‘The art of the possible’ - arbitration specialists welcome targeted proposals to reform UK’s Arbitration Act

England and Wales Law Commission acknowledges ‘root and branch reform is not needed or wanted’ to 1996 legislation
London, United Kingdom - July 20, 2018: Official website of The U.K. Law Commission.

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Arbitration specialists have welcomed the England and Wales Law Commission’s proposals for targeted reforms to the Arbitration Act 1996 that recognise “root and branch reform is not needed or wanted”.

The publication of the commission’s final report alongside a draft bill followed a lengthy consultation process which led the law reform body to conclude there was a “consensus that the act works well”.

Professor Sarah Green, the Law Commissioner responsible for the reforms, said the recommendations “aimed to maintain the core principles of the Arbitration Act 1996 while introducing improvements to create further clarity, ensuring the fair and efficient resolution of disputes”.

She added: “With these improvements, we hope that the act provides a modern and effective legislative framework for many years to come, enabling arbitration to continue playing a significant role in the UK economy.”

Paula Hodges KC, head of arbitration at Herbert Smith Freehills, said the commission had sought to bring the arbitration community along with it, participating in numerous public events with two rounds of consultation and engaging with responses clearly and rigorously within the consultation papers. 

The commission has proposed significant reforms to the Act, including codifying an arbitrator’s duty of disclosure and proposals to strengthen arbitrator immunity following their resignation and applications for removal.

The draft legislation streamlines the existing act to allow arbitrators to use a new power of summary disposal and proposes a revised framework for challenges under section 67, which deals with the substantive jurisdiction of arbitration. There are, however, no proposals to make any changes to section 69, which provides for appeals on a point of law.

Barry Fletcher, a senior knowledge lawyer at DLA Piper and member of the London International Disputes Week (LIDW) strategy committee, noted: “For the right disputes and the right parties, the possibility of obtaining a summary award on claims/defences will be attractive and may also help persuade previously unconvinced clients to arbitrate rather than litigate.

“As such, including an express statutory power for tribunals to dismiss claims and issues and related defences on a summary basis should be a positive development for English arbitration. While such a power arguably exists under the current regime, the proposed new section should inspire confidence in tribunals (and enforcing courts) regarding the propriety and fairness of such a process.”

In other areas, such as provisions on confidentiality and discrimination, the commission argued that there was no need for reform as the law was already working well. 

Ben Giaretta, head of disputes at Fox Williams, said the commission had concluded that “it causes more problems than it solves” to legislate for these, saying “law reform, like politics, is the art of the possible”.

Giaretta, who also sits on the LIDW committee, said that was right: “Both are complex topics, and the Law Commission has concluded that it would be best to leave it to the courts to make incremental changes.”

There was also a nod to long-running litigation on the governing law of an arbitration agreement, an issue considered most recently in the Enka v Chubb litigation in the UK Supreme Court, with the clarification that the default governing law of the arbitration agreement should be that of the seat. Hodges described this as a “particular highlight” of the report. 

The final report also clarified court powers in support of arbitral proceedings and emergency arbitrators, alongside minor reforms, which included making appeals available from an application to stay legal proceedings and simplifying preliminary applications to court on jurisdiction and points of law.

Bar Council chair Nick Vineall KC, an experienced arbitrator at 4 Pump Court, welcomed a “characteristically careful and balanced review” in supporting the proposals. Vineall added it was “extremely important that the government finds parliamentary time for the short bill which the Law Commission proposes.”

Lord Bellamy KC, the justice minister, said: “We will respond to the Law Commission’s report shortly to maintain the UK’s reputation as a world leader in resolving legal disputes.”

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