London for a long time has been one of the World’s leading arbitration venues. For the past 27 years the Arbitration Act 1996 has been the pillar upon which England and Wales has established itself as a highly respected and trusted jurisdiction under which to conduct International Arbitrations. The 1996 Act is a masterpiece of clear drafting and has provided very clear guidance to Tribunals and parties conducting arbitrations where the seat of the arbitration is England & Wales.
But after 27 years, the Arbitration Act needs a refresh to reflect modern practice and to address some of the issues that has caused concern within the arbitration community. So, the Arbitration Act is to be reformed. Here are some of the reforms that are expected to be enacted early in 2024:
Summary Disposal
For the first time under English arbitration law, it will be possible for a tribunal to issue an award on a summary basis where there is no reasonable prospect of a party succeeding on an issue. Presently, a Tribunal is not able to dispose of an issue, claim or defence on a summary basis and must see the arbitration through to the end of the usual arbitral process. This is both time consuming and expensive. But in the future, it will be possible to foreshorten the arbitral process in relations to unmeritorious claims and defences. The Tribunal will only be able to exercise this power on application from one of the parties. However, it does mean that hopeless claims or defences can be dispensed with at an early stage saving time and costs.
The Law Governing the Arbitration Agreement
The new Act will clarify how a tribunal is to determine the governing law of the arbitration agreement. Very often it is the same as the law which governs the principal agreement in which an arbitration sits, but not always. The new Act will provide that the law which is to govern an arbitration agreement should be.
The law the parties have expressly agreed should apply to the arbitration agreement; or
If there is no such express agreement, the governing law of the arbitration agreement will be the law of the seat of the arbitration.
These reforms will take away some of the complexities that arose out of the decision in Enka -v- Chubb and will hopefully reduce the arguments, time and cost spent on which law should apply to the arbitration agreement.
Streamlining Challenges to the Tribunal’s Jurisdiction
Instead of a full rehearing, the court under the new Act should not hear any new grounds or evidence that had not been advanced before the Tribunal. This should save time and costs and prevent the party that lost the argument before the Tribunal from adducing new evidence before the court to better its position.
Immunity for Resigning Arbitrator
There should be no liability on an arbitrator that resigns from an arbitration unless the resignation was shown to be unreasonable. This should mean that reasonable resignations will not be deterred or discouraged by the risk of liability.
Arbitrator Disclosure
The new Act will codify the arbitrator’s duty to disclose any circumstances which might give rise to questions about their impartiality.
The reforms, once enacted, will provide a much more effective and efficient arbitral regime in England & Wales. This should ensure London maintains its position as one of the most important arbitration centres in the World.
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