Out-Law News 3 min. read

Arbitration Bill tipped to underscore London’s position as leading arbitration hub

London’s reputation as a leading hub for international arbitration will be reiterated if “modest but necessary” changes to arbitration law are implemented as expected via a new Arbitration Bill, an expert has said.

Scheherazade Dubash of Pinsent Masons was commenting after the UK government’s plans to bring forward a new Arbitration Bill, to implement recommendations for reform proposed by the Law Commission of England and Wales, were confirmed in the King’s speech on Tuesday. The Law Commission set out proposed amendments to the existing Arbitration Act 1996 following a near year-long review, which included two consultation exercises held with stakeholders – including Pinsent Masons.

The Bill’s inclusion in the King’s speech means businesses can expect the draft legislation to be introduced before parliament during the course of the next parliamentary session, before the next UK general election.

Dubash said: “It is fabulous to see the Arbitration Bill featuring in the King’s speech as one of the government’s legislative priorities. This has been a commendable procedure from the very beginning and, if as speculated, the Law Commission’s special parliamentary procedure for ‘uncontroversial’ bills is adopted, it will hopefully lead to swift scrutiny and passage of the Bill through to Royal Assent.”

“Although England and Wales is among the world’s foremost jurisdictions for arbitration, with London being selected by users repeatedly as a top seat of arbitration, the modest but necessary changes to the arbitration regime will ensure it remains competitive as a leading hub for clients seeking to resolve their disputes in the region,” she said.

The Arbitration Bill, once enacted, will apply automatically in England and Wales, but the government has said it will propose that the provisions are given effect in Northern Ireland too.

Businesses will have to wait for the Bill to be published to determine whether all of the Law Commission’s recommendations will be put before parliament, but Dubash said that briefing notes shared by the government alongside the King’s speech, in the context of the Bill’s contents, refer to the headline changes recommended by the Law Commission in its final report – with almost the exact same wording, in places.

The government confirmed that the Bill’s provisions to “modernise” the arbitration law will include clarifications for the law governing the arbitration agreements. It said the Bill will provide “that the law applicable will be those of the legal location chosen for arbitration unless parties expressly agree otherwise”. This, it said, would mean that “where arbitration is seated in England and Wales or Northern Ireland, it will be fully supported by our arbitration law”, which it described as “among the most supportive of arbitration globally”.

Other reforms to be provided for in the Bill include “empowering arbitrators to expedite decisions on issues that have no real prospect of success”, the government said. This, it added, will improve the efficiency of arbitral proceedings and bring the position into line with the powers of the courts to issue summary judgments.

The Bill will also impose a new statutory duty on arbitrators to “disclose circumstances which might give rise to justifiable doubts about their impartiality”. Codification of the common law in this respect, following the Supreme Court’s decision in the Halliburton v Chubb case, allows the parties to have an informed discussion about the choice of arbitrator and will help increase an overall sense of trust in the arbitral process, said Dubash. It also brings the Act in alignment with the UNCITRAL Model Law as well as some arbitral rules.

Arbitrators will also be provided with immunity against liability for resignations, unless this is shown to be unreasonable, and for the costs of the application to court for their removal, unless they have acted in bad faith. These measures are intended to support and encourage arbitrators to make robust and impartial decisions without fear of being sued by a disappointed party.

Further provisions to be included in the Arbitration Bill will limit the circumstances in which losing parties in arbitrations can ostensibly obtain a re-hearing of the case before the courts when challenging arbitral awards as to its ‘substantive jurisdiction’. Appeals raised on that basis in future “should contain no new evidence or new arguments”, the government said.

The Bill will also empower the court to make orders supporting those of emergency arbitrators, which in turn will enable the decisions of emergency arbitrators to have the same efficacy as those of the “full” arbitral tribunal. The Bill will also give the court powers to “make orders in support of arbitral proceedings against third parties”, the government added.

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