An Act to restate and improve the law relating to arbitration pursuant to an arbitration agreement; to make other provision relating to arbitration and arbitration awards; and for connected purposes.
The 1996 Act only applies to parts of the United Kingdom.[4] In Scotland, the Arbitration (Scotland) Act 2010 [5] provides a modern statutory framework for domestic and international arbitration.
In 2024, a Bill to amended the Act was introduced to the Lords, although as of November 2024[update] it has not progressed beyond second reading.[6]
Overview
England and Wales is one of the very few developed jurisdictions in the world which has consciously elected not to follow the UNCITRAL Model Law on International Commercial Arbitration. This is a position which has been subject to criticism.[7]
act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and
adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.
The various subsequent provisions relating to the conduct of arbitrations are largely pinned upon this overriding duty. The legislation specifies that "The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it."[8]
Subject to that overriding duty, the tribunal has broad discretion in relation to matters of procedure and evidence. The legislation provides that "It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter."[9]
when and where any part of the proceedings is to be held;
the language or languages to be used in the proceedings and whether translations of any relevant documents are to be supplied;
whether any and if so what form of written statements of claim and defence are to be used, when these should be supplied and the extent to which such statements can be later amended;
whether any and if so which documents or classes of documents should be disclosed between and produced by the parties and at what stage;
whether any and if so what questions should be put to and answered by the respective parties and when and in what form this should be done;
whether to apply strict rules of evidence (or any other rules) as to the admissibility, relevance or weight of any material (oral, written or other) sought to be tendered on any matters of fact or opinion, and the time, manner and form in which such material should be exchanged and presented;
whether and to what extent the tribunal should itself take the initiative in ascertaining the facts and the law; and
whether and to what extent there should be oral or written evidence or submissions.
The Act also imposes a duty on the parties to "do all things necessary for the proper and expeditious conduct of the arbitral proceedings."[10]
Stay of legal proceedings
If any legal proceedings are commenced against a party which are subject to an arbitration agreement, then the party may apply to the court for a stay of those legal proceedings, and the Act provides that the court "shall grant a stay unless [it is] satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed."[11]
Section 69 permits an appeal on a point of law to a court unless the parties have agreed to exclude that right.[12] But the right to bring an appeal may only be exercised either with the agreement of the other party, or with the leave of the court. An agreement by the parties to dispense with the requirement to give reasons for the tribunal's award is treated as an agreement to exclude the court's jurisdiction to hear an appeal on a point of law.[12]
Challenging the award
Under the Act there are broadly only two ways in which an arbitration award may be challenged (apart from appeal on a point of law):
Challenging the substantive jurisdiction under section 67; or
Seeking to set aside the award for serious irregularity under section 68.
The Act defines serious irregularity as one or more of the following which the court considers has caused or will cause "substantial injustice" to the applicant:
failure by the tribunal to comply with section 33 (general duty of tribunal);
the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction);
failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties;
failure by the tribunal to deal with all the issues that were put to it;
any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers;
uncertainty or ambiguity as to the effect of the award;
the award being obtained by fraud or the award or the way in which it was procured being contrary to public policy;
failure to comply with the requirements as to the form of the award; or
any irregularity in the conduct of the proceedings or in the award which is admitted by the tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award.
Any challenge to an award must be brought within 28 days of the arbitrator's decision, or notification of the outcome of any arbitral appeal or review.[13] According to Lord Justice Popplewell, "this relatively short period of time reflects the principle of speedy finality which underpins the Act".[14] Where "the interests of justice require an exceptional departure" from this timescale, an extension of time may be allowed. In 2012, Popplewell set out the factors which will influence a court's decision on whether to grant an extension of time as:
the length of the delay;
whether the party who permitted the time limit to expire and subsequently delayed was acting reasonably in the circumstances in doing so;
whether the respondent to the application or the arbitrator caused or contributed to the delay;
whether the respondent to the application would by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed;
whether the arbitration has continued during the period of delay and, if so, what impact on the progress of the arbitration, or the costs incurred in respect of the arbitration, the determination of the application by the Court might now have;
the strength of the application;
whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined.
