For a quarter of a century, the Arbitration Act 1996 has been a major factor in the UK’s status as a leading hub for international commercial arbitration. Today, the Law Commission of England and Wales published its proposed revisions to the Act with an aim to make it more effective and responsive, and to maintain the UK’s status as a preeminent arbitration centre. The report discusses reforms related to confidentiality, discrimination, and the summary dismissal of unmeritorious claims, among others.
While arbitrations often are confidential, the current Act does not address confidentiality explicitly. The Commission rejected a suggestion that the Act should include a default position that arbitrations are confidential. Two issues were key to its reasoning. First, arbitration is used in a variety of instances and there is a trend towards transparency in some types of arbitrations, such as investor-State disputes. Second, existing case law on confidentiality is still evolving and not yet ready to be codified. In the end, the Commission felt that the differing approaches in arbitral rules and party agreements continue to work sufficiently well while ensuring flexibility.
Some arbitrator selection clauses discriminate, like a requirement that the arbitrators be “commercial men”. English employment laws against discrimination do not apply to arbitrator selection clauses. The Law Commission has suggested that the Act be changed so that any agreement related to protected characteristics be rendered unenforceable. There would be an exception if the protected characteristic is a proportionate means of achieving a legitimate aim, such as some requirements that the arbitrator have a different nationality from the parties. The Commission also proposed prohibiting any challenge to an arbitrator based upon a protected characteristic.
Court proceedings permit summary judgment where a judge can dismiss an unmeritorious claim prior to trial. While the current Act likely implicitly grants arbitrators the power to summarily dismiss claims, it does not do so expressly. This has led some arbitrators to avoid summary dismissal because they fear a challenge on the grounds that they have not given a party a full opportunity to be heard. The Commission has thus suggested amending the Act to state explicitly that the tribunal may adopt summary dismissal proceedings with party agreement and if certain steps to ensure due process are followed.
The report proposes several other changes to existing law, including preserving arbitrator immunity, enhancing the court’s power to aid arbitral proceedings, and clarifying and streamlining the process for appealing jurisdictional awards and points of law. There are other minor amendments proposed as well, such as correcting drafting errors and clarifying potentially inconsistent language.
All of these proposals are part of a formal consultation exercise. Interested parties may respond to the consultation, which will inform the Commission’s final recommendations to the Government.