News Flash – Arbitration Bill Update: Where are we now?

The highly anticipated amendments to the Arbitration Act 1996 (‘AA 1996’) appear to be gathering pace. Since the original consideration of the Arbitration Bill in the previous parliament, which unfortunately was not concluded in the wash up before the UK General Election in July 2024, and reference to the Bill in the King’s Speech, the Lords, recognising the importance of Arbitration to our economy, are seeking to proceed expeditiously to process the Arbitration Bill.

On 30 July 2024, the Lords addressed the Bill, its second reading, outlining key measures following the first reading in November 2023. Further consideration has now been given to the operation of Clause 1, which provides rules regarding the law governing an arbitration agreement, in relation to standing offers to arbitrate contained in international law treaties or non-UK legislation (which is relevant to international investment arbitrations). Lord Ponsonby confirmed that Clause 1 has now been changed so that the default rule on the governing law does not apply to arbitration agreements arising from treaties or non-UK legislation. This is a sensible move, which avoids what would have been unwelcome obstacles to the use of London as a seat of such arbitrations. An additional point was raised concerning the operation of Clause 1 where there is no choice of seat in an arbitration agreement and no seat has been designated by a tribunal or court. It was felt that this would likely be a rare event and Lord Ponsonby confirmed that the Government agrees with the Law Commission in its final report that the courts could deal with such matters through the common law. As such this issue would be included in the Explanatory Notes.

Further, Clause 13 was identified as an issue requiring review. This relates to a situation where ‘leave of the court’ is required to appeal on a certain issue. It was queried whether ‘leave of the court’ meant the court of first instance and/or includes the Court of Appeal (or should include it if not already). There was no immediate response to this query from Lord Ponsonby.

The aim of the Bill is to attract international business, increase UK growth and enable efficient dispute resolution as well as ensuring that the country remains at the forefront of arbitration globally. Other key measures, which have been identified previously and were the subject of examination by the Special Public Bill Committee, include Clause 2 (codifying disclosure), Clauses 3 and 4 (strengthening arbitrator immunity against liability for resignation and application for removal), Clause 7 (empowering arbitrators to make awards on a summary basis on issues that have no real prospect of success), Clause 8 (boosting effectiveness of emergency arbitration by empowering arbitrators to issue peremptory orders and make relevant court orders), Clause 11 (revising the framework for challenges to the tribunal’s jurisdiction under Section 67 of the AA 1996, with an emphasis on providing new rules applications to court should not contain new evidence or arguments, with a view to preventing such challenges becoming a full rehearing).

All measures identified will extend to England, Wales and Northern Ireland, but will not apply to proceedings commenced before the amendments are brought into force.

Given that further clarification is needed on some issues, such as Clause 13, the Bill has been committed to a committee of the Whole House, though a date has yet to be set. However, it is encouraging that progress is being made and hopefully, we will see a quick passage to statute, especially in view of the words of Lord Ponsonby:

“In conclusion, this Bill achieves a balance. It neither seeks to fix what is not broken, nor does it sell short the potential of our jurisdiction. Growth is a fundamental mission of this Government, and this Bill plays its part”.

Posted by: Lucy Bushell