunt said: “I tend to agree with the change – Enka creates needless complexity – but it does entail overturning what had been thought to be settled law.”

The proposed reform would also simplify the procedure and narrow the grounds for challenging arbitral awards, which Wade said would give arbitrators “sharper teeth” and improve the enforceability of their awards.

Other provisions included allowing court orders to enforce emergency arbitrators’ decisions and, significantly, the power to order emergency relief in support of arbitral proceedings against third parties.

Craig Tevendale, head of London international arbitration at Herbert Smith Freehills, said the bill was the result of extensive consultation by the Law Commission that had brought the arbitral community with it in a process that was “clear and rigorous”.  

Nick Vineall KC, chair of the Bar Council, welcomed the new bill as part of what he called an “ambitious parliamentary agenda” for the justice sector that included crime, leaseholds and mental health.

However, he and Law Society counterpart Nick Emmerson noted the court system for consumers had suffered from more than a decade of underfunding. At the same time, legal aid cuts had denied many people effective access to justice.

“Additional funding is urgently required both to ensure that the courts and justice system can adequately function and to enable the delivery of draft legislation announced today,” Vineall concluded.

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