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BCLP Arbitration Survey 2022: reform of the Arbitration Act: evolution in a changing world

For over ten years, BCLP have conducted an annual survey on issues affecting the arbitration process. This year’s survey focuses on the reform of the English Arbitration Act 1996, a topic chosen to coincide with the Law Commission’s ongoing consultation on reform of the legislation.

One of the aims of the Law Commission’s review is to enhance the experience of those who choose to arbitrate in England and Wales, and to maintain English law as a gold standard in international arbitration. There is no doubt that London is a popular seat of arbitration, regularly topping polls as parties’ preferred seat of arbitration. Although the Arbitration Act is not the only reason for the popularity of London as a seat of arbitration, a modern and effective arbitration law is key to retaining that position. There is a general perception that the Act is a clear, well-drafted arbitration law that provides an effective framework for the conduct of arbitration. Indeed, when the Law Commission announced that it would be reviewing the Act, many stakeholders queried whether major reform was needed, adopting the view “if it ain’t broke, don’t fix it”.

That said, there is no hiding from the fact that the Act is more than 25 years old and, over that time, there have been significant developments in arbitration law and practice. In 1996, the emergency arbitrator was a relatively unknown concept. Now most of the major arbitral institutions have adopted emergency arbitrator provisions. There have been significant legal decisions on a range of issues, including confidentiality, court powers exercisable in support of arbitral proceedings, and arbitrators’ duties of independence and disclosure.  Furthermore, the last two decades have seen the increased use of technology, and an increased focus on diversity and environmentally sustainable practices in arbitration.

The reform of the Arbitration Act is not just of interest to UK practitioners. Many international practitioners choose England and Wales as a seat of arbitration, so have a vested interest in maintaining the quality of the Act. Other jurisdictions have responded to developments in arbitration law and practice with updated arbitration legislation. The Law Commission’s review of the Act offers an excellent opportunity for England and Wales to do the same.

Who we asked

The 116 respondents to the survey included arbitrators (37%), in-house counsel (7%), external lawyers (53%), those working at arbitral institutions (4%), academics (11%), expert witnesses (14%) and litigation funders (1%). The geographical regions in which our respondents work include Central and South America, North Africa, Western Europe, East and South East Asia, Australasia, the Middle East, and the Caribbean, Eastern Europe (including Russia and CIS), West and East Africa and North America. The majority of respondents work in Western Europe (81%) and are from a common law background (60%). The respondents have been involved in disputes across a wide range of sectors including construction and engineering, energy and natural resources, international trade and commodities, and maritime and shipping.

The Survey Report

Perception v Reality:  what is the current perception of the Act and of English-seated arbitration?

Part one of the survey tested the extent to which the “if it ain’t broke, don’t fix it” perception of the Act reflects reality. We asked respondents to give their views on the Act and on their experience of English-seated arbitration.

English-seated arbitration is highly rated

The results of the survey confirm that English-seated arbitration is highly rated. 83% of respondents had experience of English-seated arbitration, as well as arbitration seated in other jurisdictions. 45% of those respondents rated English-seated arbitration as “much better” or “a bit better” than their experience in other jurisdictions. 37% rated it as “about the same”. Only one respondent rated their experience of English-seated arbitration as “much worse” than arbitration in another jurisdiction.

There is a high level of satisfaction with the Arbitration Act 1996

We invited respondents to rate their satisfaction with the Act on a scale of one to ten, with one being the lowest and ten being the highest. The responses indicated a fairly high level of satisfaction with the Act. 74% of respondents gave the Act a rating of 7 or higher. Only 15% of respondents gave the Act a rating of 5 or lower.

We also asked respondents how they would describe the Act. Again, the responses indicated a fairly high level of satisfaction with the Act. Respondents rated the Act highly for being easy to understand (77% strongly agreed or agreed) and for promoting finality (73% strongly agreed or agreed). However, in terms of cost, there was a perception that English-seated arbitration is expensive and only 33% thought the Act avoids unnecessary costs. Also interesting was the fact that 19% of respondents thought the Act was over complex and 32.5% thought it was dated. This does suggest that, in spite of the high regard in which the Act is held, there is room for improvement.

Evolution in a changing world: how could the Act be improved?

The Law Commission’s consultation paper identified eight specific areas for reform:  confidentiality; independence of arbitrators and disclosure; discrimination; immunity of arbitrators; summary disposal; interim measures ordered by the court in support of arbitration (section 44); jurisdictional challenges (section 67); and appeals on a point of law (section 69). In part two of the survey, we asked respondents for their views on the specific areas of reform identified by the Law Commission and on other potential areas for reform that did not make the Law Commission’s shortlist.

Key Findings

  • Confidentiality: 83% of respondents favoured either full codification of the duty of confidentiality or the embedding of a general principle of confidentiality in the Act, with only a small minority (14%) favouring the status quo.
  • Independence of arbitrators and disclosure: 84% of respondents thought the Act should include an express duty of the tribunal to be independent. 86% thought the Act should include an express duty to disclose any circumstances that might give rise to justifiable doubts as to the impartiality or independence of the tribunal.
  • Summary disposal: 77% of respondents thought that the Act should include an express provision for summary determination or disposal. 48% of those respondents thought the Act should set out the test for summary determination or disposal.
  • Section 44 and non-parties: 67% of respondents thought that court powers exercisable in support of arbitration should be available against non-parties to the arbitration agreement. 40% of those respondents thought that the non-party should have the right to challenge any order made, by petition to the Court of Appeal.
  • Section 44 and emergency arbitrators: 83% of respondents thought that court powers exercisable in support of arbitral proceedings, including the power to grant interim injunctions, should remain available in cases where parties have the option of seeking relief from an emergency arbitrator.
  • Section 67 jurisdiction challenges: review or full re-hearing: 68% of respondents favoured a review. 21% of respondents favoured a full re-hearing.
  • Section 69: should the right of appeal on a point of law be abolished? 67% of respondents thought the right of appeal on a point of law should be retained. 24% of those respondents thought the right of appeal should be limited to issues of public importance and with a real prospect of success.
  • Diversity: 64% of respondents thought the language of the Act should be made gender-neutral.

Overall, the findings of the survey indicated a good level of satisfaction with the Act, but also an appetite for some targeted reform. What respondents seem to want is necessary, almost organic, “evolution” that adapts to change while preserving existing strengths, as opposed to a “revolution”, which could dilute the essence of English arbitration law and jeopardise the jurisdiction’s attractiveness.

The full survey report can be downloaded here.

The Law Commission’s consultation is open until 15 December 2022. Details on how to respond to the consultation can be found here.

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