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21 juillet 2023
Disputes Quick Read – 29 de 105 Publications
The Law Commission's Consultation Process on the Arbitration Act 1996 – taking stock
The Law Commission's reform project on the Arbitration Act 1996 (the Act) has progressed through a meaningful consultation stage involving not one, but two consultation papers. This continued engagement is welcomed by all with an interest in arbitration as England continues to maintain its position as the leading centre for international arbitration.
As we discussed here, the first consultation paper was published on 22 September 2022 and was a lengthy document consisting of 10 chapters addressing key topics which the Commission shortlisted because they reflected "a large measure of agreement among stakeholders that these are the topics which would benefit most from review". The first paper also included a chapter setting out the principal topics which did not make the shortlist, briefly explaining for each why this was the case. The Commission then requested responses and comments from all stakeholders, allowing a three-month period for such submissions which closed on 15 December 2022.
After reviewing the responses received, the Commission decided to publish a second consultation paper on 27 March 2023. Contrary to its predecessor, the second paper is much shorter and only covers three topics, two of which were already considered in the first paper but needed revisiting and one of which was elevated from the list of discarded topics. In doing so, the Commission clearly gave careful consideration to the responses received and even engaged in further discussions and correspondence with a number of consultees – all of which constituted a useful dialogue with the arbitration community whereby the Commission listened to their concerns and opinions.
Topics covered in the second consultation paper
The three topics featured in the second consultation paper are as follows:
- Law of the arbitration agreement: While this was mentioned in passing in the first paper but was not shortlisted for reform, 31 responses asked the Commission to reconsider. Accordingly, the second paper provisionally proposes that a new rule be introduced into the Act to the effect that the law of the arbitration agreement is the law of the seat, unless the parties expressly agree otherwise. The discussion reveals that this was motivated by the fact that the Enka v Chubb decision would likely result in more arbitration agreements being governed by foreign law, and would thus oust the law of England & Wales on a number of important points (separability, arbitrability, scope and confidentiality). The Commission also observed that the Enka v Chubb ruling is complex and concluded that a simple default rule would remove opportunities for argument and satellite litigation.
- Discrimination: This was considered in the first consultation paper which provisionally proposed that a term be unenforceable which requires an arbitrator to be appointed by reference to a protected characteristic (unless it is justified as a proportionate means of achieving legitimate aim). However, the Commission received several responses focusing on the desirability of an arbitrator being of a neutral nationality, prompting it to revisit the issue. Accordingly, the Commission provisionally proposed in its second paper that it should be deemed justified to require an arbitrator to have a nationality different from that of the parties. The Commission has also asked consultants to consider whether discrimination should be generally prohibited in the context of arbitration and what the remedies should be where discrimination occurs.
- Challenging jurisdiction under section 67: This was considered in the first consultation paper which provisionally proposed that a challenge regarding the jurisdiction of a tribunal under section 67 should take the form of an appeal instead of a full rehearing. After receiving "strong views on both sides of the debate", the Commission modified its provisional proposal such that the particularised limits of a challenge under section 67 be adopted in the rules of court, instead of legislation. These include the procedural specifications that (i) the court should not entertain any new grounds of objection or new evidence (unless, even with reasonable diligence, they could not have been advanced or submitted to the tribunal), (ii) evidence should not be reheard (save exceptionally in the interests of justice), and (iii) the court should allow the challenge only where the tribunal's decision on its jurisdiction was wrong.
What is there still to address?
The contents of the second consultation paper are in line with the desire that England & Wales maintain its position as a strong arbitration-friendly hub and London as the world's most popular seat. However, recalling that the first consultation paper included a chapter explaining why several areas were not shortlisted, it is worth pausing to consider some of those which remain beyond the scope of the Commission's suggested reforms:
- Third party funding – whether the Act should require a party to disclose whether they have third party funding and whether clarification is needed about the tribunal's control over costs in relation to third party funding;
- AI – whether the Act should address arbitration conducted by artificial intelligence, i.e. should it explicitly provide that an arbitrator must be human?;
- Delay – whether the Act should provide arbitrators with more powers to control against party-caused delay because, for example, the requirement of inordinate and inexcusable delay in section 41(3) is too high a threshold;
- Seat – whether "seat" in section 3 is too vague and should be replaced with "place", and whether other terms like "venue" should be defined;
- Consolidation – whether the Act should provide arbitrators with greater powers to consolidate proceedings (which section 35 currently only allows where the parties agree); and
- Costs – various issues under sections 61 to 65, i.e. whether the Act should provide tribunals with greater powers to control party costs, whether it should address WP offers, whether the Act should update the language in sections 61 (the default rule of "costs follow the event") and 63 (defining "recoverable" costs) in light of changed language in new civil procedure rules.
What now?
The consultation period for the second paper closed on 22 May 2023. The stakeholder responses may well justify the publication of a third paper. Either way, the expectation in light of the consultation to date is that some reform is on the way. Generally, two-thirds of the Law Commission's recommendations are implemented. For arbitration practitioners this is welcome and reinforces the commitment the UK has to promoting private dispute resolution.
