In 2023 the Law Commission published a report on proposals to update the Arbitration Act 1996. This followed a long period of consultation with a wide range of consultees.
Since then, an Arbitration Bill which puts in place the recommendations from the Law Commission, has been making its way through Parliament. The Bill progressed through various stages until the General Election was announced, which took place on 4 July 2024. It was one of the Bills that was not rushed through, and was effectively dropped in the dissolution of Parliament.
However, in the King’s Speech on 17 July 2024 at the State Opening of Parliament, the new Labour Government’s legislative plans were unveiled. The Arbitration Bill was included as part of the plans for economic stability and growth.
The Background Briefing Notes from the Prime Minister’s Office on the Bill describes that:
“The Arbitration Bill will support more efficient dispute resolution, attract international legal business, and promote UK economic growth. It does so by enacting recent Law Commission recommendations to reform arbitration law and bolster our world-leading domestic and international arbitration sector.”
The formal legislative journey of the new iteration of the Arbitration Bill started again on 18 July, when it had its first reading in the House of Lords.
The Bill remains largely unchanged from the previous version. But there is one notable deviation. One of the recommendations was a new default rule that the seat of the arbitration will also be the applicable law, unless the parties have agreed otherwise. The new Bill introduces a carve-out to that rule for cases involving arbitration in non-ICSED investment treaty cases. The Bill specifies that in these investment treaty cases, public international law should continue to apply. ICSID arbitrations remain unaffected because they are subject to a separate regime.
The next stages for the Bill are to progress through the House of Commons and the House of Lords. Then it receives Royal Assent and becomes law, which could happen as quickly as September.
By way of reminder, the key reforms which the Arbitration Bill introduces are:
- Clarifying the law applicable to arbitration agreements that do not arise from investor-state agreements, providing that the law applicable will be those of the legal location chosen for arbitration unless parties expressly agree otherwise. This will ensure that, where arbitration is seated in England and Wales, or Northern Ireland, it will be fully supported by our arbitration law which is among the most supportive of arbitration globally.
- Codifying a duty on arbitrators to disclose circumstances that might give rise to justifiable doubts about their impartiality, in line with international best practice.
- Strengthening arbitrator immunity against liability for resignations and applications for removal, supporting arbitrators to make robust and impartial decisions without fear of being sued by a disappointed party.
- Empowering arbitrators to make awards on a summary basis on issues that have no real prospect of success, avoiding nuisance claims and making arbitrations more efficient.
- Empowering courts to make orders in support of emergency arbitrators so they have the same routes to enforce their orders as other arbitrators.
- Revising the framework for challenges where the challenge alleges that the arbitral tribunal lacked jurisdiction.
