Commercial Awareness Update – W/C 5th August 2024

THE ARBITRATION BILL

The Arbitration Act 1996 was introduced to render arbitration a more efficient, fair and internationally aligned process, thereby enhancing the UK’s reputation as a global hub for arbitration.

As efficient as it has been in achieving those aims, the government has decided, that in keeping with societal modernisations, introducing the Arbitration Bill was apt as further reformation of arbitration law, stating that ‘the Bill will enable more efficient dispute resolution, attract international legal business, and promote UK economic growth’.

A brief overview

The Bill was originally introduced on November 21, 2023, following the Law Commission’s review of the 1996 Act, and the government’s acceptance of the Commission’s recommendations. However, it was taken out of the ‘wash-up’ period, (an accelerated enactment process immediately after a General Election is called), and reintroduced on 18^th July 2024, following the recent General Election.

Its journey will commence in the House of Lords, and if it succeeds in all requisite stages, it will progress to the House of Commons.

The primary proposals of the Bill highlight areas where further improvements were deemed a necessity, including:

• Digital arbitration – The Bill provides for digital arbitration proceedings through electronic communications, virtual hearings and digital document management, which reduces costs and increases efficiency.
• Clarification of powers – The Bill further clarifies the duties and powers of arbitrators, particularly when it concerns interim measures and the ability to make binding decisions, thereby reducing the possibilities of disputes concerning an arbitrator’s authority.
• Confidentiality provisions – In aid of strengthening the confidentiality of the process, there are clearer rules on disclosure. This is crucial as parties primarily choose arbitration for its private nature.
• The enforcement of awards – The Bill enhances the enforcement of arbitration awards domestically and internationally in closely aligning UK law with international standards,
• Streamlining appeals – There is an enhanced limitation on grounds of appeal and the challenge of arbitration awards in court. By reducing judicial intervention, arbitration becomes a more final and binding process, thereby increasing its appeal as an alternative to litigation.

Impact on society

If enacted, the Bill is likely to boost business confidence. Companies will be better assured that disputes will be resolved quickly and fairly, with some promise of reduced costs and delays. As a result, the UK will be a greater attraction for international business and investors looking to settle cross-border disputes.

The clearer rules and reduced scope for judicial intervention provide parties with greater legal certainty, thereby effecting more predictable outcomes and stable business environments.

Furthermore, simplifying arbitration procedures means greater access for smaller businesses and individuals, thereby providing a viable alternative to litigation, which can be prohibitively expensive and time-consuming.

Impact on the legal sector

There is an expected increase in the demand for arbitration services due to greater efficiency and accessibility. This heightened demand translates to economic growth opportunities for legal practitioners, institutions and law firms in this sector.

The new provisions, particularly those related to digital arbitration and interim measures, will require legal practitioners to stay abreast of changes and develop their expertise in those areas, potentially leading to more specialised training and professional development opportunities, and by making arbitration a more attractive option, the provisions could reduce the volume of commercial litigation in the courts, leading to a shift in focus for some legal practitioners from litigation to arbitration.

Finally, the provisions could attract more international cases to UK-based arbitrators and law firms, thereby boosting the global legal competitiveness of the UK.

In conclusion, the Bill represents a significant step towards modernising the arbitration framework. By addressing the needs of contemporary business practices and leveraging technological advancements, it aims to provide a more robust, clear and accessible arbitration system.

As it progresses, it will be crucial for all those to whom it pertains to, to monitor its implementation and ensure that it meets the needs of all stakeholders involved in the arbitration process.

• By Aqua Koroma