Minor Service or Complete Restoration? Law Commission to decide if Arbitration Act 1996 still fit for purpose

For 25 years (and arguably longer), London has been the epicenter of international arbitration. Largely the growth in popularity of this seat of arbitration can be attributed to the enactment of the Arbitration Act in 1996 (‘the Act’), which heralded significant changes in the way arbitration could be sought and pursued in England & Wales and Northern Ireland.

Distinguished from its predecessor (the 1940 Act) for emphasizing the impartiality and fairness inherent in arbitral proceedings, the 1996 Act critically established that any party subject to an arbitration agreement could apply for a stay of legal proceedings (if such had already been commenced) unless the Court considered the arbitration agreement null and void.  The benefits of this development (and others) underpinning the 1996 Act were of course substantial to any parties who were subject to arbitration agreements – the impact being that legal proceedings would be stayed pending the outcome of the arbitral process.

The Arbitration Act was seen at the time – and arguably remains in retrospect – a modern, forward-thinking dynamic piece of lawmaking, confirming the right of arbitrators to adopt procedures suitable to the circumstances of a particular matter, the desire to do away with unnecessary delays and wasted costs together with a broad discretion conferred upon arbitrators as to matters of procedure and evidence.

Skip forward 25 years and much like a much-used and loved vehicle that is now deemed ‘classic’ by dint of its long service and reliability, the Law Commission have decided that it’s time to look ‘under the hood’ and consider what areas of this highly respected Act of Parliament might require some attention.

Largely the decision to analyze whether the 1996 Act remains fit for purpose has come about due to global competition: the rising popularity of other seats of arbitration, namely those of Singapore and Dubai, have placed pressure on the UK to remain at the forefront of international arbitration and international dispute resolution.

To that end, the Law Commission will be looking at a ‘shopping list’ of upgrades; including the power to summarily dismiss unmeritorious claims, the courts’ powers in support of arbitration proceedings, electronic service of documents and electronic awards, the advent of virtual hearings and the procedures for challenging jurisdictional awards to name but a few.

It is expected that the consultation paper considering these matters will be produced by the Law Commissions by Q4 2022 and we will then know whether the Act requires some tweaks and a few new parts to get it back on the road or whether it will receive a complete restoration befitting a classic to bring it up to date and into line with modern standards for years to come.