If it ain't broke, don't fix it? The Law Commision's review of the English Arbitration Act 1996
The Law Commission of England and Wales announced in November 2021 that it will carry out a review of the Arbitration Act 1996 (the Act) to ensure that “the UK remains at the forefront of international dispute resolution”. The Commissioner leading the review suggests that the Arbitration Act 1996 “could be improved in light of modern arbitration practices”, which “will enhance the experience for those who choose to arbitrate in England”.
For any successful seat of arbitration, its arbitration law is a cornerstone. According to the surveys by the Queen Mary School of International Arbitration, London has been the world’s most popular seat for a number of years. In the most recent survey in 2021, London held on to the top spot but, for the first time, had to share it (with Singapore). London’s rivals, such as Singapore and Hong Kong, have amended their arbitration laws periodically over the past two decades to keep pace with rapid changes in arbitration practice. The competition between jurisdictions for the business of arbitration (and dispute resolution more generally) has become more overt, with a growing appreciation of the value of legal services to national prosperity.
Meanwhile, the English Arbitration Act has stood unchanged for a quarter of a century since 1996. This partly reflects the statute’s success. It is described by one leading textbook as “an exemplary piece of legislation”. Its ability to stand the test of time is all the more remarkable considering that it was effectively a new start for English arbitration law. Nevertheless, the law and practice of arbitration has moved on in numerous ways, which could not have been predicted 25 years ago. It has increasingly been argued that developments in arbitral best practice have highlighted gaps and faults in the Act, which, in the words of Law Commissioner Professor Sarah Green, should be remedied to “maintain English law as the gold standard in international arbitrations”. Similar updates and revisions have been made to the arbitration statutes in jurisdictions including France, Hong Kong, Singapore and Switzerland in recent years.
It is, therefore, a significant development for 2022 that the Law Commission has announced a review of the Act. This does not necessarily mean that the Act will be amended, although at least some updates seem likely. Nor does it mean that any amendments would be sweeping, given the strong reputation of the Act and the attractions of a stable and predictable framework for arbitration in England and Wales. Moreover, no amendments will take place in the short term: as first steps, the review will be launched in the first quarter of 2022 with a view to publishing a consultation paper in late 2022, with a potential proposal for law reform in Spring 2023.
Nevertheless, some degree of change is likely on the cards, with the Law Commission’s announcement of the review highlighting a number of “possible areas” of focus. These are:
- the power to summarily dismiss unmeritorious claims or defences in arbitration proceedings;
- the courts’ powers exercisable in support of arbitration proceedings;
- the procedure for challenging a jurisdiction award;
- the availability of appeals on points of law;
- the law concerning confidentiality and privacy in arbitration proceedings; and
- the electronic service of documents, electronic arbitration awards, and virtual hearings.
Further topics may be added to this provisional list. For example, any review of the procedures for challenging awards might consider more than just the subset of jurisdiction awards. Additionally, it is understood that the Law Commission is looking closely at areas such as whether the Act should include a requirement that arbitrators are independent, in addition to the current standard of impartiality. An alternative also under consideration is the introduction of a statutory duty of continuing disclosure along the lines ruled upon by the UK Supreme Court in Halliburton v Chubb.
Generally, the areas of focus reflect changes in arbitration practice since the 1996 Act was enacted. For example, the courts’ powers exercisable in support of arbitration proceedings may need to be updated to reflect the emergence of emergency arbitration, which was not known in 1996. Equally, electronic communication was in its infancy in the late 20th century but predominates in the Covid-19 era. It has also become clear that arbitration users in the finance sector may value a statutory power to summarily dispose of unmeritorious defences in English-seated arbitral proceedings. In these senses, the 1996 Act needs a new lick of paint to reflect the passage of time and ensure that it is fit for the next 25 years. The consultation period will reveal whether more fundamental changes are needed to its engineering.
It is to be hoped that users of international arbitration in England and Wales, as well as practitioners, will engage with the consultation to ensure that any reforms address the wishes of arbitrating parties.
On 7 March, Allen & Overy will be hosting a panel discussion on the Law Commission’s review which the responsible Law Commissioner, Professor Sarah Green, is due to chair. For information on the event and to register, please visit: If it ain't broke, don't fix it? The Law Commission's Review of The Arbitration Act 1996