The first three points are "the primary factors".[14]
Recognition of foreign awards
Recognition of foreign awards is addressed in Part III of the statute.
The remainder of the part deals with the enforcement of awards from contracting states to the New York Convention. Those provisions broadly replicate the architecture of the Convention, and provide that such an award shall only be refused on the ground specified in the Convention, specifically:[16]
that a party to the arbitration agreement was (under the law applicable to him) under some incapacity;
that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made;
that he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case;
that the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration (but see subsection (4));
that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country in which the arbitration took place;
that the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made; or
if the award is in respect of a matter which is not capable of settlement by arbitration, or if it would be contrary to public policy to recognise or enforce the award.
The Permanent Court of Arbitration (PCA) is a non-UN intergovernmental organization headquartered at the Peace Palace, in The Hague, Netherlands. Unlike a judicial court in the traditional sense, the PCA provides administrative support in international arbitrations involving various combinations of States, State entities, international organizations and private parties. The cases span a range of legal issues involving territorial and maritime boundaries, sovereignty, human rights, international investment, and international and regional trade. The PCA is constituted through two separate multilateral conventions with a combined membership of 124 Contracting Parties. The PCA is not a United Nations agency, but has been a United Nations observer since 1993.
R v Kirby; Ex parte Boilermakers' Society of Australia, known as the Boilermakers' Case, was a 1956 decision of the High Court of Australia which considered the powers of the Commonwealth Court of Conciliation and Arbitration to punish the Boilermakers' Society of Australia, a union which had disobeyed the orders of that court in relation to an industrial dispute between boilermakers and their employer body, the Metal Trades Employers' Association.
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and entered into force on 7 June 1959. The Convention requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states. Widely considered the foundational instrument for international arbitration, it applies to arbitrations that are not considered as domestic awards in the state where recognition and enforcement is sought.
In contract law, an arbitration clause is a clause in a contract that requires the parties to resolve their disputes through an arbitration process. Although such a clause may or may not specify that arbitration occur within a specific jurisdiction, it always binds the parties to a type of resolution outside the courts, and is therefore considered a kind of forum selection clause.
International arbitration is arbitration between companies or individuals in different states, usually by including a provision for future disputes in a contract.
An arbitration award is a final determination on the jurisdiction, merits, costs or other aspect of a dispute by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law. It is referred to as an 'award' even where all of the claimant's claims fail, or the award is of a non-monetary nature.
Ex aequo et bono is a Latin phrase that is used as a legal term of art. In the context of arbitration, it refers to the power of arbitrators to dispense with application of the law, if appropriate, and decide solely on what they consider to be fair and equitable in the case at hand. However, a decision ex aequo et bono is distinguished from a decision on the basis of equity and even tribunals with ex aequo et bono powers generally consider the law too. "Whereas an authorisation to decide a question ex aequo et bono is an authorisation to decide without deference to the rules of law, an authorisation to decide on a basis of equity does not dispense the judge from giving a decision based upon law, even though the law be modified".
Arbitration is a formal method of dispute resolution involving a third party neutral who makes a binding decision. The third party neutral renders the decision in the form of an 'arbitration award'. An arbitration award is legally binding on both sides and enforceable in local courts, unless all parties stipulate that the arbitration process and decision are non-binding.
An arbitral tribunal or arbitration tribunal, also arbitration commission, arbitration committee or arbitration council is a panel of unbiased adjudicators which is convened and sits to resolve a dispute by way of arbitration. The tribunal may consist of a sole arbitrator, or there may be two or more arbitrators, which might include a chairperson or an umpire. The tribunal usually consists of an odd number of arbitrators. Members selected to serve on an arbitration panel are typically professionals with expertise in both law and in friendly dispute resolution (mediation). Some scholars have suggested that the ideal composition of an arbitration commission should include at least also one professional in the field of the disputed situation, in cases that involve questions of asset or damages valuation for instance an economist.
