King's Speech 2023 - Arbitration Bill

Arbitration Bill

• The Arbitration Bill modernises the law on arbitration as recommended by the Law Commission of England and Wales. This includes clarifying the law governing arbitration agreements, strengthening the courts’ supporting powers, and facilitating quicker dispute resolution.

• These new measures will bolster England, Wales, and Northern Ireland’s world- leading domestic and international arbitration sector with benefits for individuals and businesses seeking to resolve disputes, as well as boosting economic growth.

What does the Bill do?

• Arbitration is a form of dispute resolution. If two or more parties have a dispute which they cannot resolve themselves, they might appoint a third person as an arbitrator to resolve the dispute for them by issuing an award or they might appoint a panel of arbitrators to act as an arbitral tribunal. This gives individuals and businesses access to effective dispute resolution without the cost or stress of court proceedings. It is also an important means of reducing pressures on our courts system.

• The Arbitration Bill implements recommendations from the Law Commission’s review of the Arbitration Act 1996. It will support arbitration in England, Wales, and Northern Ireland by:

oClarifying the law governing arbitration agreements, providing that the law applicable will be those of the legal location chosen for arbitration unless parties expressly agree otherwise. This will ensure that, where arbitration is seated in England and Wales or Northern Ireland, it will be fully supported by our arbitration law which is among the most supportive of arbitration globally.

Territorial extent and application

• The Bill will extend and apply to England and Wales. Justice is a devolved matter in Scotland and Northern Ireland. However, the Arbitration Act 1996 also applies to Northern Ireland and so, subject to the agreement of the Northern Ireland Department of Justice, the Bill will also extend and apply to Northern Ireland.

Key facts

• England and Wales is among the world’s foremost jurisdictions for arbitration. Industry estimates suggest international arbitration has grown by about 26 per cent between 2016 and 2020, with London the world’s most popular seat of arbitration.

• England, Wales, and Northern Ireland’s arbitration sector is world-leading in its facilitation of domestic and international legal disputes. The Law Commission of England and Wales estimate there are at least 5,000 domestic and international arbitrations each year in England and Wales, worth £2.5 billion to the economy in fees alone.

• It is vital to modernise our arbitration framework, to respond to competition from abroad and maintain our competitive edge. Competing jurisdictions have updated their legislation more recently: Singapore in 2023, Hong Kong in 2022, and Sweden

and Dubai in 2018. In 2021, Singapore ranked equal first to London as preferred choice of seat for the first time according to research from Queen Mary University.

• The Law Commission consulted extensively before reaching its recommendations, which this Bill implements. They have received great support from the arbitration sector. The Law Commission ran two public consultations on the Arbitration Act 1996 in 2022-23, with a majority of respondents to both consultations agreed with the amendments to the Arbitration Act provided for in this Bill.

• The Bar Council has welcomed the Law Commission’s review and said “London has a well-deserved reputation as the foremost centre for International Arbitration. It is important to legislate to make the modest changes to the arbitration regime which the Law Commission has recommended in order to maintain and enhance that reputation.”