The Arbitration Act 1996 (the “Act”) provides a framework for arbitration proceedings in England and Wales. It has played a key role in confirming London’s position as a leading jurisdiction for commercial arbitrations.

The Law Commission conducted a review of the Act in November 2021, to try and make it more efficient. The Law Commission has finally now published its consultation paper, containing its proposals for reform. 

This article discusses some of the important proposals for reform arising out of the consultation paper. 

Independence of arbitrators and disclosure

The Law Commission considered the merits of imposing a statutory duty of independence on arbitrators. The Law Commission defined “independence” as the idea that arbitrators should have no connection to the parties or dispute. The provisional view of the Law Commission was that there is limited benefit in imposing a statutory obligation of independence, given that arbitrators are already subject to a statutory duty of impartiality (under s 33 of the Act). The Law Commission’s overarching view was that the common law position should be regularised in the Act, therefore imposing a statutory duty to disclose any circumstances which might reasonably give rise to justifiable doubts as to their impartiality.

Discrimination

The Law Commission further proposed that protections from discrimination also be extended to the arbitrator’s “protected characteristics”. This would be achieved by the following:-

• Any agreement between the parties in relation to the arbitrator’s protected characteristics would be unenforceable.
• The appointment of an arbitrator would not be challenged on the basis of the arbitrator’s protected characteristics; and
• An exception may apply where an arbitration requires an arbitrator to have that protected characteristic as a proportionate means of achieving a legitimate aim.  

Confidentiality

Confidentiality provisions were omitted from the Act. Instead, the confidentiality of arbitrations under the Act is determined on a case-by-case basis. A term of confidentiality can be expressly agreed by the parties, or implied as a term of the arbitration agreement. The Law Commission considered introducing a default presumption that arbitrations are confidential, save for certain specified exceptions. However, the Law Commission’s provisional assessment was that the Act should not seek to codify the law of confidentiality, as they thought this would be better left to the courts to develop.

Jurisdictional challenges and appeals 

The Law Commission has also proposed limited amendments regarding the procedure for challenging the jurisdiction of arbitral tribunals before the courts. Those include a proposal that such challenges be heard by way of an appeal (as opposed to rehearing as under the current framework) and confirming that an arbitrator may make an award of costs in consequence of an award ruling that it has no substantive jurisdiction.

The Law Commission also provisionally considered that there is no requirement for a reform to the provisions providing for an appeal on a point of law. It was established that the current legislative framework strikes a reasonable balance between the need to ensure the finality of arbitral awards, and the need to provide a just way by which errors of law may be overturned. 

Summary determination of proceedings

A fundamental part of the Act is to allow arbitral proceedings to be dealt with in a cost effective and proportionate manner. One way to help meet that objective would be to allow arbitrators to rule on unmeritorious claims by way of summary determinations, allowing parties to avoid engaging in a process that will take up a lot of their time and costs on hearing claims which will not succeed. There is no provision in the Act enabling arbitrators to adopt a summary determination.

The Law Commission has therefore provisionally proposed that the Act should provide that an arbitral tribunal may adopt a summary determination procedure to dismiss a claim/defence unless the parties have agreed to opt out of such a procedure. 

The Law Commission has set out two possible thresholds for such a procedure: either that the issue to be summarily disposed of is “manifestly without merit” (a phrase used in some arbitral rules), or that it has “no real prospect of success” (a threshold akin to summary judgment by the courts under CPR 24).

Conclusion 

The Law Commission’s consultation paper suggests that it is taking a pragmatic and cautious approach to reforming the Act. The consensus appears to be that the current Act is working well, however, there appears to be appetite for limited reform in key areas. The Law Commission has asked that responses to the consultation paper be provided by 15 December 2022 and so one would expect to see any implementation of the proposed changes over the course of the coming year. 

If you would like to discuss Arbitration or would like to find out about our services more generally, please contact our Dispute Resolution team at TV Edwards Solicitors on 020 3440 8000 or email adam.haffenden@tvedwards.com.

We have experience in conducting arbitration proceedings and so should you require any assistance, please contact us using the details above for a free initial consultation call.