England and Wales is unquestionably one of the most popular selected destinations in terms of seats for arbitration. This article examines the domestic foundations which have established the United Kingdom’s dominance and success and concludes with a review of future developments.
What is arbitration?
Arbitration provides for the determination of disputes by a third party arbitrator or arbitration panel, chosen by the parties to a dispute. The process tends to be quicker and less expensive when compared to the traditional court proceedings model, although there are more limited appeal rights. The parties also maintain greater control in terms of keeping the proceedings confidential and facts relating to the proceedings out of the public domain.
Arbitrations seated in England and Wales are governed by the Arbitration Act 1996. At its inception, the Act represented an innovative (and undeniably successful) effort to pull together fragmented legislation and case law which historically applied to and governed arbitrations conducted in England and Wales.
The Act provides the key legislative support (as followed by English courts) for the growth and success of both domestic and international arbitral processes in the UK. English courts have determined that the key purpose of the Act is to enable parties to have the choice of having disputes decided by arbitration rather than by the traditional court process.
The law of limitation applies to arbitral proceedings in the same way as they apply to legal proceedings (section 13 of the Act). For example, for a simple breach of contract claim, a claimant will still have 6 years from the date of the breach to commence arbitral proceedings or face being time-barred.
Is arbitration widely used?
The use of arbitration services as an alternative dispute resolution method is hugely popular and widely used by UK-based parties, particularly those working within certain industries such as construction, energy and financial services. For example, in the context of construction – the standard form contracts (such as JCT contracts) used by parties tend to feature arbitration clauses by default. These clauses provide contractual direction in terms of the form and process for resolving the matter in the event of a dispute arising. For example the clauses might require the appointment of arbitrators from specific trade bodies and organisations Several sector specific bodies, such as the RIBA (the Royal Institute of British Architects) have developed their own rules for the conduct of arbitral proceedings. These bodies have gained considerable commercial success in terms of offering both a pool of sector-specific arbitrators and providing a platform / set of arbitral rules for lawyers and practitioners to follow in order to assist with resolving sector-specific disputes involving architects, builders and construction professionals.
Future developments – what will change?
On 30 November 2021, the Law Commission announced that it will conduct a review of the Arbitration Act 1996. The purpose of the review is to ensure that the UK remains a leading hub for dispute resolution and in recognition of the fact that the Act is now over 25 years old and other jurisdictions have updated their arbitration laws.
The scope and extent of the review or any recommended changes which might be supported will be determined in the months ahead, however a few areas and issues of focus have already been identified:
- the power to summarily dismiss unmeritorious claims or defences in arbitration proceedings
- the courts’ powers exercisable in support of arbitration proceedings
- the procedure for challenging a jurisdiction award
- the availability of appeals on points of law
- the law concerning confidentiality and privacy in arbitration proceedings
- electronic service of documents, electronic arbitration awards, and virtual hearings.
The final item listed above concerning the potential embracement of technology in arbitration (and dispute resolution) is clearly necessary. It is belatedly reflective ofhow working arrangements and the conduct and management of arbitral proceedings have become much more flexible during and since the pandemic. It will be interesting to see the extent to which there is support for wider statutory assistance with matters including use of electronic service methods, choice of use of virtual hearings, and electronic bundling.
Practitioners eagerly await the outcome of the review (a consultation paper is expected in late 2022) with the expectation that proposed changes are likely to be more evolutionary rather than being a complete root and branch dismantling or rearrangement of the legislation.
Helping you be prepared
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