REUTERS | Denis Balibouse

Arbitration Act 1996: your voice matters!

The Law Commission currently intends to publish its consultation paper on proposed reform of the English Arbitration Act 1996 (AA 1996) in September 2022. However, at a COMBAR lecture on the Law Commission’s project and proposals on 27 June 2022, Professor Sarah Green and Dr Nathan Tamblyn gave a preview of the eight areas that have made the current shortlist for inclusion in the consultation paper.

The draft consultation paper reflects the input to date of practitioners, arbitrators and users of arbitration. It is designed to elicit further feedback and comment, and should not be regarded as a final statement of the scope of possible reform. It is reasonably clear, however, that a root and branch reform of the law is not on the cards: the AA 1996 is a successful piece of legislation with a good international reputation. Rather, any changes will aim to tweak the 25-year old Act to ensure that it is still “best in class” and competes with rival legislative frameworks in other arbitral seats.

The topics  that have made the shortlist are:

  • Confidentiality: No changes to the Act are proposed. Confidentiality is appropriate for some types of arbitration, but one size does not fit all (see, for example, the move towards transparency in the context of investor state arbitration). Furthermore, it would be difficult to draft exceptions to any blanket duty of confidentiality with sufficient clarity or flexibility to cater to all situations.
  • Independence: The consultation paper does not propose the introduction of a statutory duty of independence, but will recommend the introduction of a statutory duty of disclosure, effectively codifying the principles outlined in Halliburton and bringing the statutory framework into line with international practice. Breach of the duty of disclosure would in most cases also involve a breach of the duty of impartiality and could result in the removal of an arbitrator under section 24 of the AA 1996.
  • Discrimination: The consultation paper recognises that, despite recent improvements, the arbitration community could not yet be described as diverse. The consultation paper proposes to exclude the possibility of any challenge to arbitral appointments based on discriminatory grounds (as defined in the Equality Act 2010).  Although this provision may not have a huge direct practical effect (most challenges are not based on a protected characteristic), introduction of this provision is intended to send a strong anti-discrimination message.
  • Immunity: The consultation paper will recommend that arbitral immunity should extend to immunity from costs liability in court proceedings for, for example, removal of an arbitrator. Potential liability for costs (which may not be covered by professional liability insurance) can put arbitrators into a difficult position and may encourage arbitrators to resign rather than incur costs liabilities.
  • Summary disposal: Although arbitrators probably already have a power to dispose of a claim or defence summarily, the consultation paper proposes that this should be spelled out in the legislation. The applicable test would align with that in English court proceedings (“no real prospect of success”). The intention is to reassure arbitrators and foreign enforcing courts that summary disposal per se does not, as a matter of English law, evidence a lack of due process.
  • Section 44: The wording of section 44 has driven courts to the conclusion that it does not confer power to make orders (for example, freezing orders) against third parties. This is not what was intended: section 44 was intended to replicate the court’s available powers in the context of support for arbitration. The consultation paper proposes that this principle should be re-affirmed, and possibly also that amendments should make expressly clear that section 44 relief is, in principle, available against third parties. Similarly, tweaks to the wording should be introduced to clarify the interplay between section 44 and the role of emergency arbitrators.
  • Section 67: One of the more controversial recommendations of the consultation paper is that, where a party has participated in an arbitration and has challenged jurisdiction, the tribunal’s decision on jurisdiction may be challenged only by way of appeal. Permission to appeal would not be required, but the challenging party would not be entitled to a complete rehearing. The intention is to prevent parties from having two bites at the cherry and to enhance efficiency: a challenging party would in effect have to choose whether to challenge in court (in which case, it should not participate in the arbitration) or in the arbitration. The proposal raises some obvious conceptual difficulties, and gave rise to some lively debate at the lecture!
  • Section 69 appeals: No changes to the current scheme will be recommended in the consultation paper. The project team consider that the current approach achieves the right balance between finality of arbitration on the one hand, and the public interest in the development of the common law on the other.

The speakers emphasised that the Law Commission is interested in views from anybody with an interest in arbitration. Furthermore, the discussion is not limited to the eight topics outlined above: there is a “sweep up” category of other ideas that have been raised, and new ideas can still be proposed. It seems to me that arbitrators have probably been quite active in making their voices heard on topics such as immunity, independence and disclosure; it is important that users of arbitration, and their lawyers, also use this opportunity to raise any concerns or suggestions they may have.

The consultation paper is intended to be published in September; there will then be a period of around three months during which responses can be submitted. However, interested parties need not wait to submit comments, but can do so via the Law Commission website. Don’t be shy!

 

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