London has long been a destination of choice for international arbitration. Yesterday the Law Commission of England & Wales published its recommendations for proposed updates to the Arbitration Act 1996 seeking to further strengthen England & Wales as a leading destination for arbitration.
Whilst the report covers many topics, the key recommendations by the Law Commission includes:
- Codification of the common law duty of an arbitrator to disclose any conflicts
- Strengthening and codification of Arbitrator immunity
- Introduction of a power of summary disposal
The report also includes proposals to promote efficiency in arbitration proceedings, clarification of the courts powers of support in relation to arbitration proceedings, suggested improvements to the framework for challenges to awards under s. 67, as well as a new rule on the governing law of an arbitration agreement.
Duty of disclosure
The proposals are simply to codify the test established by the Supreme Court in Halliburton -v- Chubb – i.e., that there is a continuing duty on arbitrators to disclose any circumstances which might reasonably give rise to justifiable doubts as to their impartiality.
The report does propose a slight extension to the test by recommending that arbitrators be subject to a duty to disclose any circumstances of which they are aware or ought reasonably to be aware.
Arbitrator immunity
The report proposes that arbitrator’s immunity should extend further than currently provided for under s. 29. As things stand, an arbitrator may be liable for additional legal fees and costs incurred in the event of their resignation. They may also be liable for the costs of an application to court to have them removed.
The report recommends that arbitrators should incur no liability for resignation unless their resignation was unreasonable. As to removal, the recommendations are that arbitrators should be immune unless they have acted in bad faith.
Summary disposal
The report proposes a tweak to s. 33 of the Act that would expressly allow summary disposal for the fair and efficient resolution of disputes. This would be subject to the agreement of the parties and be available on application by a party. The proposed test mirrors that of the test for summary judgment in court proceedings – i.e., no real prospect of success.
The proposals stop short of granting the power of summary disposal to arbitrators (akin to the power given to judges under the court’s case management powers under CPR Part 3) and instead recommends the power only be available on the application of a party.
Comments
While these proposals are welcome and broadly uncontroversial, the light touch of the recommendations emphasises the UK as being a leading destination for commercial arbitration and the general consensus that the current system works well and requires fine tuning as opposed to wholesale change. It will be interesting to see whether the government adopts the draft Bill annexed to the report.
For all questions regarding the topics raised in this article, please contact Felicity Potter or a member of our team. The full report can be found here: Review of the Arbitration Act 1996.
