England & Wales Law Commission consults on reform of the Arbitration Act 1996 with proposals intending to support London’s leading role in international arbitration

The use of arbitration as a medium for resolving all types of disputes has grown exponentially since the Arbitration Act 1996 (the ‘Act’) came into force over 25 years ago. It seems an appropriate time, therefore, to review the Act against developments in the wider business environment and reforms in other jurisdictions. The Law Commission was asked by the UK Government to review the Act to ensure it remains fit for purpose and continues to promote the UK as a leading destination for commercial arbitrations. On 22 September 2022, the Law Commission published a consultation paper containing provisional law reform proposals for the Act (the “Paper”)[1]. We outline the main areas being considered for reform below.

Provisional Areas for reform

The consultation paper identifies eight provisional areas for reform and several minor amendments that fall outside of these topic areas.

1. Summary disposal of issues which lack merit

The absence of a clear route to summary disposal of bad claims and defences is a notable difference between arbitration and litigation in the England & Wales courts, and is on the wish-list for many commercial parties.

The paper proposes that the Act should incorporate an express provision for summary procedure in arbitration, to improve efficiency. Currently, the Act requires the arbitral tribunal to adopt procedures which avoid unnecessary delay and expense (section 33(1)(b)). However, there is no express provision for the early disposal of proceedings with no merit. The Law Commission proposes a non-mandatory (“opt-out”) provision to allow tribunals to adopt a summary procedure if applied for by a party to dispose of a claim or a defence. The threshold remains open to consultation, but suggestions include claims/defences which are “manifestly without merit” or with “no real prospect of success”.

The English court has previously shown itself willing to support a form of summary process (e.g. Travis Coal Restructured Holdings LLC v. Essar Global Fund Limited [2014] EWHC 2510 (Comm) in respect of enforcement of an award made in New York), and various institutional rules have adopted such provisions into their rules. The proposed change would fit with this discernible direction of travel to make the tribunal’s powers more explicit and to encourage their use where appropriate.

2. Interim measures ordered by the court (section 44) – orders against third parties and provisions in support of emergency arbitrations

The Law Commission proposes changes to section 44 of the Act which provides that the court has power to make orders in support of arbitral proceedings. These include the taking or preserving of evidence, and – most importantly - the granting of an interim injunctions.

Orders against third parties

The Law Commission considers that the existing section allows the court to make orders against third parties in appropriate cases, although it does not definitively conclude that this is the case. If it does, there is also the…