Reanalysing the Arbitration Act 1996—in its prime, or past its best?

Reanalysing the Arbitration Act 1996—in its prime, or past its best?

43169312_xlAs London reassesses its position as a global arbitration hub following the Brexit referendum does the Arbitration Act 1996 (AA 1996) require a radical re-think for the coming decades? Philippa Charles, partner at Stewarts Law, gives her take on the debate.

Do you think AA 1996 is ripe for reform?

AA 1996 is largely based on the UNCITRAL Model Law which continues to provide the basis for new arbitration statutes worldwide. While it continues to provide a good fall-back set of measures in the absence of specific party agreement, there are certain aspects of arbitration practice now for which AA 1996 is perhaps less well-suited, such as the speedy disposal of meritless claims and the management of multi-party disputes. These are matters which may merit from a review but the temptation to adopt wholesale review for the sake of it should be avoided, since the certainty and predictability offered by established arbitration laws are a factor attracting users to arbitration in jurisdictions boasting such laws.

It is suggested that providing explicitly for summary judgment procedures in arbitration may help reduce delay and costs. Should this be recognised in AA 1996?

The Singapore International Arbitration Centre (SIAC) has introduced an explicit tribunal power for the early dismissal of claims in its new rules (the first major institution to do so, and other institutions are working on similar provisions or expedited processes). There are concerns about cost reduction and delay in arbitration. This issue is exacerbated by the problem of ‘due process paranoia’ which users feel causes tribunals to be reluctant to act swiftly to dispose of such cases because of the risk of challenge to those decisions. Adoption of an express summary disposal power in English law would be a positive amendment to AA 1996 which might increase London’s appeal to users, and would reduce the cost to parties of defending meritless claims or counterclaims.

The Lord Chief Justice has firmly suggested that the process for appeals to arbitral awards needs to be reconsidered for several reasons, although many prominent arbitration lawyers disagree. Do you think there is wider appetite for reform of AA 1996, s 69?

I do not see this as a necessary or helpful development. The Lord Chief Justice’s speech earlier this year concerning the risks to the development of the common law from the popularity of arbitration has been quite controversial in arbitration circles—the ubiquity of arbitration in particular business sectors does raise a risk that cases arising from disputes in those sectors are all resolved out of the public eye, but users value the limited rights of appeal available in non-institutional arbitration as a meaningful check and balance on arbitrators’ application of the law and further restriction on the availability of AA 1996, s 69 seems unnecessary as it provides another distinguishing feature between London and other competing arbitration centres. English courts have a very repressive attitude to the use of AA 1996, s 68 to launch challenges which are really challenges on points of law. There appears little appetite within the judiciary to expand the courts’ supervisory jurisdiction and it therefore appears to me to offer an appropriate balance for users.

In light of Brexit, does this provide a good opportunity for the UK to further cement its status as an arbitration friendly forum?

Arbitration has remained largely untouched by the UK’s membership of the EU (with the exception of the loss of the power to issue anti-suit injunctive relief against proceedings in other Member States) so in principle, Brexit should not adversely affect the market for arbitration in London. Indeed, the lower value of the pound makes arbitration in London more affordable for foreign parties, and the certainty available to parties as to the validity of an agreement to arbitrate will increase compared to agreements to confer jurisdiction on courts in contracts between Member State parties—which may be affected by the UK leaving the ambit of Regulation (EC) 44/2001 (Brussels I) and Regulation (EU) 1215/2012 (Brussels I (recast)).

In the longer term, the state of the British economy may influence the popularity of London as an arbitral seat—therefore the opportunity to improve AA 1996 to promote London as a location for predictable, high-quality and decisive arbitration procedures should not be missed.

Interviewed by Alex Heshmaty. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.


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