The Arbitration Act 1996 – review by the Law Commission part II - An Update by John Habergham


The Law Commission project is ongoing  - see my earlier article.

They issued a first consultation paper, considered the results and, as a consequence, then issued a second consultation paper inviting responses – the period for such responses ends on 22 May 2023. 

Some consist of topics which the Law Commission picked up with, played with, and decided there was no need for any change – for example the topic of independence/disclosure – deciding there is no need for a statutory duty of independence as there is an existing body of case law which provides any arbitrator to act with impartiality.

In others, the Commission was wondering whether there was a need for clarity – for example the power of the court in support of arbitral proceedings.

The court currently has power to make orders in support of arbitral proceedings such as taking or preservation of evidence, granting of interim injunctions.  Does this apply against third parties?  If not, should it? 

The answer is that it is implicit that the court can do in support of arbitration whatever it can do under the court rules but simply asks whether this should be made explicit in a revision of the Act. 

Of the topics, some are highly technical and I doubt whether would be of wider interest.

For example, challenging the jurisdiction of the tribunal – should such an application should be a re-hearing or by way of appeal.  The former means that new arguments and evidence can be adduced.  The latter means no new oral evidence.

Similarly, one of the proposals is that any arbitrator should be given immunity from suit if they resign or where a party makes an application to the court to remove an arbitrator. 

In both instances, the arbitrator can be liable for costs and, apparently, cannot obtain insurance against this.

The Law Commission recommends that this liability should be reversed. 

In my opinion, I agree but only if the arbitrator can prove that he or she didn’t act unreasonably – for example in accepting an appointment when he or she knew that they shouldn’t have, in which case the usual costs consequences follow.

The Law Commission also displayed immaculate woke credentials with the proposal that the appointment of an arbitrator should not be open to challenge on the basis of the arbitrator’s protected characteristics – this on the grounds of equality and diversity, although this took a turn in the second consultation paper where they have tentatively suggested that this should now be extended to include a requirement that any arbitrator must have a different nationality from that of the parties. 

Of the former, this has never been an issue in the references I have been involved in.

As to the latter, I doubt, would be of any great concern to, for example, the London Maritime Arbitrators Association, where they are, typically, in the main, UK nationals dealing with international arbitration but in my experience of a certain part of the world, this would be no bad thing.

However, my attention was piqued by the proposals for summary disposal.

In my opinion, this is a lacuna in the Arbitration Act and one which, I think, should be filled. 

The English and Welsh procedural rules contain the facility for an application for summary judgment.

It works, in very simplistic terms like this – a defendant files a defence which, in essence, is no defence at all and the claimant asks the court to agree and not to put the claimant to the time and expense of a full trial.

The threshold is fairly high – the claimant has to show that there are no real prospects of success or there is no other compelling reason why the matter should be determined at trial.

Should arbitration procedure contain the same facility?

The answer is, undoubtedly, yes.

There is, currently, no express provision in the Arbitration Act for this and it should be filled.

The proposals are that summary procedure should be adopted only if a party makes an application for summary disposal  to the tribunal (an initial feeler?) and the tribunal agrees. 

In my opinion, this is simply adding another hoop to jump through and will burn more costs where, in my experience, tribunals are more hesitant than courts in making such decisions.

In my opinion, the facility should be mandatory – adopt the same threshold and procedure as in the court rules.  Practitioners are aware of the potential downsides of any such application – if it comes off, all well and good; if it fails, there is a potential adverse costs order.

The same threshold for success should be applied as in the court rules. 

Where London prides itself on being an international arbitration dispute resolution centre, it can only make it more attractive if there is a facility for truncated proceedings leading to an early award and a costs saving.

Watch this space.

John Habergham

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