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As 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.
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.
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.
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.
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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