English Arbitration Act 1996 – Time for Reform?

It is no secret that international commercial arbitration is well-developed in London and the UK (see https://www.akt.rs/en/publication/arbitrating-international-contract-disputes-in-england—why-and-how). But a solid legal framework of the Arbitration Act 1996, coupled with experienced and supportive courts, does not mean improvements are not needed. As much as courts react to new developments through their judgments, it might be beneficial to introduce or codify the innovations.

International arbitration is competitive, and countries have a strong interest in maintaining modern legal frameworks to support their arbitration centres and attract (legal) business. Although there seems to be a consensus that there is no need of complete overhaul of the Arbitration Act, to retain the competitive advantage of England and Wales as a seat for commercial arbitration, it is likely that some type of reform will occur in the foreseeable future.

Although the number of potential reform topics is not small, three areas seem to be especially likely. These are confidentiality; speed and cost of proceedings; and issues relating to Article 44 of the Arbitration Act, primarily concerning third parties and emergency arbitrators.
As for confidentiality, one of commonly stated key attractions of arbitration, there are somewhat surprisingly no specific provisions regulating it in the Arbitration Act 1996. The case law of courts established an implied, presumed duty of confidentiality in arbitration under English law with some exceptions. A reform of the act would allow for laying out a clear statutory basis for confidentiality, codify and improve the regulation of exceptions, and perhaps offer an opportunity to rethink the approach. In comparative terms, it remains debated if presumed confidentiality is a better choice than an ‘opt-in’ system. Particularly concerning investment arbitration cases, there is room to rethink where the balance should be struck concerning public interest in transparency and party interests of confidentiality.

Another constantly highlighted issue is keeping the length and cost of proceedings under control. There is a recognition that businesses are increasingly conscious of and sensitive to these costs. Although arbitral institutions and their rules can primarily help here, there are opinions 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. Coupled with the support from the courts to accept and enforce such judgments, this could help maintain London as a preferred place to do arbitration even for companies with less deep pockets.

Finally, section 44 of the Arbitration Act deals with the relationship between the arbitral tribunal and the court and the court powers exercisable in support of arbitral proceedings. One particularly controversial area, where the case law is still evolving, is whether and to what extent the court’s powers under section 44 may be exercisable against third parties. Whilst there is recent Court of Appeal judgment holding that taking of evidence can be ordered from a non-party under section 44(2), it remains unclear if this extends to all possible orders. A reform of the Arbitration Act would be an opportunity to bring welcome clarity to this important question.

It remains interesting to observe as to where the potential reform efforts go concerning the Arbitration Act and how far they reshape the instrument. If for no other reason, this is so as the prestige of London as an arbitral venue might influence other jurisdictions to follow suit.

Velimir Zivkovic