Law Commission unveils proposals to update Arbitration Act

The Law Commission has announced proposals to update the Arbitration Act 1996 “to ensure the UK continues to be the foremost destination for international arbitration”.

Arbitration – where parties resolve disputes privately through a third party, rather than the traditional court process – is a major industry in the UK.

Arbitration in the UK is centered around London, and commonly involves commercial disputes, but can also involve other areas, such as family law.

The Law Commission’s view is that the Act still functions very well, and its central provisions should remain unchanged. However, to help strengthen the UK’s position as an arbitration leader, the Commission has proposed a set of improvements, designed to make the Act as effective and responsive as possible, following recent reforms by competing jurisdictions.

The new proposals include measures to improve the efficiency of cases, give further protections to arbitrators, grant extra provisions to the courts to support cases, and refine the process for challenging an arbitrator and their decisions.

Consultation proposals include: 

• Provisions to allow arbitrators summarily to dismiss claims, made by parties, that lack legal merit.
• Retention of the current duties on the impartiality of arbitrators, with an additional provision on disclosure of conflicts of interest, so such disclosure is fully codified in the Act.
• Further protections under the law for arbitrators: strengthening their immunity in certain cases and the introduction of provisions in support of equality in arbitral appointments.
• Extending the capacity of the courts to support arbitration proceedings.
• Refining the process for challenging the jurisdiction of an arbitrator, so challenges in the courts take place by way of an appeal, rather than a full rehearing.
• Retention of current provisions around confidentiality and privacy in arbitration proceedings.

Commenting on the arbitration proposals, Professor Sarah Green, Law Commissioner for Commercial and Common Law, said: “The Arbitration Act was a landmark piece of legislation which helped to propel London to its position as the foremost destination for international arbitration today.

“While it continues to function well, over 25 years later, some parts of the Act may benefit from being updated and refined.  

“Our proposals are designed to ensure that arbitration law is efficient, effective and responsive to modern developments. By making further improvements, we can help the UK to consolidate its status as a global centre for international dispute resolution.”

Lord Bellamy KC, Parliamentary Under Secretary of State for Justice, said: “The UK has long been the world’s best destination for arbitration, and the Arbitration Act 1996 is internationally regarded as the gold standard of arbitration legislation. After a quarter century of success, it is right that the Law Commission is looking at the Act to ensure that the legislation remains relevant in the 21st century.

“The work of the Law Commission and those who contribute to this consultation will ensure that the Act remains world-leading for many years to come.”