New arbitration bill aims to modernise UK dispute resolution framework

The new Arbitration Bill aims to modernise the UK's arbitration framework, making dispute resolution more efficient and attractive to international legal business, thereby promoting economic growth. This bill enacts recent recommendations by the Law Commission to update arbitration law.

Key Reforms

The Arbitration Bill updates the existing framework established by the Arbitration Act 1996 through several significant changes:

1. Clarification of Applicable Law: This provision aims to provide greater certainty and avoid unnecessary litigation by clarifying the law applicable to arbitration agreements.

2. Codified Duty of Disclosure: By formalising arbitrators' duty to disclose relevant information, the bill seeks to enhance impartiality and build trust in the arbitration process.

3. Strengthened Arbitrator Immunity: Arbitrators will have improved protection against liability for resignations and applications for removal, supporting their ability to make robust decisions.

4. Summary Awards: Arbitrators will be empowered to issue summary awards on issues with no real prospect of success, aligning arbitration with summary judgments in court and improving efficiency.

5. Emergency Arbitrators' Powers: The bill enhances the effectiveness of emergency arbitrators by enabling them to issue peremptory orders and apply for court enforcement, similar to non-emergency arbitrators.

6. Jurisdiction Challenges: The framework for challenging an arbitral tribunal’s jurisdiction under section 67 of the 1996 Act will be revised, ensuring applications contain no new evidence or arguments, preventing full rehearings and reducing delays and costs.

Background

Arbitration in England, Wales, and Northern Ireland has been regulated by the Arbitration Act 1996. However, with the Act being over 25 years old, there's a risk of the UK losing its competitive edge to jurisdictions with more modern frameworks.

In March 2021, the Ministry of Justice tasked the Law Commission of England and Wales to review the Arbitration Act 1996 to ensure it remained effective and attractive internationally. After conducting two public consultations in 2022-23, the Law Commission submitted its report and draft Arbitration Bill to Parliament on 5 September 2023. The Arbitration Bill incorporates all the recommended reforms.

Financial Impact and Scope

The impact assessment accompanying the bill indicates no direct costs. Potential litigation costs for businesses concerning new points of law under the revised regime are expected to be temporary. The bill applies to England, Wales, and Northern Ireland, while Scotland operates under its Arbitration (Scotland) Act 2010.

Key Facts

• The Arbitration Bill aims to support the UK arbitration sector and boost economic growth. Arbitration contributes approximately £2.5 billion annually to the British economy from domestic and international arbitrations.
• Modernising the Arbitration Act 1996 is essential to maintain the UK's competitive edge in international arbitration. Other jurisdictions, such as Singapore, Hong Kong, Sweden, and Dubai, have updated their arbitration laws more recently, enhancing their global standing.
• The bill ensures more efficient dispute resolution, offering flexibility and privacy compared to court trials. It also clarifies court powers supporting arbitration, emergency arbitrators' roles, and procedural aspects related to jurisdiction and points of law.
• The legal sector has widely supported these targeted reforms, with positive feedback from public consultations held by the Law Commission.

The Arbitration Bill represents a critical step in maintaining and enhancing the UK's position as a leading destination for arbitration by modernising its legislative framework and ensuring it remains competitive in the global market.

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