On 10 March 2016, the London Shipping Law Centre held a seminar, hosted by Stephenson Harwood LLP in London, inviting a number of commercial barristers to give their frank reflections on the Arbitration Act 1996 (AA 1996) almost 20 years on from its drafting and coming into force: had the AA 1996 proven fit for purpose?
The event was chaired by Lord Saville of Newdigate (one of the principal architects of the AA 1996) and moderated by former Commercial Court Judge Sir Bernard Eder. Stephen Lewis, the Law Commissioner for commercial and common law, attended and explained that reform of the AA 1996 in some shape or form was potentially on the cards for the Commission’s next programme of law reform.
Two seminar sessions were summed up by Louis Flannery (Head of International Arbitration at Stephenson Harwood) and arbitrator Bruce Harris respectively, both authors of two of the main practitioners’ texts on the AA 1996. The seminar benefited from their expertise and knowledge of the AA 1996’s practical workings.
Session One
Session One began with Nakul Dewan of 20 Essex Street, who spoke about the issue of whether there could be said to be 100% party autonomy given that certain provisions of the AA 1996 are mandatory. He pointed out that there is no reason why an offer of 100% party autonomy (and the ability, therefore, to “cherry pick” arbitral procedure) should be considered more attractive or desirable than the mandatory statutory rules of a contractually agreed choice of seat. He did question whether, in light of the other international arbitration seats now available to parties, the extent of the mandatory provisions under the AA 1996 should be revisited.
Ravi Aswani of Stone Chambers then spoke about section 44 and its role in relation to the development of emergency arbitration. The court can only act if and to the extent that the tribunal or institution has no power or is unable for the time being to act effectively (section 44(5)). If an emergency arbitrator can be called upon, the tribunal or institution arguably is able to act effectively. However, Ravi commented that in the overwhelming majority of cases, interim relief is sought from the court for the very reason that the arbitrator does not possess the required power or effective sanction. In contrast with some jurisdictions, the English court was ready, willing and able quickly and effectively to grant interim relief in support of arbitration within the confines of section 44. He concluded that, although some amendment to the AA 1996 may be required to cater for the development of emergency arbitration, section 44 continues to work reasonably well.
Next, Alistair Schaff QC of 7 KBW spoke about section 46, drawing attention to the fact that, on its wording, section 46 provides for a flexible and, therefore, less predictable regime (than that adopted, for example, in the English Commercial Court). To the extent there is no express choice of law, the tribunal is given a “free hand” to determine the applicable law by virtue of selecting the conflict of laws rules of its choice. This affords the opportunity for the tribunal to apply different conflict of laws rules to the dispute and, therefore, to produce different legal outcomes (substantive and procedural). It was questioned whether this was intended or desirable. He highlighted that, subject to due process, a tribunal’s decision as to what conflict of laws rules should apply is a matter for discretion and not reviewable by the court.
Duncan Matthews QC of 20 Essex Street, spoke about emergency arbitrators and how the AA 1996 does not seem to have anticipated how widespread institutional provision for the same would become globally. This has given rise to lacunae and has highlighted some of the “sketchier elements of the Act”, ranging from the very definition of an emergency arbitrator through to the extent, nature and impact of its powers. If an express provision were to be introduced into the AA 1996 in relation to emergency arbitrators, the most elegant solution might be that found in section 2(a) of the Singapore International Arbitration Amendment Act 2012.
James Leabeater of 4 Pump Court highlighted the advantages and pitfalls of confidentiality in arbitration and emphasised the difficulties (substantive and commercial) in attempting to draft a statutory code in relation to the same. Instead of advocating formulation of statutory principles, he recommended consideration of a “code of best practice” which could begin to inform the further development of arbitration laws on an international basis. He emphasised that it is for the parties to choose whether or not arbitrations are confidential.
Sean O’Sullivan, of 4 Pump Court, addressed section 12 and the court’s discretionary power to extend contractual time limits for the commencement of arbitration proceedings. Referring to section 12 as “an unnecessary relic of the past which has no place in the modern law of arbitration”, he commented that it serves little discernible useful purpose, tending only to cause delay and an increase in costs. What was so special about time limits for commencing arbitration that meant they formed some exception to the English law norm of respecting and upholding the parties’ contractual bargain?
Session Two
Brian Dye of Essex Court Chambers spoke about section 9, addressing the question of what the test should be for a stay of legal proceedings allegedly brought in breach of an arbitration clause. Whilst in England and Wales the court adopts a “virtual certainty” standard of review (amounting in effect to a trial of the question of the arbitrator’s jurisdiction by the court), in other jurisdictions the courts have moved to a “prima facie” standard of review. That is that if prima facie there was a binding arbitration clause, those courts would, without more, stay legal proceedings in favour of arbitration and leave further consideration for the arbitrators.
Philippa Hopkins of Essex Court Chambers spoke about section 57, describing it as a “trap for the unwary”. She suggested that whilst the role of section 57 as a true “slip rule” could not be criticised, the fact that it went much further than this led to a number of difficulties in practice. This includes the potential consequences for a challenge in court if a section 57 application was not made, and issues relating to time limits. There was a case for restricting the scope of section 57 to genuine “slips” only.
Poonam Melwani QC of Quadrant Chambers discussed section 67, and in particular the present position in which a section 67 challenge amounts to a complete re-hearing. She was critical of the duplication of costs and time, and of the losing party having two bites at the cherry. Her proposed solution was a redrafting of section 30 to provide for determinations by the tribunal of its own substantive jurisdiction to be the exception rather than the norm, or a right of election in favour of the party asserting jurisdiction to choose to go to court (only) for a determination of substantive jurisdiction.
Rachel Toney of Stone Chambers considered the difficult interplay between section 68, section 73 and section 24. She commented that the fact that all four types of objection (jurisdictional and non-jurisdictional) in section 73 were treated in the same manner for the purposes of waiver, led to practical difficulties. This is because all four types of objections were so different in their nature. Parties were too often placed on the horns of a dilemma with regard to non-jurisdictional complaints (which, inherently, tend to be not only much more difficult to identify with the required specificity at the relevant time, but also much more “delicate” in nature). Was it time for a more nuanced approach within section 73?
Simon Rainey QC addressed section 69, noting that England and Wales are out of step with many other sophisticated arbitral jurisdictions (and out of step with the UNCITRAL Model Law) by allowing any appeal on a point of law at all. He also considered:
- Whether there was a continued justification for the different approach to one-off points and points of general public importance.
- The inability of the parties to apply to the Court of Appeal for permission to appeal, where this is refused at first instance.
- Whether section 69(3)(d) was otiose in practice.
Louis Flannery addressed the practical difficulties that routinely arise in relation to questions of security for costs and third party funding.
Conclusion
The panels and the audience were unanimous in their view that the AA 1996 was an outstandingly well drafted piece of legislation that had worked, for the most part, very effectively. In these times of globalisation it was important to look at what was being done in other leading arbitration jurisdictions.
The general consensus was that some modest reform of the AA 1996 (as opposed to wholesale redrafting), keeping intact and unchanged provisions which have worked well, would be the most appropriate approach towards law reform in this fast moving area. The Law Commissioner recorded that the seminar had been extremely informative.