We will continue to monitor the progress of the Commission's final recommendations.
To discuss the issues raised in this article in more detail, please reach out to a member of our team.
Dans cette série
The sting and the tale
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First of its kind judicial guidance on the use of AI in the courts
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Supreme Court rules that APP fraud victims cannot rely on Quincecare Duty
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par plusieurs auteurs
The Law Commission's Consultation Process on the Arbitration Act 1996 – taking stock
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Disputes Quick Read – developments in the fixed costs regime
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Disputes Quick Read - What do practitioners think about making alternative dispute resolution (ADR) compulsory?
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Disputes Quick Read: New gateway for serving Norwich Pharmacal Orders and Bankers Trust orders out of the jurisdiction
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par Jess Thomas, Lucy Waddicor
Disputes Quick Read: Judicial Review and Courts Act 2022 – now in force
17 juin 2022
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Disputes Quick Read: an important reminder of the duty to disclose electronic documents in native format
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Disputes Quick Read: ENRC prevails in claim against former solicitor
26 mai 2022
Disputes Quick Read: Climate change litigation update – McGaughey v Universities Superannuation Scheme Limited
31 mai 2022
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Don't lose your keys: Bitcoin developers do not have a duty to assist owners in recovering lost cryptocurrency
4 avril 2022
par Emma Allen
Disputes Quick Read: The new witness statement preparation rules – a year on
5 avril 2022
par Stephanie High
Disputes Quick Read: ClientEarth v Shell – climate change litigation shifts focus to UK companies
31 mars 2022
par plusieurs auteurs
Disputes Quick Read: High Court rules that failure to provide adequate data security is not a positive act
21 septembre 2021
par Matthew Caskie
Disputes Quick Read: Key changes to the Disclosure Pilot Scheme
13 septembre 2021
Disputes Quick Read: Judicial Review and Courts Bill – unpacking the UK government's proposed amendments
6 septembre 2021
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Disputes Quick Read: Will litigants be compelled to participate in alternative dispute resolution?
2 août 2021
Disputes Quick Read: Freezing injunctions – maximum custodial sentence imposed for breach
21 juillet 2021
Disputes Quick Read: The online future of civil justice – the end of the legal profession or the end of legal drudgery?
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26 mai 2021
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Disputes Quick Read: Not your prerogative – the Independent Review of Administrative Law reports its recommendations on judicial review
21 avril 2021
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Disputes Quick Read: Amendments to the Disclosure Pilot Scheme – a step in the right direction
31 mars 2021
Disputes Quick Read: UK Supreme Court rules on the territorial extent of the SFO's powers
26 février 2021
par Tim Strong
Disputes Quick Read: No dropping anchor – parent company liability for environmental claims
24 février 2021
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Disputes Quick Read: What lawyers need to know about new witness statement preparation rules
20 janvier 2021
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Disputes Quick Read: Law on interest applicable to US dollar awards reaffirmed
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Disputes Quick Read: Care required when drafting SPA claim notices
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par Stuart Broom
Disputes Quick Read: Why the modernised LCIA rules are a welcome update
7 octobre 2020
par Nick Storrs
Disputes quick read: Mandatory changes to Statements of Truth
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Disputes Quick Read: COVID-19 and supply chain disruption – key issues
9 avril 2020
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Disputes Quick Read: High Court orders parties to explore options for 5-week remote trial
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Disputes Quick Read: Tomlin Orders – ensuring the confidentiality of settlement terms
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Disputes Quick Read: UK's OFSI fines Standard Chartered Bank £20 million for sanctions breaches
21 avril 2020
par Stephanie High
Disputes Quick Read: A different approach to witness evidence
11 mars 2020
par James Bryden
Disputes Quick Read: Coronavirus - a growth in virtual courts?
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par Stuart Broom
Disputes quick read: climate change activism by litigation
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par Tim Strong, Andrew Howell
Disputes Quick Read: Commercial Court's arbitral power shift
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par Georgina Jones
Disputes Quick Read: Will the civil justice system change forever post COVID-19?
16 juin 2020
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Disputes Quick Read: Privilege waiver warning
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Disputes Quick Read: Retailers reign supreme in Visa and Mastercard proceedings
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Disputes Quick Read: The contra proferentem rule reconsidered?
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Disputes Quick Read: Scope of duty and the SAAMCo counterfactual following Manchester Building Society
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Disputes Quick Read: Facilitating transactions in cryptoassets - Lord Leggatt and the point of commercial law
24 novembre 2021
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10 janvier 2022
par Tim Strong, Jess Thomas
Disputes Quick Read: Court decisions on the Disclosure Pilot Scheme – the 2021 roundup
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par Natalia Faekova
Disputes Quick Read: Climate change litigation update
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Disputes Quick Read: Assumption of responsibility - tax schemes and investors
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