The UK Law Commission has announced that it will carry out a review of the Arbitration Act 1996, the principal legislation governing arbitrations in England, Wales, and Northern Ireland. The Law Commission has stated that its aim is to ensure that the Arbitration Act remains clear, modern, and efficient in order to maintain the United Kingdom’s attractiveness as a destination for dispute resolution.
In the 25 years since the Arbitration Act 1996 (the Act) was enacted, it has helped to make the United Kingdom one of the leading destinations for commercial arbitrations and reinforced the pre-eminence of English law as a choice of law for commercial parties. Accordingly, there are very few practitioners who would call for a wholesale amendment of the Act. Nevertheless, it is generally accepted that there are provisions of the Act that may be appropriate for updating and clarification, particularly in light of recent updates to the legislation governing arbitrations in other jurisdictions. Accordingly, on 30 November 2021, the Law Commission announced it will launch a review of the Act with the aim of ensuring it is as “clear, modern, and efficient as possible.”
The specific matters that will be addressed as part of the review have not yet been determined, and the Law Commission will be doing so as part of its initial consultations with stakeholders. However, taking into account responses it received concerning the Act as part of its 14th Programme of Law Reform, the Law Commission has indicated that it is likely to consider:
In addition, one of the more interesting matters that the Law Commission has indicated it might consider is the power to summarily dismiss unmeritorious claims or defences in arbitration proceedings. Any consideration by the Law Commission of this topic would need to pay regard to what appears to be a growing acceptance of the benefits of arbitral tribunals possessing this power. Indeed, in the last few years, a range of arbitral bodies—including the International Centre for Settlement of Investment Disputes (ICSID) and the Arbitration Institute of the Stockholm Chamber of Commerce—have introduced provisions in their rules allowing for the summary dismissal of unsustainable claims lacking in legal merit, with other institutions’ rules—such as the 2016 Rules of the Singapore International Arbitration Centre (SIAC) and the 2020 Rules of the London Court of International Arbitration (LCIA)—going further and also allowing for the summary dismissal of cases that fall manifestly outside the arbitral tribunal’s jurisdiction.
Should it consider this topic, the Law Commission would need to explore how the introduction of this power might be balanced with the desire to ensure due process and respect for a party’s right to be heard. A failure to strike the right balance could result in unsuccessful parties pursuing litigation to set aside and/or resist the enforcement of awards, undermining the benefits in terms of saving time and costs that a summary dismissal procedure is intended to introduce.
Elsewhere, the Law Commission’s indication that it may also consider electronic service of documents, electronic arbitration awards, and virtual hearings may reflect its recognition that parties and tribunals (and also the English courts) have over the last 18 months become accustomed to using technological solutions to navigate the difficulties caused by the COVID-19 pandemic.
It may prove to be that case that not all of the identified issues are ultimately considered by the Law Commission, or that the Law Commission determines that no amendments to the Act’s existing provisions are required in relation to certain of these issues. However, the Law Commission’s decision to revisit the Act confirms that the United Kingdom wishes to remain a pro-arbitration jurisdiction at the forefront of international dispute resolution for the foreseeable future. As Lord David Wolfson of Tredegar QC, a minister in the UK’s Ministry of Justice, said when announcing the review on Twitter, it is hoped that the review will “ensure the [Act] remains up-to-date so we continue to attract commercial disputes across the globe to London arbitration.”
The review is in its pre-consultation phase, and the Law Commission anticipates launching the project in the first quarter of 2022. A consultation paper is expected to be published in late 2022.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
London
Peter Sharp
David Waldron
Robert Bolgar-Smith
Keir Baker