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What can we expect from the Law Commission's proposed reform of the Arbitration Act 1996?

08 January 2018

The Law Commission has identified summary procedures in arbitration as a potential area for law reform in England & Wales.

In December 2017, the Law Commission published its 13th Programme of Law Reform, including proposals for possible future reform of the Arbitration Act 1996.

Established by the Law Commissions Act 1965, the Law Commission's purpose is to promote the reform of law - it receives and considers proposals for law reform and periodically prepares proposed programmes for the review of branches of the law where reform is considered desirable. The 13th Programme of Law Reform runs from 13 December 2017, and covers diverse topics ranging from the law on surrogacy to the regulation of autonomous vehicles. In addition to 14 projects which have been selected for review in this programme, the Law Commission refers to further proposals that it believes could have significant merit as law reform projects. If resources allow, these projects may prove possible to accept as additional references during the course of the 13th Programme. One of those further proposals is the reform of the law in relation to the use of summary procedures in arbitration.

The Commission notes that, although London continues to be one of the world's leading centres for international commercial arbitration, there is concern that rival jurisdictions, such as Hong Kong, Singapore, Paris and Dubai, could soon "catch up". Since the introduction of the Arbitration Act 1996, other jurisdictions have enacted their own equivalent legislation, with provisions which reflect recent developments in this practice area, and the Commission considers the Act may be ripe for reform to keep pace with such developments.

One particular area of reform that the Commission has identified is the use of a "statutory summary judgment style procedure". Such a procedure would allow arbitrators to determine unmeritorious claims swiftly without the need for potentially lengthy and costly proceedings. The Commission notes that although arguably arbitrators already have sufficient power to determine claims summarily, there is no express power in the Act, and arbitrators appear reluctant to employ summary procedures for fear of their award being challenged or encountering difficulties at the enforcement stage.

The use of such summary procedures has gathered momentum in recent years in the arbitration community. The rules of certain arbitral institutions (e.g. SIAC and SCC) give arbitrators express powers to determine disputes in this way. And, while it has not gone as far as to make it express in its arbitration rules, as we reported recently the ICC has adopted guidance clarifying that arbitrators do have power to use summary procedures under its existing rules.

The Commission also suggests that reform in this area could extend to giving arbitrators wider powers, for example the power to strike out unmeritorious claims or defences.

When can we expect these reforms?

The Law Commission comments that, because of the cross-government nature of this work, it was not possible to secure support for reform in this area in time for publication of the 13th Programme. It has however expressed its hope that government Ministers will make a reference to the Commission so that it can undertake work in this area during the 13th programme, i.e. at some point during the next four years. With the bandwidth that Brexit is likely to take up during that period, perhaps it is ambitious to expect to see this additional project being taken on in the immediate future, but this is certainly a statement of intent from the Commission that reform of the Act is on its radar in the mid-term.


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