New UK Government announces intention to continue with reforms to Arbitration Act 1996 and publishes text of new Bill

Last week, the new UK government set out its legislative proposals and priorities in the King’s speech. Although not mentioned in the speech itself, in the briefing notes accompanying it, the government sets out its plans to enact the recent reforms to the Arbitration Act 1996 contained in the 2022 Law Commission consultations on the law of arbitration in England and Wales.

The proposed Arbitration Bill was published last week after its introduction into the House of Lords on 18 July 2024.  It appears to contain similar provisions to the Bill which was introduced into the House of Lords in late 2023 but which failed to make it through the ‘wash-up’ period prior to the dissolution of Parliament before the general election on 4 July 2024. The major development in the content of the new Bill is that investor state arbitration clauses contained in a treaty or the legislation of a country or territory other than the UK will not be covered by the new default rule regarding the governing law of the arbitration. This was a stumbling block to the smooth progression of the Bill under the last government but it is hoped this addition will allow the Bill to progress on to the statute book. 

The key provisions in the new Bill 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.
  
• Codification of an arbitrator’s duty to disclose circumstances that might give rise to justifiable doubts about their impartiality.
  
• Introduction of an express power for arbitrators to dispose summarily of any claim, defence or jurisdictional objection which has no real prospect of success.
  
• Enhancing the protection of arbitrators from legal claims for resignations and removal requests, helping arbitrators to decide firmly and fairly without worrying about being sued by an unhappy party.  
  
• Authorising courts to issue orders to back up emergency arbitrators so they have the same ways to enforce their orders as other arbitrators.
  
• 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.

Next steps

The new Bill was introduced to the House of Lords on 18 July 2024 and we will keep you up to date on its passage through Parliament.