The British Institute of International and Comparative Law hosted the 16th Annual Review of the Arbitration Act at the end of last year. At the event, speakers discussed whether the Arbitration Act 1996 (“the Act”) is currently in need of reform. The speakers agreed that a complete overhaul of the Act is not required, but all highlighted different areas that might usefully be revisited due to developments in international arbitration in the past two decades.
The review opened with a keynote speaker who recalled the complicated 7-year process in which the Act was created. The speaker described the difficulty in consolidating all existing legislation and satisfying stakeholders with very different views and interests. At the time, this process was necessary, however, to improve arbitration procedures in England.
The speaker indicated that the Act has done this. What would benefit the Act now, therefore, is an update in those areas which could not be foreseen back in 1996, rather than complete reform. Such areas include, for example:
- The emergence of investor-state arbitration and its indirect impact on commercial arbitration regarding issues of confidentiality and fairness;
- The increasing competition to arbitration in England, with English-language fora in countries such as Germany, the Netherlands and Singapore; and
- The advent of Artificial Intelligence and its impact on people’s expectations of speed and efficiency.
A panel discussion then followed, consisting of three speakers.
The role of Courts and Tribunals
The first panellist began by stating that effective reform of the Act would need to be based on facts, which would be difficult due to the confidential nature of arbitration and reluctance by the Courts to collect any data. Through collecting publicly available data, the panellist found that the English Courts’ interference in arbitration processes is minimal, with most appeals failing.
The panellist argued that reform of the Act itself is unnecessary, as it already gives Tribunals powers that they seldom exercise. In particular, the panellist argued that the introduction of a process akin to summary judgment in arbitrations would be superfluous as, under sections 33 (General duty of the Tribunal) and 34 (Procedural and evidential matters) of the Act, arbitral tribunals already have the power to determine the dispute in the most efficient way possible, including in summary form. For this reason, the panellist suggested that, instead of reforming the Act, arbitrators and Courts alike should support the use of such powers, without worrying about awards potentially being challenged because of ‘due process’ concerns.
Business needs and international competitors
The second panellist agreed that, generally, the Act has withstood the test of time. The panellist praised the Courts’ support of arbitral proceedings and the overall integrity of the process. Nonetheless, working in-house, the panellist noted that businesses are increasingly conscious of the high costs that are sometimes incurred in arbitral proceedings. For this reason, the panellist considered that the Act would benefit from the specific introduction of provisions for interim orders, such as summary judgment, which could potentially save time and money for parties in arbitration. She pointed out that this could be an important factor in London remaining a preferred arbitral seat.
Confidentiality and transparency
The third and final panellist, whilst agreeing that the Act does not need extensive reform, believed that developments in the last 20 years in relation to issues of transparency and confidentiality have not helped the image of arbitration. The panellist stated that many issues of public interest, such as those concerning energy and the environment, are dealt with in arbitrations rather than at Court and questioned whether confidentiality in these scenarios is justified. He also agreed with the point of view expressed in a 2016 speech by Lord Thomas in which he was critical of arbitration’s influence in restricting the growth of case-law precedent in substantive commercial law (a view which readers may recall then led to a somewhat public response from Lord Saville, one of the chief architects of the Act).
As a solution to these issues, the panellist suggested that investor-state arbitration should, without exception, become public. In addition, he proposed that there should be an opt-in mechanism for confidentiality rather than vice versa, despite acknowledging the limits in practice of this reform.
It is interesting to note that the panel were all of the view that the Act is not in need of drastic reform. However, the shared consensus was also that some updates to the process of arbitration in England would certainly be welcomed.
Stephen Lacey and Sadie Buls would like to thank Matteo Lenzi for his assistance in preparing this article.