UK Government introduces the Arbitration Bill into Parliament

In November 2023, the UK government introduced a new Arbitration Bill (the “Bill”) into parliament, which will enact certain amendments to the Arbitration Act 1996 (the “Act”). The Bill follows a comprehensive review of the Act by the Law Commission (the “Review”) which rightly concluded that “root and branch reform is not needed or wanted”, so that the changes mark improvements and tweaks to the Act, rather than any major surgery, to ensure that the arbitration regime within England, Wales, and Northern Ireland remains up to date and that London, in particular, can remain a venue (‘seat’) of choice for international contracts. The Review involved two public consultations and input from leading arbitration practitioners and stakeholders including Bird & Bird. You can read our thoughts on the Law Commission’s proposals here.

In updating the Act after 26 years, the Review and resulting proposals are intended to ensure that the arbitration regime in London responds to competition from other dispute resolution centres such as New York, Singapore and Paris. It is estimated by the UK government that arbitration services in England and Wales are worth £2.5 billion to the UK economy each year in fees alone, and, if passed, the Bill’s proponents say it will help the UK’s legal services sector continue to thrive.

Key Provisions in the Bill

The Bill had its first reading in the House of Lords on 21 November 2023. The key provisions contained in it include:

• Introduction of a new default rule that an arbitration agreement shall be governed by the law of the seat of arbitration in the absence of an express agreement to the contrary, which is intended to bring certainty by reversing the approach adopted by the Supreme Court in Enka v Chubb, and ensure that more London-seated arbitrations will benefit from the pro-arbitration approach of English law;
• Codification of an arbitrator’s duty to disclose this time adopting the Supreme Court’s approach in Halliburton v Chubb;
• Introduction of an express power for arbitrators to dispose summarily of any claim, defence or jurisdictional objection which has no real prospect of success;
• Provision for new court rules to be introduced to adopt a revised framework for challenges under section 67 of the Act to allow a more cost-efficient process for challenges to arbitral awards on the basis that the tribunal lacked substantive jurisdiction;
• Strengthening of arbitrator immunity around applications for removal and resignation; and
• Clarification of court powers in support of arbitral proceedings against third parties, and in support of emergency arbitration by enforcing peremptory orders of Emergency Arbitrators.

Minor changes to the Act include:

• Clarifying time limits for challenging awards where there is an arbitral process of appeal, or where any corrections or clarifications are made to awards; and
• Making appeals available from an application to stay legal proceedings.

More background on these changes can be found in our article discussing the advantages of these modifications, and also commenting on those changes which did not make it into the Law Commission’s final recommendations, such as attempting to codify arbitral confidentiality, and questioning whether to create a bespoke regime against discrimination in arbitration.

Next steps

The Bill’s progress through parliament will be carefully monitored, but is not expected to be controversial. On this basis, there is good reason to expect it will become law in the first half of 2024.

With thanks to Evie Scott for her help with the drafting of this article.