Improvements recommended to Arbitration Act 1996 to ensure UK position as international arbitration leader
- Law Commission publishes final recommendations to update the Arbitration Act 1996 and puts forward draft legislation.
- Commission advocates for maintaining the Act’s core principles while introducing improvements to help strengthen the UK’s position as a foremost destination for arbitration.
- Improvements include measures to strengthen arbitrator immunity, improve the efficiency of cases, and clarify powers of the court.
After thorough consultation with a broad range of industry specialists, the Commission has concluded that the central tenets of the Act continue to function well, while suggesting several improvements that would help bring greater clarity and certainty to the law.
The Commission’s final recommendations include measures to strengthen arbitrator immunity, improve the efficiency of cases, clarify the powers of courts, and refine the framework for challenging an arbitrator and their decisions. In other areas, such as provisions on confidentiality, the Commission argues that there is no need for reform as the law is already working well.
Together, these recommendations aim to cement the UK’s position as a leading seat for arbitration by providing a clear and comprehensive legal framework while maintaining the flexibility of the law.
Arbitration enables disputing parties to resolve a disagreement privately through a third party rather than going to court. This form of dispute resolution can be used in a wide range of domestic and international settings, from family law and rent reviews to commercial disputes. In the UK, arbitration is a major industry centred around the world-leading seat of London.
For more than a quarter of a century, the Arbitration Act 1996 has provided a legal framework for arbitration in the UK. The Government asked the Law Commission to review the Act to ensure it remains effective and responsive, allowing the UK to retain its position as a leader in international arbitration.
The Law Commission’s final report also includes draft legislation which would implement their recommendations for reform.
Commenting on the new recommendations, Professor Sarah Green, Law Commissioner for Commercial and Common Law, said:
“Our recommendations for reform aim to maintain the core principles of the Arbitration Act 1996 while introducing improvements to create further clarity, ensuring the fair and efficient resolution of disputes. With these improvements, we hope that the Act provides a modern and effective legislative framework for many years to come, enabling arbitration to continue playing a significant role in the UK economy.
“The Arbitration Act 1996 has played a key role in securing the UK’s world leading reputation for arbitration and our reforms will build on this.”
Justice Minister, Lord Bellamy, said:
“Arbitration is a vital measure to help people and businesses resolve disputes swiftly and effectively, without the expense of going through court proceedings.
“This process must be underpinned by effective laws, and we will respond to the Law Commission’s report shortly so we can maintain the UK’s reputation as a world leader in resolving legal disputes.”
The Law Commission’s recommendations for reform of the Arbitration Act 1996 include:
- Codifying the law on arbitrators’ duty to disclose conflicts of interest and retaining current duties on impartiality to maintain the integrity of arbitration as a system of dispute resolution.
- Strengthening arbitrators’ immunity to ensure arbitrator neutrality and robust decision-making.
- Introducing provisions for arbitrators to summarily dismiss legal claims that lack merit to allow for the efficient and fair resolution of disputes.
- Clarifying the power of the courts to support arbitration proceedings and emergency arbitrators.
- Improving the framework for challenging arbitrators’ decisions on the basis that the arbitrators lacked jurisdiction.
- Creating new rules for deciding which laws govern an arbitration agreement to introduce simplicity and encourage the application of the law of England and Wales.
Next steps
It is now for the Government to review and consider our final recommendations, and to decide whether our draft Bill should be introduced into parliament.