Neil Newing and Alasdair Marshall discuss proposed reforms to the Arbitration Act

By Neil Newing & Alasdair Marshall

Counsel Neil Newing and associate Alasdair Marshall discuss the recent decision in Selevision Saudi Company v BeIN Media Group LLC and the patchwork nature of the of the enforcement framework for court judgments between the UK and EU, in Law360.

Neil and Alasdair’s article was published in Law360, 22 December 2021, and can be found here.

The Law Commission has signalled its intent to preserve the status of England and Wales as a leading destination for commercial arbitration with its announcement that the 25-year-old Arbitration Act 1996 (the “Act”) will be brought under review.  The announcement notes that the Act set out an enduring framework for arbitration, but acknowledges that following recent reforms from rival jurisdictions, it is time to ensure the Act remains up to date in all respects.

The review aims to ensure that England and Wales remains a “destination” for dispute resolution and maintain the pre-eminence of English Law as a choice of law.  Perhaps reflecting the success of the Act, it is not expected that the Law Commission will propose wholesale changes – instead, the review looks to ensure the Act is clear, modern and efficient and amendments will be suggested only if necessary.

The specific matters to be addressed are yet to be determined. However, based on its earlier consultation, the Law Commission lists the following as some of the areas to be addressed by the review:

  • 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; and
  • Electronic service of documents, electronic arbitration awards, and virtual hearings.

The Law Commission says it will launch its review during the first quarter of 2022, with plans to publish a formal consultation paper in late 2022.

Points of Interest for Future Arbitral Proceedings

The following points that may be covered by the review are of particular interest to those considering whether to opt for an English-seated arbitration as their dispute resolution mechanism.

  1. Summary Dismissal

There has been a growing recognition that it is valuable for arbitral tribunals to have powers of summary dismissal, reflected by the International Centre for Settlement of Investment Disputes, the Arbitration Institute of the Stockholm Chamber of Commerce and the Singapore International Arbitration Centre all recently introducing provisions to this effect.  The adoption of similar powers in the 2020 Rules of the London Court of International Arbitration last year provides further evidence that powers of summary dismissal represent a competitive addition to an arbitral institution’s offering.  Given the stated objective of maintaining the position of England and Wales as a competitive arbitral seat, it is therefore unsurprising that this issue is listed by the Law Commission for review – and it seems likely that such powers of summary dismissal will be introduced into the Act (particularly given that such powers already exist for court proceedings in England and Wales, and so are familiar both to lawyers and users in this jurisdiction).

However, a careful balance must be struck between the interests of efficiency and the requirements of due process and respect for a party’s right to be heard.  An approach which provides powers of summary dismissal that are too broad may come unstuck when faced with a surge of litigation from parties seeking to set aside and/or challenge the enforcement of summary awards and dismissals.  Clearly, this would undermine any time and cost savings at the arbitral stage, as well as the Law Commission’s objective of preserving the “attractiveness” of England and Wales as an arbitral seat.

  1. Confidentiality and Privacy

Whilst often cited as one of its greatest benefits, the confidentiality of arbitral proceedings has come under increased scrutiny.  This is particularly seen in the investor-state dispute context, where criticisms have been raised over the perceived lack of transparency of the dispute resolution process.  The mounting pressure has led to the development of transparency regimes by, e.g., the United Nations Commission on International Trade Law, which introduced new transparency standards by increasing public access to its arbitral proceedings.  It also led to the adoption of the 2014 UN Convention on Transparency in Treaty-based Investor-State Arbitration (also known as the Mauritius Convention on Transparency), which the UK has signed but not yet ratified.

The question remains, however, whether such concerns of transparency have any place in commercial arbitration between two (or more) private parties, who have agreed for their dispute to be resolved confidentially (and indeed may have chosen arbitration for that very reason).  It is therefore notable that, while the Act is currently silent on the question of confidentiality, the Law Commission has marked this as an item for review.  Any imposition of transparency standards will need to be carefully scrutinised from a ‘party autonomy’ standpoint.

  1. Electronic Service, Awards and Virtual Hearings

The inclusion of electronic service of documents, electronic arbitration awards and virtual hearings as items for review reflects the reality of current practice, where parties and tribunals have increasingly relied on technological solutions over the past couple of years to keep their arbitrations running.  While this has arisen primarily to help navigate the difficulties posed by the COVID-19 pandemic, it has been recognised that many of these technological solutions have provided useful and cost-effective alternatives to traditional methods that can continue to be used in appropriate proceedings.  Given the international nature of many arbitrations, an update to the Act which facilitates virtual hearings and the greater use of technology will be attractive to (if not expected by) many.  Further, reducing the need for arbitrators, witnesses and parties to fly around the world to appear in person (particularly for short hearings) may enable London to appear as a greener option for international companies keen to burnish their environmental credentials.

Another Reason to Consider English-seated Arbitration in International Contracts?

The Law Commission’s reference to England and Wales as an attractive seat is borne out by recent pro-arbitration decisions of the English courts.  These include two judgments, the first of which (Kabab-Ji SAL (Lebanon) v Kout Food Group (Kuwait) [2021] UKSC 48) saw the Supreme Court provide welcome confirmation that the choice of law in the main contract will (usually) also operate as a choice of law for the arbitration agreement (in the absence of an express alternative choice). This confirms the principles set out in the earlier case of Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, putting to bed any residual uncertainty on this issue.

The second recent judgment is Selevision Co (a company incorporated in Saudi Arabia) v Bein Media Group LLC [2021] EWHC 2802 (Comm), in which the English Commercial Court held that it did not have jurisdiction to permit a counterclaim in the context of an application for leave to enforce a New York Convention Award pursuant to section 101(2) of the Act and CPR 62. This judgment underscores the “streamlined” nature of the enforcement process for arbitral awards under the New York Convention.  This can be sharply contrasted with the enforcement of UK judgments in the EU following the EU Commission’s refusal to permit the UK to accede to the Lugano Convention in July 2021 after Brexit.  Unless litigants benefit from an exclusive jurisdiction agreement in favour of the UK courts, they will need to negotiate the patchwork of local laws of the EU Member States concerning the enforcement of English judgments.

These judgments continue the trend which has emerged in the English Courts since the Act was first introduced, and it is hoped that the Law Commission’s review will only enhance the efficacy and appeal of the English arbitral process.  Parties to international contracts may wish to take note of this clear pro-arbitration stance when deciding what form of dispute resolution to pursue and, if arbitration, where to seat it.

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