After a long-awaited review of the Arbitration Act 1996 (“the 1996 Act”) by the Law Commission, the Arbitration Bill (“the Bill”) was introduced to the House of Lords in November 2023 with an aim to modernise and strengthen the English arbitration framework and to ensure that the legislation remains of “market-leading status’.[1] After being left out of the ‘wash-up’ period following the announcement of July’s general election, the Bill’s fate temporarily hung in the balance. However, much to the approval of practitioners, the Bill was promptly re-introduced before Parliament by the new government in substantially the same form as under the previous government, on 17 July 2024.
The majority of the changes proposed in the Bill arise from the Law Commission’s Review (“the Review”) of the 1996 Act. The Review advocated for 10 main areas of reform, intended to “fine-tune, rather than revolutionise” [3] the legislative framework, and to further the principle found in section 1 of the 1996 Act being “to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense”.[4]
One of the main changes proposed by the Bill concerns the applicable law of the arbitration agreement. As introduced in November 2023, the Bill provides that the law governing an arbitration agreement will be the law of the seat chosen for arbitration unless the parties expressly agree otherwise; the provision therefore works as a default rule. In the version of the re-introduced Bill put before Parliament after the general election, it has been clarified that this new rule does not apply to investor-state arbitration agreements if the offer to arbitrate is contained in a treaty or non-UK legislation; this means that non-ICSID investor-state arbitration agreements will not be covered by the provision. However, investor-state agreements which arise under commercial contracts will remain to be captured [5] and ICSID arbitrations continue to remain outside the scope of the Bill, as they are under the current 1996 Act by virtue of the Arbitration (International Investment Disputes) Act 1966.
Furthermore, the Bill aims to simplify the procedure for challenging arbitral awards on substantive jurisdiction under section 67, by providing for rules of court that would mean these applications should contain no new evidence or new arguments. This is to avoid challenges based upon jurisdiction becoming a full rehearing, reducing the delay and costs involved in repeating what has already been argued before the tribunal.
A further proposed change is to provide emergency arbitrators with the power to issue peremptory orders and apply to the court to order compliance with them, or otherwise apply directly to the court to issue its own order. This is to allow emergency arbitrators the same pathways to enforce their awards as other arbitrators and enhance their effectiveness. Amongst many other suggested reforms, a final notable proposal is to confer a power on arbitrators to dispose summarily of issues that have no real prospect of success, on an application by any of the parties to a dispute. Despite tribunals’ general reluctance to utilise summary disposition due to concerns surrounding procedural irregularity/fairness, this is ultimately to align interim relief in arbitration with court proceedings and make arbitrations more efficient.
By Ben Knowles, Partner & Chair of the Global Arbitration Group, Clyde & Co.
[1] https://globalarbitrationreview.com/article/reactions-uk-arbitration-reform-proposals
[2] Review of the Arbitration Act 1996 – Law Commission
[3] Arbitration Act 1996 (legislation.gov.uk)
[4] See the draft Bill and the Explanatory Notes paragraph 18
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