Emmanuel Gaillard was a prominent practicing attorney, a leading authority on international commercial arbitration, and a law professor. He founded the international arbitration practice of the international law firm Shearman & Sterling before launching Gaillard Banifatemi Shelbaya Disputes, a global law firm dedicated to international arbitration, in 2021. He frequently acted as an arbitrator in international commercial or investment disputes.
Section 1782 of Title 28 of the United States Code is a federal statute that allows a litigant (party) to a legal proceeding outside the United States to apply to an American court to obtain evidence for use in the non-US proceeding, a process known as discovery. The full name of Section 1782 is "Assistance to foreign and international tribunals and to litigants before such tribunals".
Alternative dispute resolution (ADR), or external dispute resolution (EDR), typically denotes a wide range of dispute resolution processes and techniques that parties can use to settle disputes with the help of a third party. They are used for disagreeing parties who cannot come to an agreement short of litigation. However, ADR is also increasingly being adopted as a tool to help settle disputes within the court system.
Justice Jean-Paul Beraudo is a lawyer, academic and author of legal works. He was Justice at the French Supreme Court and vice-chairman of the International Court of Arbitration. He lectures on International Private Law and International Trade Law at Panthéon-Sorbonne University and on Company law at Sciences-Po, Paris. The International Institute for the Unification of Private Law (UNIDROIT) appointed him correspondent for France and a member of the scientific committee.
Investor–state dispute settlement (ISDS), or an investment court system (ICS), is a set of rules through which states can be sued by foreign investors for certain state actions affecting the foreign direct investments (FDI) of that investor. This most often takes the form of international arbitration between the foreign investor and the state. As of June 2024, over US$113 billion has been paid by states to investors under ISDS, the vast majority of the money going to fossil fuel interests.
The Anti-war Treaty of Non-aggression and Conciliation was an inter-American treaty signed in Rio de Janeiro on October 10, 1933. It was the brain-child of Carlos Saavedra Lamas, who was the Argentine Minister of Foreign Affairs at the time the treaty was concluded. It was signed by representatives of Argentina, Brazil, Chile, Mexico, Paraguay and Uruguay. The US government acceded to the treaty on August 10, 1934. The treaty went into effect on November 13, 1935. It was registered in League of Nations Treaty Series on November 28, 1935.
The Arbitration Act 1979 was an Act of the Parliament of the United Kingdom that reformed arbitration law in England and Wales. Prior to 1979, arbitration law was based on the Arbitration Act 1950, which allowed use of the "case stated" procedure and other methods of judicial intervention, which marked English arbitration law as significantly different from that of other jurisdictions. The prior law significantly increased the cost and time required for arbitration, which made England an unpopular jurisdiction to conduct such negotiations in. As a result, while London maintained its traditional position as a centre for arbitration in insurance, admiralty and commodities trading, it failed to attract more modern forms of trade. Following pressure from industry groups, the Lord Chancellor introduced the Arbitration Bill into Parliament, having it passed hours before the dissolution of James Callaghan's government. It was given royal assent on 4 April 1979, and commenced working on 1 August 1979.
Kompetenz-kompetenz, or competence-competence, is a jurisprudential doctrine whereby a legal body, such as a court or arbitral tribunal, may have competence, or jurisdiction, to rule as to the extent of its own competence on an issue before it. The concept arose in the Federal Constitutional Court of Germany. Since then, kompetenz-kompetenz has often been important in international arbitration.
Arbitration in the British Virgin Islands is regulated principally by the Arbitration Act, 2013 which came into force on 1 October 2014. Prior to that date, arbitration was regulated by the Arbitration Cap, 1976.
The Arbitration Act 2005 is a Malaysian law that was enacted to reform the law relating to domestic arbitration, provide for international arbitration, recognize and enforce awards, and deal with related matters.
The Arbitration and Conciliation Act 1996 is an Act that regulates domestic arbitration in India. It was amended in 2015 and 2019.
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