The recently-elected UK government has indicated that it will continue the work started by its predecessor to revise the UK’s arbitration legislation.

In September 2023, we wrote about the Law Commission’s final report on its review of the Arbitration Act 1996 (the Act). The report recommends only limited amendments to the Act.

The full report and draft bill can be found at https:// www.lawcom.gov.uk/project/ review-of-the-arbitrationact-1996. In our view, the most significant proposals are:

• The introduction of a new rule on the governing law of the arbitration agreement

The current common law position is that the law governing the arbitration agreement will be the law chosen by the parties. If (as is often the case) there is no choice of law specific to the arbitration agreement, then the law chosen to govern the matrix contract will be taken as the implied choice of law to govern the arbitration agreement, unless this might render the arbitration agreement invalid, in which case another law could be deemed to govern. Where there is no choice of governing law in the matrix contract, the arbitration agreement will be governed by the law with which it is most closely associated (usually the law of the seat of the arbitration).

The Law Commission proposes that the current several step analysis be replaced by a much simpler rule: where there is express agreement as to the law governing the arbitration agreement, that law will apply, otherwise the law of the seat will apply.

• The introduction of a power for arbitrators to make an arbitral award on a summary basis

The proposed changes in this area would introduce an explicit power for arbitrators to dispose of matters before them on a summary basis. Parties are free to opt out or set limits to this power if they wish, but otherwise the report proposes that arbitrators should be able to summarily dispose of matters before them on the basis that a party has no real prospect of success of succeeding on that issue.

• No second bites at the cherry under section 67 of the Act (lack of jurisdiction)

Section 67 allows a party to challenge a tribunal’s own ruling on jurisdiction through the courts and, in Dallah v Pakistan, the Supreme Court indicated that any challenge under section 67 would be by way of a full rehearing.

The Law Commission proposes moving away from the Dallah approach such that where a party making a 67 challenge has participated in the arbitration proceedings in question, the court will not entertain any new grounds of objection or any new evidence (unless it could not with reasonable diligence have been put before the tribunal), and that evidence would not be reheard, save in the interests of justice.

We concluded that the consultation process led to a balanced and welcome set of recommendations, whilst perhaps missing an opportunity to address discrimination in arbitration.

Read the full article here.