Below we have outlined the proposed key refinements to the English Arbitration Act 1996 which were released in a recent Law Commission report. And while changes may be some way off and will depend on parliamentary time being allocated for their enactment, parties to, or considering, arbitration clauses which specify London-seated arbitration may wish to comment on the report's following eight key proposals so that their views are reflected in recommendations made to government after the consultation.
Please reach out to us for further explanation about the proposals' effects (the first six advocate change; the remainder preserve the status quo) and, if necessary, assistance in preparing a response [link to: https://consult.justice.gov.uk/law-commission/arbitration/consultation/intro/] by the deadline of Thursday 15 December 2022.
You can also comment on areas not covered like third party funding, the use of technology (such as remote hearings, electronic documents, and whether artificial intelligence should make decisions in the arbitral process), and whether statutory provisions specifically on investor-state arbitrations are needed, and on a few minor issues designed to simplify or tidy up the Act.
Restricting challenges to the tribunal's jurisdiction
This is perhaps the most significant proposal as it removes the current right for parties to have their challenge of a London-seated tribunal's jurisdiction re-heard by an English court if they are unhappy with the tribunal's ruling on its own jurisdiction. It means parties would have to challenge jurisdiction either:
- at court directly, rather than before the tribunal.
- before the tribunal, but then at court only be allowed to appeal the tribunal's decision on jurisdiction itself (rather than, as at present, potentially being permitted a full re-hearing of the jurisdictional challenge at court).
This would increase certainty and save time and costs, as there would only be one opportunity to challenge jurisdiction, and the tribunal's decision wouldn't be redundant. At the same time, the courts would still have the final say. This could make London-seated arbitrations more efficient compared with pro-arbitration countries like the United States and Hong Kong, which allow full re-hearings.
Allowing summary disposal of issues lacking merit
The report recommends allowing tribunals a statutory power summarily to dismiss claims, defences or issues which are unlikely to succeed and when there is "no other compelling reason to continue to a full hearing". This could result in cheaper and faster proceedings and improve the enforceability of summary awards as tribunals would be less reluctant to dismiss cases for fear of not exercising due process.
Parties would have to apply for the exercise of this power, would be given the chance to make their case on the issues in question, and could opt to disapply the power if they wished. Ideas are welcomed as to what the threshold for a successful summary judgment should be.
Codifying the duty to disclose where impartiality could be doubted
The Act requires tribunals to be impartial, but not that arbitrators be independent (which is difficult to define and probably unnecessary). However, to help parties be more sure when an arbitrator can be removed for bias and to strengthen England's pro-arbitration status, the Law Commission wishes to codify the common law rule that arbitrators have a continuing duty to disclose any circumstances which might reasonably give rise to justifiable doubts as to their impartiality. It also invites comments on whether actual knowledge of circumstances, or what ought to be known after the making of reasonable enquiries, should be disclosed.
Clarifying interim measures
First, should the Act be clearer on when the courts can exercise their default powers to order interim measures, such as freezing assets or ordering injunctions? And should the Act state that these powers are exercisable as in English civil litigation and subject to the rules that apply in domestic court proceedings, and that third parties can be bound by these orders and appeal against them?
Second, should applications to the courts for interim measures to support emergency arbitrations (arguably restricted under current case law) be allowed? And where an arbitral party ignores the orders of an emergency arbitrator, should the Act either empower courts to order compliance with the emergency arbitrator's order, or allow applications with the permission of the emergency arbitrator, not just that of the fully constituted tribunal as at present?
Preventing discrimination in arbitral appointments
The Act would be amended to make arbitration agreements unenforceable if they specified the protected characteristics listed in the Equality Act 2010 (age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation), and to end challenges to arbitral appointments based on those characteristics. There could be an exception where characteristics were necessary or justifiable.
Whilst this would probably have little effect on the arbitration process, it shows a desire to work towards greater diversity in arbitrator appointments. However, there is a small risk this reform could open a ground for resisting enforcement under the New York Convention.
Extending arbitrator immunity
Under the Act, arbitrators are not automatically immune from liability if they resign, or from costs if a party launches court proceedings to remove them, even if the challenge is unsuccessful. The report proposes they be immune from costs in court proceedings and invites comments on whether they should be liable at all if they resign unreasonably. This supports the finality of awards (by discouraging satellite litigation against arbitrators) and arbitrator impartiality (by reducing the pressure to conform to party demands).
Remaining silent on confidentiality
The Act is silent on confidentiality because court decisions show how hard it is to draft a default rule requiring arbitrations to be confidential (and any exceptions to that rule), given the variety of types of London-seated proceedings. The Law Commission proposes no change in this area, as parties can enter into confidentiality agreements, adopt arbitration rules which mandate confidentiality, and rely on the courts to define the scope of English common law's existing implied duty of arbitral confidentiality.
Keeping appeals on points of law optional
The Act would continue to allow parties to choose to exclude appeals of arbitral awards to the courts on points of law. Parties often do this by opting for the LCIA or ICC rules, as both exclude this right to bolster award finality.
Authored by Mark Crossley and Benjamin Littlewood.
